Small and medium-sized businesses (SMBs) are increasingly looking attractive to advertising player in Retail Media and TV, if you look closely at two recent announcements from the NRF “Big Show” in New York. The long tail of retailers has smaller budgets, but untapped potential and larger aggregate budgets.
Amazon’s Retail Ad Service: convincing for a smaller retailer?
There has been lots of talk about how the second and third tier retailers could struggle to make a retail media network business work for them as they could not have the scale to make it attractive to brands, nor the ability to invest the resources in technology and heading.
The other that has long been talked about in Retail Media is the ‘network’ model – where one ‘stack’ and one set of people will manage everything for a bunch of retailers who will pool their audiences to get access to the ‘riches’ of Retail Media.
At NRF, Amazon’s launch of Retail Ad Service has sparked debates across the industry. I asked them to ‘pitch’ the product directly to me at NRF. Their pitch was a version of the following:
- Load up your catalogue through an API and you get to use the sane Amazon’s adtech stack that powers the $50 billion Amazon Advertising business.
- You get access to a vast pool of advertisers already using Amazon Advertising
- You can manage your direct advertisers, all within Amazon Ads console
- You receive comprehensive reporting and insights to help measure and optimize your advertising business
- You get access to data clean rooms powered by Amazon Web Services (AWS)
Pretty convincing for a smaller retailer – but is that it?
The risks are obvious
The question is whether this positions Amazon to strengthen its dominance over retail media. Data privacy looms large, with critics questioning whether Amazon can resist using retailer data for its gain – giving your data to the largest online retailer in the world hardly makes sense.
Larger retailers are less likely to embrace this offer, given their established infrastructures and greater concerns about competition. As one retail media executive observed: “The big question is whether retailers want to rely on the tech and support one of their biggest competitors.”
For smaller players, however, the benefits of using Amazon’s ad tools may outweigh these concerns.
The pitch about advertisers does not stack up
Amazon mentioned beta partner iHerb to me as “sharing 1,200 advertisers with Amazon”, saying smaller retailers could attract new advertising revenue quickly. This is a real stretch. Suppliers already on Amazon, are, for the most part, SMBs who do NOT have distribution in mainstream retail – and certainly not second and third retailers with smaller scale outside of the US.
If I were a smaller retailer, I would look very closely at this opportunity if I knew I was never going to get the investment to do it myself. However, this would mean that I would not have the scale in the first place, which would make me less attractive to advertisers. So, it might be a simple decision for some extra revenue versus all the requirements of working with a platform like Criteo, no matter how good it is.
And, Amazon has a history of making things work eventually that start off reasonably unassuming: Amazon Advertising was not even split out in revenue terms till January 2022, now it’s a $50bn business.
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OPINION Everyone loves long tails: the lure of SMBs for retail media
Colin Lewis
Small and medium-sized businesses (SMBs) are increasingly looking attractive to advertising player in Retail Media and TV, if you look closely at two recent announcements from the NRF “Big Show” in New York. The long tail of retailers has smaller budgets, but untapped potential and larger aggregate budgets.
Amazon’s Retail Ad Service: convincing for a smaller retailer?
There has been lots of talk about how the second and third tier retailers could struggle to make a retail media network business work for them as they could not have the scale to make it attractive to brands, nor the ability to invest the resources in technology and heading.
The other that has long been talked about in Retail Media is the ‘network’ model – where one ‘stack’ and one set of people will manage everything for a bunch of retailers who will pool their audiences to get access to the ‘riches’ of Retail Media.
At NRF, Amazon’s launch of Retail Ad Service has sparked debates across the industry. I asked them to ‘pitch’ the product directly to me at NRF. Their pitch was a version of the following:
Pretty convincing for a smaller retailer – but is that it?
The risks are obvious
The question is whether this positions Amazon to strengthen its dominance over retail media. Data privacy looms large, with critics questioning whether Amazon can resist using retailer data for its gain – giving your data to the largest online retailer in the world hardly makes sense.
Larger retailers are less likely to embrace this offer, given their established infrastructures and greater concerns about competition. As one retail media executive observed: “The big question is whether retailers want to rely on the tech and support one of their biggest competitors.”
For smaller players, however, the benefits of using Amazon’s ad tools may outweigh these concerns.
The pitch about advertisers does not stack up
Amazon mentioned beta partner iHerb to me as “sharing 1,200 advertisers with Amazon”, saying smaller retailers could attract new advertising revenue quickly. This is a real stretch. Suppliers already on Amazon, are, for the most part, SMBs who do NOT have distribution in mainstream retail – and certainly not second and third retailers with smaller scale outside of the US.
If I were a smaller retailer, I would look very closely at this opportunity if I knew I was never going to get the investment to do it myself. However, this would mean that I would not have the scale in the first place, which would make me less attractive to advertisers. So, it might be a simple decision for some extra revenue versus all the requirements of working with a platform like Criteo, no matter how good it is.
And, Amazon has a history of making things work eventually that start off reasonably unassuming: Amazon Advertising was not even split out in revenue terms till January 2022, now it’s a $50bn business.
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