Earlier this year Best Buy and Roku announced a data sharing partnership whereby the streamer will get access to the retailer’s first-party data to help brands better target ads on the streaming service. It’s a type of relationship that TransUnion’s Mark Rose expects to see more of as retail media networks (RMN) look to connected TV (CTV) as a new avenue to attract larger advertising budgets and boost their long-term success, while CTV players aim to build more robust audience marketplaces.
Retail media networks are a bit more complicated than traditional straight media buys, Rose, senior director of market development at TransUnion, explained, in that brands and advertisers aren’t simply evaluating the performance of campaigns (which is still an important element), but rather the value of the holistic relationship with the retailer - which could also include things like in-store promotions and online efforts. The primary avenue in a retail media network operation typically involves a retailer, such as Best Buy for example, selling ad inventory on their owned and operated websites (picture an electronics brand running an ad or sponsored post for a smart TV it sells at Best Buy on Best Buy’s website for users to see as they’re shopping, with advertisers getting access to first-party customer data)– or as Rose put it, advertising that’s considered endemic to RMNs where retailers are selling ad space to their brand partners. Amazon may be first to mind for retail media networks, as it’s a massive national player and dominant recipient of retail media ad spend in the U.S., but there are also smaller and regional retailers looking to pull in bigger brand budgets.
CTV presents an opportunity as a so-called “off-site” channel to grow RMN businesses longer-term. That’s because there’s only so much capacity that a retailer has, Rose said, in terms of traffic and level of engagement on their website.
“The significance of a Roku relationship is that longer-term, Best Buy needs to expand beyond its own website… because it’s limited by the available ad inventory on there,” he told Fierce, adding that a retailer such as Best Buy benefits from creating audience segments and making them available on connected TV where more clients can buy them, while leveraging scaled CTV inventory.
For the connected TV partner, be it a Roku, Vizio or the like, they like the relationship as it helps them develop a vibrant audience data marketplace with first-party shopper data.
“They want to have audiences from Best Buy, from other retailers, in their marketplaces for brands and other advertisers to buy them,” he said.
And as third-party cookies and identifiers depreciate, the Best Buy first-party data is even more valuable as streamers like Roku aim to offer audience segments to advertisers and brands for targeting. Sticking with Best Buy as an example, Rose said the first-party data is able to show what users purchased from that retailer, as well as frequency (noting that how often a person buys, say a dishwasher, is much different than buying detergent).
“Because of that, it’s even more important you have accurate data for targeting consumers when the purchase frequency is not as high as it would be for a fast-moving good like detergent,” he noted.
The promise of CTV is attractive for advertisers not only for the benefits of sight, sound and motion, Rose continued, but the same targeting abilities and measurement as digital. The TV ad market is also huge. For CTV alone, eMarketer projected U.S. CTV ad spend would exceed $26 billion in 2023. And while a new projection from Magna anticipates slightly slower growth for all-media ad revenues (though still increasing 3.4% this year to an all-time high of $326 billion) than previous forecasts, it called out retail media networks as one of the organic drivers helping to mitigate the impact of some challenging economic signals on ad revenue.
“Such organic drivers include the rise of retail media networks which are redirecting billions of marketing budgets dollars into advertising formats,” stated report author Vincent Létang, EVP of Global Market Research at Magna. “In addition, with long-form OTT streaming going mainstream and increasingly ad-supported brands finally find cost-effective solutions to reconnect with audiences that had become hard and expensive to reach through linear television.”
CPG brands help drive retail media, CTV pairing
Consumer packaged goods (CPG) brands are the most common employing retail media networks with their money fueling RMNs, according to Rose, who pointed out that those marketers also have big TV budgets. It’s the reason CTV advertising and retail media tie so closely together, he said, as RMNs today are mostly driven by those CPG brands that historically have a lot of money to spend to promote items to consumers, which typically happens close to the transaction such as in trade advertising.
“CPGs are historically large TV spenders,” Rose commented. “So the ability to shift that money … to connected TV, with retail media kind of being the impetus for doing so, makes for a very promising upside for CTV.”
And more buyers are taking a look at retail media network investments and related CTV offsite channels. According to a 2023 ad outlook survey from IAB, released in November, six in 10 buyers were currently investing in or considering investing in RMN advertising, with buyers projecting 2023 RMN ad spend to increase 28.4% over 2022 levels. For those already investing in RMNs, 75% said they were doing so in retailer-owned RMNs such as Kroger, Walmart and so on, while 64% said they were leveraging e-commerce owned, such as Doordash, Instacart, Uber and others.
While onsite owned-and-operated ad investment was by far the dominant tactic (91%), 63-73% of RMN buyers said they’re running offsite display and video tactics – at least 15% more than other ad tactics. For offsite video specifically, among those currently investing in RMN advertising, 63% said they were running offsite video on CTV or OLV (online video advertising), while another 32% were considering offsite CTV channels for RMN investment.
Shoppable TV comes into play
Another avenue where RMNs and CTV can interplay is shoppable TV. In this case, Rose said “the benefit of shoppable TV is really the ability to do closed loop measurement.”
Roku again is one streaming service pursuing shoppable TV efforts, including a pilot program with Walmart and more recently QR code-enabled efforts with DoorDash.
One of the core values of RMNs, he explained, is the ability for retailers to match ad impressions with sales – something that’s relatively easy to do within the retailer’s own domain. In connected TV it becomes a little more challenging. There’s slightly more risk of signal loss when going across channels, Rose said, with the need to attribute an impression on CTV and match it to a purchase that happens online or in-store. Still, he acknowledged there are many ways to do so, such as with a data clean room, in a privacy-enhanced matter. And with shoppable TV, the transaction is happening directly from the TV interface, helping to bring the measurement that much closer together.
TransUnion comes into play for RMNs in a few ways, including through an extensive identify graph and helping brands or retailers build audiences by providing data for deeper profiles and more accurate segments. It also offers data cleanrooms and helps clients understand the incrementality, or sales lift, of a campaign their running with measurement capabilities.
Being able to have reliable and accurate measurement off-site (such as with CTV) is something Rose sees as key to the long-term growth of retail media.
“What [RMNs] want to do longer term is go after the bigger brand and media budgets,” he commented. “That’s where there’s a huge amount of money, and the ability to measure that accurately will help them pursue those budgets.”
As for potential risks and challenges of leveraging offsite CTV channels, Rose zeroed in on audience duplication and the quality of the audience data an RMN has to begin with. He noted a brand buying audience segments from multiple RMNs through CTV “really risk having audience duplication” – with industry efforts on deduplication tools one potential solution. As to the quality of the audience data, he suggested it needs to be specific and differentiated.
For example, if a brand is buying an audience segment to target based on their likelihood to buy a big screen TV, then the attributes that go into creating that audience matter and “you better make sure they’re relevant to those that are buying a TV,” Rose said.