Troy Townsend, CEO and Co-Founder of Zitcha, takes a look at how retail media may not be for everyone – unless they get the tech right
Lured by the hope of moving beyond the razor-thin margins of traditional business models and tapping much juicier advertising yields, retailers have raced to develop their own retail media networks (RMNs). But as the market swells, there are questions about whether this is a golden ticket opportunity for everyone.
Brand investment certainly isn’t in short supply, with ad spend in the UK expected to surpass £1 billion this year. Yet, while titans such as Amazon continue to dominate, small-to-medium RMNs have struggled to gain a profitable foothold.
Some retailers can’t compete on scale. But more often, they’re let down by disjointed tech that’s slow, expensive, and hard to manage. The more nuanced reality, however, is that many retailers are struggling to achieve their full potential due to a mix of challenges, not least their reliance on clunky, fragmented technology.
Frankenstacks have set RMNs up for a fall
There’s a curse that seems to afflict most advertising technology, and retail media hasn’t escaped it: fast growth drives complexity. According to industry pundits, RMNs now need multiple critical technologies to support on and off-site campaigns, including a buyer portal, product listing ads (PLA) marketplace, and audience extension solution. Combined with a range of ancillary tools, such as analytics, and additional platforms on both the demand and supply sides, this mix creates an increasingly unwieldy collective toolkit.
Compounding that problem is the tendency to forget about the underlying structural integrity. More often than not, RMNs eager to minimise costs and quickly evolve will build their stacks piece by piece, picking disparate tools from different vendors. As a result, many are grappling with slow and clunky setups.
Activating owned data is proving problematic
First-party data is widely hailed as retail media’s greatest superpower, but only if it is actually usable . Holding direct insights into shopper behaviour and preferences is fundamentally what allows RMNs to offer highly targeted ads across their properties, including websites, apps, emails, and in-store displays. It also plays an important role in powering wider off-site efforts, with retailers using their exclusive shopper data to steer and deliver tailored campaigns via integrated channels, such as social media or connected TV.
Yet the reality is that the practical application of first-party data can bring significant challenges. At the basic level, retailers can struggle to make their data usable at all, whether due to the tech fragmentation mentioned above or a simple lack of coordination ability. Then there is the issue of over-dependence.
While first-party data creates a valuable window into interaction and purchases on certain platforms and channels, relying on it exclusively leaves significant data gaps, in particular the broader context of individual consumers’ journeys, preferences, and habits. When data only captures part of the customer journey, ads can miss the mark, leading to underwhelming results and frustrated advertisers.
Measurement is stuck inside network walls
Aside from rich owned data, the most celebrated trait of retail media is, of course, its all-in-one nature: offering a closed-loop system where advertisers can reach relevant high-intent audiences and precisely measure tangible outcomes. The trouble with this perception, however, is that it can foster a narrow performance focus.
Eager to maintain a tight loop, many retailers prioritise short-term gains over long-term value by concentrating on driving quick hits. At the same time, a high proportion often don’t consider the full impact of their campaigns. By failing to measure conversions that are inspired by on-platform ads but happen elsewhere, retailers overlook a sizeable portion of the impact their campaigns make on consumers.
As well as underrepresenting the true effectiveness of their ad offerings, this measurement gulf is especially problematic at a time when winning advertiser trust increasingly hinges on providing robust, transparent, comprehensive performance assessment.
The three-pronged road to sustainable success
Although there are no magic fixes for flawed systems, retailers can move some way towards addressing the biggest common pitfalls by implementing three key changes:
1. Embracing tech unification
In most cases, the best answer to stack chaos isn’t a total reconfiguration. Retailers should start with an initial audit to find and address core efficiency blockers before exploring ways to reduce fragmentation with minimal disruption, including harnessing solutions that can connect their tech, rather than replacing it with a pre-integrated platform.
Instead of overcomplicating things, these next-gen solutions streamline the essential components of a retail media stack – a single pane of glass driving visibility and efficiency on all sides. For retailers, amalgamated stacks make it faster to build and roll out omnichannel campaigns, simplifying workflows and making it easier to retrieve live performance data. Meanwhile, advertisers get better consistency, clarity, and more effective campaign management that bolsters results and trust.
2. Expanding data scope
The obvious solution to limited first-party data scope is, of course, enrichment. By combining transactional and behavioural data with third-party insights — such as demographic details and psychographic analysis — retailers can obtain a more fully-rounded picture of customer interests, habits, lifestyles, attitudes and motivations. This insight informs better ad tailoring and increases the chance of high engagement, stronger sales, and crucially, lasting loyalty.
While there’s a huge selection of data management options available, one of the best is an identity platform that can automatically onboard and match varied audience data. In addition to streamlining the creation of customer profiles, these tools allow retailers to continue making strategic use of first-party data by filling in gaps with available consented insight – a particular advantage amid the rise of privacy regulations and third-party cookie deprecation.
3. Consider the full performance picture
Once retailers have a solid integrated technology and data foundation, the final piece of the puzzle is to make accurate assessments of campaign performance that prove they’re delivering real impact. Most importantly, this measurement layer must be able to evaluate every action and reaction ads drive, including in-network and off-site activity, and the halo effect.
Deploying attribution that leverages mixed datasets will provide comprehensive oversight of multi-channel individual journeys from start to finish and determine where RMN ads sit in the path to purchase, even if their payoff comes via competitor platforms or stores. By adopting a multi-touch model, retailers can also ensure a weighted understanding of exactly how each touchpoint contributes to outcomes, instead of giving all credit to the final interaction.
While Amazon is the heavyweight RMN, that doesn’t mean smaller players can’t compete with its super-scale network. There is plenty of potential for retailers of any size to carve out a viable market position if they take the right approach. Rushing in and chasing after top-line growth is a one-way ticket to underperformance. Instead, taking the time to ensure seamless stack connection, holistic customer insight, and all-inclusive measurement will pave the way to sustainable success by driving campaigns that consistently deliver what advertisers want.
Author
Troy Townsend is CEO and Co-Founder of Zitcha
