[00:00:00] Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age.
[00:00:16] Hey everyone, Peter Crosby here from the Digital Shelf Institute. Our listeners have a love-hate relationship with retail media, and every organization continues to wrestle with how to organize, execute, and measure it, while keeping up with the vast amount of change coming from the big players in the market.
[00:00:33] And what about all the others? Lauren Levack-Gilbert and I invited Russ Dieringer, Founder and CEO of Stratably, back on the podcast to use data and his brain to prognosticate what the retail media market is going to look and feel like in 2025.
[00:00:48] Heads up, it don't seem like it's going to get much easier on you and your teams in the year to come.
[00:00:54] Russ, welcome back to the podcast. We're so happy to have you back.
[00:01:00] Oh, Peter, Lauren, great to be back. Thanks for having me.
[00:01:02] I can't believe this is going to air in December, which is ridiculous that we're already there, but we have to start talking about 2025.
[00:01:11] I know. Get the holiday shopping done and then turn our attention to retail media 2025, right?
[00:01:18] Yeah, I mean, there's so many areas of e-commerce that you folks at Stratably just are incredible on, but we have to focus you because it's only a 40-minute podcast.
[00:01:28] Yeah, so let's talk retail media. I mean, where is it going? It's time for the informed crystal ball. What's happening?
[00:01:36] Yeah.
[00:01:37] We expect.
[00:01:38] I love it. Yeah, a lot of directions we could take the 2025 trends. But for retail media, I think overall, the retail media writ large is relatively healthy.
[00:01:52] But I think it depends on what exactly we're talking about.
[00:01:57] And one of the themes in our work that is coming into sharper relief, so to speak, is that the big keep getting bigger.
[00:02:06] And we had done that retail media benchmark study with you all at the DSI a year ago, and one of the data points in that study was just how concentrated retail media efforts were at really large consumer brands, even very large consumer brands, household names, right, would be activating on less than 10 retail media networks, despite dozens and dozens launching over the last couple of years.
[00:02:35] And we repeated that study, and we only recently gathered the results. So we're just starting to dig in. But that concentrated effort remains this year. In fact, it didn't really even grow all that much.
[00:02:50] And so more and more money is going into retail media, but it's going into the big ones. Amazon advertising is the largest, and it isn't really giving up much ground.
[00:03:04] Walmart Connect would be the second biggest retail media network, obviously far smaller than Amazon, but a sizable business and growing really nicely. It just reported results. It grew that segment in the U.S. over 20% again.
[00:03:20] So these big retail media networks continue to get bigger, but what about all these other retail media networks? Like what's going on there? And how do we make sense of that?
[00:03:33] You know, I'm, and at Stratably, we're always paying attention to the news and what's going on and what press releases and what new innovations and announcements and that sort of thing are happening in retail media.
[00:03:45] And there's multiple things every week from these variety of retail media networks, which is great to see, but are there actual dollars going into it?
[00:03:54] Yeah, is anything catching on?
[00:03:55] That is arising. And we don't want to be like the wet towel, so to speak, of retail media, but it is a little bit more of a sobering view that we're developing here where it's like, yeah, retail media is pretty good for like Amazon, Walmart, and maybe a handful of others.
[00:04:12] But boy, it's very, very challenging if you're a middle to longer tail retailer to develop, to generate budgets coming to you. It's very, very challenging.
[00:04:26] So that market concentration, I think is something that is not necessarily going to be super obvious next year, but we think it's a trend that is going to continue.
[00:04:38] And eventually the rubber is going to meet the road and these other retailers are going to have to face the music in terms of how are we going to fund our e-commerce business?
[00:04:46] If we don't have a strong retail media operation, there pretty much is no other way to get to a profitable business with e-commerce.
[00:04:58] So they have to do it. If they can't get retail media dollars, what are they going to do?
[00:05:02] I think that's the knock-on effect of this market concentration in retail media.
[00:05:08] And Russ, do you feel like part of that is, you know, because I imagine that early on in the ad, the, you know, online ad world, you know, it was a couple of big players.
[00:05:24] And then the folks came along that sort of bring everything together and you can sort of do one spend and get exposed a bunch across a bunch of different networks.
[00:05:33] And there was kind of that maturity of it that allowed it to sort of spread, spread the money more far and wide.
[00:05:41] Because, because do you think, I guess what I'm trying to get, do you feel like the barrier is, is it measurement?
[00:05:50] Is it just, I don't have the resources to deal with more than just a few.
[00:05:55] And so this has to get more efficient for me to be able to put money to it, or it's probably a combination of things.
[00:06:01] But what do you think is going to be needed to, to make it more universally beneficial?
[00:06:09] I think it is multiple components, which is present preventing brands from spending across a greater number of networks.
[00:06:19] The number one thing is just the internal, internal resourcing for retail media.
[00:06:23] A lot of times retailers, it seems like think you launch a retail media network and brands.
[00:06:29] It's almost like there's no marginal costs involved with them to put money to work.
[00:06:33] Magic.
[00:06:34] Yeah, it's magic.
[00:06:36] It's a free lunch in economic terms.
[00:06:40] But that really isn't the case, right?
[00:06:42] You need people, brands need people or their agency partners need people in order to dig into these retail media networks and try to get efficient media outcomes on it.
[00:06:55] And they just don't.
[00:06:57] I mean, retail media teams are relatively small today inside, even inside of big organizations.
[00:07:01] So they're limited on the internal resource constraint, which is a big factor.
[00:07:09] Other factors, though, also matter.
[00:07:12] For example, competitive intensity.
[00:07:15] Like do these other retail media networks, do they have the selection that drives an economic incentive for a brand to want to advertise on that network?
[00:07:27] So an example I use, I don't want to disparage any retailers here, but just as an example, right?
[00:07:35] If you type in facial cleanser wipes on Amazon as a search term, there'll be over 700 results, right?
[00:07:43] If you do that on Alta, just for comparison's sake, when I did it, there were 17 results.
[00:07:49] So on Alta, that's like, you know, let's say that's a half a page of search results on Alta.
[00:07:54] If you're on slot number 16 of that search results page, you have a much lower economic incentive to pay to get to the top of that page because it's only half a page results compared to if you're on page 16 of Amazon.
[00:08:11] So Amazon's vast selection is great for the user experience, although that's debatable.
[00:08:15] Maybe there's too much stuff on there and it's too hard to sort through.
[00:08:18] But nonetheless, certainly what it does, and this is why Walmart wanted the marketplace, it certainly drives a premium in visibility, a desire and a need to pay for visibility.
[00:08:30] Because if you're on page 16 or page two or whatever, you know, if you're not on the first page and typically towards the top, no one's ever going to see that product.
[00:08:38] And that's not the same across all other retailers.
[00:08:41] So that's the power of the marketplace.
[00:08:44] Walmart just reported, they said they have 700 million SKUs now available.
[00:08:49] And so one of the big benefits of that is for Walmart Connect because they're going to drive this competition on the site.
[00:08:57] Not every retailer has that.
[00:08:59] And so a lot of brands are saying, that's great.
[00:09:00] You launched this retail media network.
[00:09:02] Most of our retail media spend is paid search.
[00:09:04] And you're not giving me a real reason to want to pay to be at the top of the page because there's only five results.
[00:09:11] Several years ago, GoPuff, very limited assortment.
[00:09:13] Launched a retail media network.
[00:09:15] If you typed in energy bar, there were like four results.
[00:09:18] You know, how do you build a paid search business on it?
[00:09:21] Now, okay, we can do other things we can do.
[00:09:23] Now, I think GoPuff has evolved since then.
[00:09:25] So, yeah, I know.
[00:09:26] But, you know, you can do other things.
[00:09:27] You can do off-site and you can do things of that nature.
[00:09:30] But that's in like the very infancy in terms of retail media.
[00:09:35] Like practically speaking, there's just not a lot of money outside of what Amazon advertising is getting for off-site display.
[00:09:44] You've seen a lot of partnerships with retailers in the trade desk and that sort of thing.
[00:09:48] Brands are testing and learning to a degree there.
[00:09:52] But we're talking test and learn type budgets and very early days on that.
[00:09:58] So off-site isn't this panacea for some of these retail media networks.
[00:10:03] They've got to drive a real reason for these brands to want to spend money.
[00:10:10] Otherwise, what they're left with is basically left pocket, right pocket.
[00:10:14] Where, okay, a brand might do some stuff on their retail media network, but they're just shifting trade spend around.
[00:10:19] And like, who knows?
[00:10:20] Maybe if performance is so substantially better than what that brand can achieve on an Amazon or a Walmart,
[00:10:26] then they'll start getting incremental funds.
[00:10:28] But that's a question mark still today.
[00:10:33] That's a question mark for a lot of these retailers.
[00:10:35] But Russ, to that point, based on like a lot of the research that we did in that report,
[00:10:40] it shows that if the retailer just, I've been making this up, wakes up one day and is like,
[00:10:46] we're going to be a retail media network, but they don't work on their content.
[00:10:49] They don't work on their usability on site.
[00:10:52] They don't work on like collaborating with brands and building those relationships.
[00:10:56] They will never be successful.
[00:10:58] But for the ones that aren't the Amazon, Walmart's, Kroger's of the world,
[00:11:02] who supply that data, focus on content, are building brand relationships,
[00:11:08] I feel like there's an opportunity for them to break in to the space.
[00:11:12] Because I also feel like brands are tired of hearing we have to pay a million dollars for more data
[00:11:18] or we're not getting the relationships we need.
[00:11:20] And I would love your thoughts on that perspective.
[00:11:23] I think so.
[00:11:26] They're, you know, the aggregators in the space like Acriteo or even like Instacart in a way
[00:11:33] could be considered this consolidated would be a better word of retail media.
[00:11:38] A lot of their argument or premise, let's say, is that brands inherently want to spend money
[00:11:45] everywhere across all of these retail media networks.
[00:11:48] And what we're sort of playing with here is, is do they?
[00:11:53] I think in some sense, maybe.
[00:11:55] But in the other sense, are the other retailers, what makes, what makes them,
[00:12:03] what makes their offering unique is a key question they have to answer.
[00:12:07] If you go to a brand, they're already doing advertising with Amazon.
[00:12:14] They're already doing it with Walmart.
[00:12:17] And those two retailers alone are reaching such a huge percentage of the U.S. shopper for the U.S. market, right?
[00:12:26] So what is this retailer?
[00:12:27] Is this retailer offering unique reach?
[00:12:30] Is their data substantially better from a targeting perspective?
[00:12:35] And this brand advertiser really values that?
[00:12:38] Like, is there that economic incentive that I talked about before?
[00:12:44] Is there meaningful scale?
[00:12:46] Just dollars?
[00:12:47] Like, can I put dollars to work?
[00:12:48] Like, those are fundamental questions that these retailers need to answer.
[00:12:54] If they can answer them, then I think a brand is going to be open to that.
[00:12:57] They're not inherently turned off from working with more retailers.
[00:13:03] But it's a big bar.
[00:13:04] It's a really big challenge in front of these rivals to Amazon and Walmart and Kroger and Target and Instacart and a handful of others that have more active businesses.
[00:13:19] But like a middle-sized retailer that has launched a retail media network, there's a real question mark.
[00:13:25] And I'm not sure that we buy necessarily that brands just want to spend money everywhere.
[00:13:31] I don't think that's necessarily true.
[00:13:35] I think they have sales goals.
[00:13:37] They have reach goals.
[00:13:39] And their existing sort of concentrated base of retail media spend is helping, you know, getting them most of the way there.
[00:13:47] And I think this is like a controversial take in the industry.
[00:13:50] Like, I think in the industry, there's just a sense that like everyone's thriving and everyone's going to do great.
[00:13:57] And like retail media budgets are great.
[00:13:58] Yeah, they're great.
[00:13:59] They're just going to the big, the big ones.
[00:14:02] And I don't know if it's analogous to like, and I'm not making this point per se, but you think about like what Google has done and what Meta has done.
[00:14:11] And it has almost become these like winner take all type of markets.
[00:14:15] And is that the type of market we're in for retail media?
[00:14:17] Or is this a very, very, you know, diverse, fragmented, active, healthy ecosystem?
[00:14:26] That's, I think, what's interesting to watch in 2025.
[00:14:29] Which of those two paths is it?
[00:14:31] And to your point, and it's probably a different podcast episode, but if retail media does not come through as the balancer of P&Ls to these mid-level retailers, how do they do their omni-channel and e-commerce operations profitably?
[00:14:47] It's a big question.
[00:14:49] It's a big question.
[00:14:50] And we know factually the consumer every day is increasingly voting with their wallet and spending more of that wallet online.
[00:15:00] And that's a consumer trend.
[00:15:02] No brand, no retailer is bigger than that consumer trend.
[00:15:05] The consumer is going that way.
[00:15:07] So if a retailer can't go that way as well, sustainably, profitably, right?
[00:15:15] What happens?
[00:15:16] You know, what happens in that regard?
[00:15:19] Do they increasingly become slowly?
[00:15:22] It'd be like a slow bleed, but slowly irrelevant because it's harder and harder for the average consumer to buy from that retailer if they can't offer a robust e-commerce business.
[00:15:35] And none of the retailers necessarily give you enough information directly in order to understand the margins of like their core e-commerce operation and then what advertising contributes.
[00:15:49] So we try to do some rough math on that for different retailers.
[00:15:53] And you think about Amazon, Amazon is going to do, say, half a trillion dollars in GMV in the U.S. market.
[00:16:00] So like by definition, that should be scale.
[00:16:03] Like you should be able to make money.
[00:16:06] That's at scale, right?
[00:16:08] But even its core retail business, excluding ads, is probably break even.
[00:16:15] Probably break even.
[00:16:16] That might be generous.
[00:16:18] It might still be losing money, but advertising is helping it get to 5% operating margins, give or take, for this calendar year.
[00:16:27] And 5% puts it in line with like a Walmart or a Target, like more normal type of retail margins.
[00:16:33] So Amazon's not able to make money despite 28 years or however long it's been in business trying to refine this model and continually getting more efficient, more efficient, more efficient.
[00:16:46] What chance does another smaller retailer without the operating leverage, without the experience, have in order to make the core underlying economics work?
[00:16:56] It has, they have to, they have to sell advertising.
[00:16:59] They have to sell data.
[00:17:01] There is no other path seemingly.
[00:17:05] I think Amazon's proving there is no other path towards making this a sustainable model.
[00:17:10] So does that drive them to work with Omni enablers like Instacart, DoorDash, Uber Eats?
[00:17:16] Does it drive consolidation in the industry?
[00:17:20] I don't think this is why Albertsons and Kroger are merging, but I think it's, you know, one of the pros of that merger for them is like, okay, well, at least we have more, you know, operating scale in order to compete because this e-commerce thing is margin-decreed for us.
[00:17:37] So if they can't develop a strong retail media network, if a given retailer can't, it calls into question the long-term viability of their, of their omni-channel offering, of their digital offering.
[00:17:51] So what happens then?
[00:17:52] And I don't think that, I don't think the industry, like again, we're not going to see a bunch of bankruptcies.
[00:17:57] I'm not predicting that, but I do think retailers are going to have to sort of talk, he's talking about this.
[00:18:06] Like we've launched the retail media network.
[00:18:09] There's very little money in it.
[00:18:10] It's all left pocket, right pocket.
[00:18:11] We want to offer e-commerce.
[00:18:13] What are we going to do?
[00:18:15] That's like, is this retail media budget suddenly going to appear?
[00:18:20] When?
[00:18:20] Why?
[00:18:21] Amazon's not giving up ground.
[00:18:23] Walmart's not giving up ground.
[00:18:25] Who are we going to get it from?
[00:18:27] Big question mark in the industry.
[00:18:29] One of the themes that I'm thinking you just touched on is consolidation next year across the board.
[00:18:34] More partnerships, more consolidation.
[00:18:35] So it will be interesting to see what comes out of that.
[00:18:38] But yeah, interesting bedfellows, I'm sure there'll be interesting partnerships.
[00:18:43] And yeah, definitely.
[00:18:44] Yeah.
[00:18:45] So Russ, you touched on this a bit.
[00:18:47] The people at brands who are owning, touching, responsible for retail media.
[00:18:52] Everybody acknowledges that it's important, but there's not necessarily a clear owner.
[00:18:58] And I think we've seen that across the board.
[00:19:00] It's probably multiple teams or multiple different functions.
[00:19:02] So who's going to own this so that they can drive it moving forward?
[00:19:07] What do you think for 2025?
[00:19:09] Well, in the benchmark, the early read of the data, it is a very mixed bag, much like it was a year ago.
[00:19:17] So we come back to, and I can't remember if I shared this on this podcast, but from a while ago, we wrote this like retail media is the platypus of marketing.
[00:19:28] And the reason why we say that is because it's part retail and it's part media, just like a duckbill platypus is part duck, part beaver, right?
[00:19:36] Well, you combine those things and it's a unique animal, but organizations are not set up for this combination, this combination of sales and marketing.
[00:19:45] And so you just have so much churn and just challenge inside of these organizations.
[00:19:51] And, you know, we go and we speak to a lot of brands and share our research and whatever.
[00:19:56] And they're always looking for the answer on this topic.
[00:20:00] And I wish we had the answer or like good case studies, but it is, it's literally all over the board.
[00:20:05] I mean, for example, the data that we recently got back, 30% of brands have their head of e-commerce managing retail media, ultimately like the ultimate person in charge.
[00:20:16] Another 30%, give or take a couple percentage points had the CMO or the head of marketing in charge of it.
[00:20:23] And that was about the same.
[00:20:24] Now, what's interesting is the departments involved in executing retail media, we have an equal number of organizations shrinking the number of departments that are working on it as the percentage of manufacturers that are expanding the number of departments working on it.
[00:20:45] So it is just, I try to give brands comfort in the sense of like, you probably don't feel like you have it figured out and no one in the industry does either.
[00:20:55] And you've got to kind of think about your own internal dynamics and how budgeting, you know, works currently and just sort of like feel your way through until you get to a thing that works for your organization.
[00:21:10] But there aren't, in my opinion, based on the work, based on talking to brands, there isn't like a silver bullet answer to who should own this in the organization.
[00:21:19] I think what's, what has evolved and where a lot of brands have ended up so far is that we break retail media down into a couple of different components, right?
[00:21:31] Like paid search and then offsite stuff.
[00:21:35] And so a paid search will tend to be the domain of more of the sales oriented individuals.
[00:21:41] And then offsite stuff will be more the domain of media and how those budgets sort of work together is fluid, you know, is how I would sort of describe it.
[00:21:55] And it's, and it's imperfect, but I think that's kind of where we've gotten to this, like, I don't want to say comfortable approach to it, but that seems to be how brands are trying to, trying to make it, make it work.
[00:22:08] And they're trying to work together as good as they can.
[00:22:11] Obviously that's easier said than done.
[00:22:14] And, and on the offsite stuff, there's still, again, to my point earlier, it is very early innings in the sense of understanding what is the value of retail media off of the retailer's site.
[00:22:28] So we've seen partnerships with like the trade desk, as an example, retailers are charging a premium for brands to access that, access that capability.
[00:22:39] Many brands today don't have a clear answer to, is that premium worth it or not?
[00:22:47] Because it's difficult to set up tests.
[00:22:50] There's other people in the organization that are, or the agency, a different agency is doing programmatic for them.
[00:22:56] And so they don't even know the answer to that.
[00:22:58] So they're just trying to set that stuff up.
[00:22:59] So it's very early days.
[00:23:01] We have gotten to, again, this kind of comfortable sort of division, if you will, depending on the type of retail media that we're talking about.
[00:23:09] But the, the, the specific clear recommendation continues to evade us.
[00:23:16] And I would challenge anyone that has, that has, you know, super convicted that like, this is the right approach.
[00:23:21] I would challenge them a little bit and say, well, I don't know.
[00:23:24] There's a lot of smart people inside a lot of brands that are having a heck of a hard time figuring it out.
[00:23:28] That's the same for e-com structures, right?
[00:23:31] There's no right answer, but there's factors that go into the right answer for your organization.
[00:23:38] So I completely agree on that one.
[00:23:42] Yeah.
[00:23:42] And it seems to me that so much of it in this phase of maturity of retail media is, is internal dynamics.
[00:23:50] You know, so much when you have a budget that's this big and shifting around so much trust has to be paramount with the person that you're going to sort of the executive, you're going to entrust with that line item.
[00:24:07] And, and, and how it, and someone that can also make the divisions, the silos, all of that stuff work.
[00:24:15] So it has to be someone who's very good at, you know, cross-functional communication and collaboration or, or, or the, whatever structure you have won't last long.
[00:24:25] And so I'm imagining that it's so bespoke because it really does depend on the human beings in charge of it would be my guess, at least in the conversations that we've had.
[00:24:35] Absolutely.
[00:24:35] And I think that's the, the, the analogy to Lauren, your, your point about e-commerce.
[00:24:40] And I remember speaking at the Salsify event back in, I don't know, 2016 or something.
[00:24:45] And we were talking about, you know, trying to get cross-collaboration for the e-commerce piece, which was mostly like Amazon, you know, at that time.
[00:24:53] And that just really, you know, threw us for a loop in terms of how to go to market.
[00:24:57] And now it's shifted to, you know, retail media.
[00:25:01] And, and it's a, it's a challenge that we've been talking about in the industry for several years now.
[00:25:06] It just hasn't, you know, gotten easier in many respects.
[00:25:09] It's almost gotten, you know, more, more complicated.
[00:25:14] Yeah, for sure.
[00:25:14] In many respects.
[00:25:15] When, when it finally dawns on every, not finally, I don't mean to be unfair to the process, but now that it's clear that we have to figure out how to do this whole thing together in store, online, in a profitable way.
[00:25:31] And, and the only way you're going to achieve that is that this all needs to come together supporting.
[00:25:37] That just is just more complex than having this side operation that's doing some funky things over there that you don't have to worry too much about.
[00:25:44] So, yeah, yeah, absolutely.
[00:25:46] You're just like letting the account managers just go spend money on retail media and they've, they're, they're salespeople.
[00:25:52] They're not even, you know, they have no, no experience doing, doing media and they have no context towards some of the, the retailers ask.
[00:25:59] Like there has to be control and you do need this cross collaboration.
[00:26:03] So I think the trust is an element, but I would also say just getting harder data back on just the relative performance of some of these options.
[00:26:14] I think that's a big missing component.
[00:26:17] Even if we bring in promotions, like, should we put our money, should we put the next dollar or this dollar, let's say into paid search ad on Kroger?
[00:26:26] Should we put it into a promotion at Kroger?
[00:26:30] Should we put it into some upper funnel thing that, that, that we can do with KPM?
[00:26:36] That there isn't a lot of clarity around that.
[00:26:39] And we've talked before about, about MMMs and that sort of thing, like measurement is such a rich area that, that continues to, I think, really develop nicely for, for the space.
[00:26:51] I think over the next three years, or, you know, I don't want to put a timeframe on it, but over the coming years, we're going to keep getting more and more clarity as to like the relative impact of all of these different levers.
[00:27:02] But right now there's so many levers, it's almost like the retail media industry has overshot the, the advertisers.
[00:27:10] Like there's all these, you know, there's all this innovation, there's all these different levers they could pull.
[00:27:15] And meanwhile, the industry's back here saying like, well, we haven't quite figured out how to, to reasonably allocate paid search budgets across, you know, all these different retailers.
[00:27:29] So we're basically just put it into like four of them at the, at the moment.
[00:27:34] And so speaking of the, the half a trillion dollar elephant, why don't we spend a little time talking about the biggest one of all of these?
[00:27:42] Let's what's going on in Amazon.
[00:27:44] What's coming next where they headed.
[00:27:47] They, you know, like to my earlier point, they, they really, they don't seem to be giving up much ground.
[00:27:54] I know there's a lot of folks in the industry that, that characterize Amazon as it being day two there and they've slowed down and that sort of thing.
[00:28:01] We don't really see that.
[00:28:02] And on the advertising front, that ad business is going to grow somewhere around 20% this year to $56 billion.
[00:28:09] It'll grow high teens next year based on, you know, what we're, what we're forecasting.
[00:28:15] And we think that growth is happening for a few reasons.
[00:28:22] Certainly Amazon scale is, is huge, right?
[00:28:27] So brands can put a lot of money to work and they have a lot of different options all across the funnel.
[00:28:34] But what's interesting, I think with Amazon and some of the announcements that they've come out with and just really just the last few months at like accelerate and unbox.
[00:28:43] Is that on the, on the one hand, they're making it easier and easier for less sophisticated advertisers to get more sophisticated.
[00:28:52] So, and a lot of times this is through generative AI technology that, that they're layering into advertising.
[00:29:01] So things like making it easier to, to, to produce creative or through their performance plus offering where you tell the system you're advertising goals and it goes out there and does it much like, you know, meta has, has seen, seen success with.
[00:29:18] And those aren't going to be perfect images.
[00:29:20] Those aren't going to be perfect campaigns through the, the gen AI tool, but they're reducing the barriers for the lower end, less sophisticated advertiser.
[00:29:28] On the other side of things, they're, they're, they're increasingly giving sophisticated advertisers more and more granularity and more and more tools primarily through Amazon marketing cloud.
[00:29:44] So Amazon marketing cloud a couple of years ago, it was sort of like this insights tool, which was interesting, but tough to take action.
[00:29:51] Then they started to connect directly the insights to the advertising.
[00:29:56] They started to show things instead of last touch, you could do multi-touch and then you could start to see, well, custom audience multi-touch.
[00:30:03] And now you can start to see, okay, for this type of audience on this type of ad, I want to adjust my bid differently than this other type of audience.
[00:30:11] It keeps getting more and more sophisticated, rewarding those advertisers in those agencies that have been in AMC for several years now, getting stronger and stronger.
[00:30:24] And so Amazon, like the competitive edge opportunities almost continue to widen on Amazon based on this concept that AMC keeps developing and they keep innovating and they keep giving more tools to, to advertisers.
[00:30:40] So we, we don't see them giving up much ground.
[00:30:43] I mean, even our benchmarking from a budget perspective, we asked brands are, is Amazon ads gaining or losing or no change to your retail media budgets next year?
[00:30:54] And an overwhelming percentage indicated like something like 40 plus a net 40 plus of brands said, we're, we're putting more of our retail media budget into Amazon because performance is good because they have to do it because of competition, because Amazon keeps offering more tools.
[00:31:10] And by the way, Amazon's offering a new upper funnel capabilities like streaming ads, which is going to be a big area I think to watch in 2025.
[00:31:22] So Ross, they are a juggernaut and not, not really slowing down.
[00:31:27] Just before you move on from that point, because when you were at DSS last year or sorry, wow, that was this year.
[00:31:33] Gosh, it feels like it was last year.
[00:31:34] You talked a lot about AMC and you said that not a lot of brands were taking advantage of it and they could be the first movers.
[00:31:41] And a lot of the ones that were had someone internally gathering the expertise to be able to use AMC because you do have to have some knowledge of that.
[00:31:49] Has that changed from like an internal expertise perspective and people actually putting resources to it?
[00:31:57] We don't, you know, I think so DSS was in, it was in April.
[00:32:02] So feels like a year ago, you know, eight months or whatever, nine months ago, give or take.
[00:32:08] Like we haven't really seen that change all that much.
[00:32:11] I mean, at that, at that time, I think we had our benchmarking suggested that like three quarters or so of brands were using AMC quote unquote, but only one in 10 brands were using it in a sophisticated way.
[00:32:23] So it's kind of like doing advertising, like everyone could be doing sponsored products, but not everyone's going to be doing like sophisticated practices on sponsored products on Amazon.
[00:32:32] Same thing with AMC, like you can use different components of it, but there's a spectrum of sophistication.
[00:32:38] And, and I would expect the next time we ask that benchmarking question, 9%, it will be, it will be higher than that 9% using a sophisticated way, but it's not 50% now, or it's not 80%.
[00:32:50] It's still a minority of brands again, because, because they don't have the internal resources because their agency doesn't have the resources to tap into it.
[00:33:01] They've underestimated the importance of it.
[00:33:04] I mean, it's hard to just to stay on top of what Amazon's announcing with the, with, with the, you know, with, with the tool.
[00:33:11] I mean, this is a very fast paced area.
[00:33:13] It's complex.
[00:33:14] They don't market it particularly, you know, well, in my opinion, although that's improving, they've gotten better education out there about the tool.
[00:33:23] So that's, you know, that's a positive.
[00:33:24] So the industry will, you know, get there, but, but the, the goalposts keep moving, I guess is my point.
[00:33:32] And, and so that just benefits brands that, you know, moved early, but if you haven't moved into it, you know, no, no time like the present to get, to get started or help your agency get started and help them understand what's capable, you know, what's possible with that tool.
[00:33:49] Speaking of fast moving announcements, I know I cut you off and you wanted to talk a bit about AI and Amazon.
[00:33:54] So I know they have a ton of announcements around using AI to change titles and imagery.
[00:33:58] And how do you think that's going to impact search and just the way that retail media is going to take place on Amazon and other channels?
[00:34:06] I think it's creating a lot of opportunity in some respect for brands that can dive in and really understand how AI is doing those, you know, sorts of things as, as you describe.
[00:34:20] I mean, for several years now, it has been pretty much the chessboard has been all around paid search results based on whatever the user type typed in.
[00:34:30] And now we've got, you know, we've got Rufus throwing out, you know, whatever it's going to, whatever it's going to throw out.
[00:34:36] Amazon's changing titles, personalized search results and personalized experiences are changing, not just advertising, but even like visibility to deals and that sort of thing.
[00:34:46] So it's requiring, I guess, a greater, I don't want to say focus, but maybe a renewed, maybe a renewed focus in terms of, well, what does our digital shelf look like?
[00:34:57] I mean, we had thought it looked like this forever and we had a certain degree of control.
[00:35:02] And maybe, you know, we lamented that we had to pay this retail media tax in the form of paid search ads.
[00:35:07] But I tell you what, that was preferable to not knowing what the heck the system's going to spit out with AI.
[00:35:15] So it's just creating, I think, a lot of interesting opportunities to sort of maybe develop a competitive edge there if you can understand how that system is working today,
[00:35:28] because it's different than how it was working, you know, a year ago.
[00:35:33] You know, I was gonna say several years ago, but really like a year ago.
[00:35:37] Yeah. And we don't know how ads are going to work with AI assistants.
[00:35:41] So when you think about AI assistants recommending products or shopping for consumers, are they going to choose sponsor products?
[00:35:49] Are they going to use content?
[00:35:51] Are they going to, like, what are they going to use to recommend those things?
[00:35:54] And I feel like that's a whole world of retail media, but it's much more specific and there's fewer spots and there's fewer opportunities to get people's attention.
[00:36:04] So is that going to cost more money?
[00:36:07] Is that going to mean more data?
[00:36:08] Like, what will that mean for retail media?
[00:36:10] Yeah.
[00:36:11] I think all interesting questions.
[00:36:12] I mean, they're already testing.
[00:36:14] Amazon and Google and others are already testing ads in these responses.
[00:36:18] So that will be interesting, you know, to watch and what type of ad load do we get?
[00:36:25] And then what is the consumer adoption of some of these AI tools?
[00:36:30] I personally, not that it matters, but I personally have found Rufus to be very helpful in shopping.
[00:36:34] And I think it is like, yeah, this is a powerful shopping experience and it's different.
[00:36:40] I use it for different shopping occasions, so to speak.
[00:36:43] I don't always use it, but it's, I think it's safe bet, right?
[00:36:48] To say that it's here to stay.
[00:36:49] I don't know.
[00:36:50] Maybe I'll be wrong.
[00:36:51] But I think it's going to be here to stay.
[00:36:53] They'll figure out a way to put advertising on it because it's core to an e-commerce business.
[00:36:58] It's already there.
[00:37:00] Or Google's business for that matter.
[00:37:02] So they'll figure out a way.
[00:37:03] But, you know, it doesn't, I don't think we're getting to a world where we require less budgets, nor a world that is less complex to manage advertising on Amazon or other retailers that develop, you know, similar type of AI experiences.
[00:37:22] So Russ, what other trends should we watch out for in 2025?
[00:37:27] What are you thinking?
[00:37:29] Yeah, just very practically speaking, I think right now we're in the midst of a very value-focused consumer.
[00:37:37] That value-focused consumer has been worn down by inflation for several, you know, inflation has come down, right?
[00:37:43] But it's the compound effect that matters.
[00:37:45] And they're worn down.
[00:37:46] So we've got this value-focused consumer.
[00:37:48] Consumer brands are increasingly pulling that promotional lever.
[00:37:53] So one of the things that we want to do more work on in 2025 is understanding how do you create a, like a one plus one equals three type of outcome, marrying your promotional strategy with your retail media strategy.
[00:38:08] I think that not just determining like where to spend, but how do we get these things to work together?
[00:38:13] That's something that we're watching next year.
[00:38:18] I also think, and I mentioned this earlier, brands, we expect to do more test and learn around off-site for retail media.
[00:38:28] And how does that perform relative to your existing off-site offerings?
[00:38:35] Does it make sense to pay this premium to retailers to access, to get that targeting, to access the same inventory, but targeted at a more precise shopper potentially or not?
[00:38:46] That's an open question for a lot of brands.
[00:38:48] So we'll be following that closely.
[00:38:52] And then we already mentioned the streaming TV, particularly with Amazon.
[00:38:56] I think what's, I don't know if this will really show in 2025, but TV advertising was always about reach, you know, and building the brand, quote unquote.
[00:39:08] Well, we can now with TV, do more with it and get, and we're closer to the, to the point of purchase, whether that's with QR codes or whether that's retargeting a shopper that saw the streaming TV ad.
[00:39:24] We can do more and get them closer to buying because of that.
[00:39:30] Does that start to change what TV commercials look like?
[00:39:32] Does that start to change the goal of TV commercials where instead of like just reach, we're now trying to get someone to buy, someone to take action.
[00:39:41] And that really hasn't been the case in TV.
[00:39:45] Does the rise of streaming TV and what Amazon's doing with it, does that change the actual content of the commercials?
[00:39:55] I think, again, that's a little conceptual.
[00:39:57] I don't know if we'll really necessarily see that in any measurable way next year, but I think it's an interesting theme to pay attention to.
[00:40:10] Well, Russ, so it sounds like 2025 will be more complex, more expensive and more annoying.
[00:40:16] Is that my takeaway?
[00:40:18] Well, you said the last part, not me.
[00:40:23] It just seems, it does seem like it's another year of, of test, learn, scale what you can and, and see how things continue to evolve.
[00:40:34] Uh, but once again, I think the figuring out how people are organizing around all of this to get the work done as efficiently as possible and have things be fluid and agile, you know, the ability to stay loose in this environment, don't you think is going to be more important than ever before?
[00:40:56] Yeah, no, no doubt about it.
[00:40:58] And, um, yeah, we, along with you all at the DSI, we'll have a study ready early in the year, uh, all around that topic.
[00:41:06] So I think that'll be good to, uh, to dive into at that point in time, but yeah, no doubt about it.
[00:41:11] I mean, I think the people side on, on the brand advertising part of the equation is, uh, is huge and there's a lot to figure out there and there isn't an easy answer.
[00:41:23] There's not one answer. And, um, I think 2025, maybe we'll get closer, uh, to, to that.
[00:41:29] Uh, but right now as we enter the year, there's still a lot of work to be done.
[00:41:33] Well, the things we know for sure is that you and Claire and Stratably will be on it all year in 2025 and you will be on the main stage at the Digital Shelf Summit in April of 2025.
[00:41:44] So we, we really look forward to that.
[00:41:46] I can't wait. That was by far my favorite conference last year.
[00:41:50] And so just so excited to attend it again and participate again. Thanks for having me.
[00:41:55] Wow. That was very nice of you to say. I mean, I know you only went to one.
[00:41:58] We didn't pay you to say that.
[00:41:58] I know you only went to one conference.
[00:42:00] They didn't pay me to say that. It is true. They did not pay me to say that.
[00:42:03] But I'm happy to take a check if you want to say it.
[00:42:06] Oh yeah. Lauren, is that in the budget?
[00:42:08] How about a high five?
[00:42:09] Yeah, there we go. Okay.
[00:42:12] Zoom high five.
[00:42:13] Zoom cash.
[00:42:14] My friend, thank you so much for bringing this, this 2025 overview with you.
[00:42:19] And we look forward to connecting again in the new year with the, with the new report.
[00:42:24] Thanks, Peter. Thanks, Lauren. Take care.
[00:42:26] Thanks, Russ.
[00:42:28] Thanks again to Russ for his brain and everything.
[00:42:30] Swing on over to digitalshelfinstitute.org and become a member to keep this kind of knowledge coming your way.
[00:42:36] Thanks for being part of our community.