The Challenges of Running a Media Retail Network…and How Retailers Can Address Them

Beyond retail media giants like Amazon.com and Walmart, there are a growing number of retailers still grappling with how to transform themselves into media entities, while the retail media teams at these companies are tasked with growing 10, 20, even 50 times faster than the core retail business.

With pressure on every new retail media network (RMN) to deliver breakthrough results from the start, there are huge challenges in managing change, scaling indirect demand, integrating new media operations with established retail processes, and coordinating a wide range of media formats from digital to in-store and out-of-store.

Drive to establish RMN

Retail media has its roots in the in-store brand experiences that were the hallmarks of classic retail marketing—such as aisle ends, signage, and point-of-sale (POS) displays at the checkout—designed to grab the attention of browsing customers. Retailers have also expanded their media efforts beyond the physical store, buying billboard space, newspaper ads, or circulars on behalf of brands.

The shift to digital formats has created a dramatic shift. Retail organizations that relied on in-store promotional units to generate very low margins have discovered a hugely profitable, proprietary space in retail media that they can leverage to increase their profits and operating margins.

Challenges arising from accelerated RMNs

Today, advertisers have more than 200 RMNs to consider and budgets for, with the lion’s share currently going to market leaders Amazon and Walmart. These advertisers are open to alternative options that can reach their core audiences, but most other retail media networks are not prepared to capitalize on this potential demand due to practical challenges, including:

• Fragmented Tech Stacks: The prevalence of disparate technology stacks—including supply-side platforms, demand-side platforms, point solutions for media management and data analytics, cleanrooms, and more—not only impacts the day-to-day operations of RMNs, but also creates significant barriers to scaling and adapting to new market requirements, contributing to missed revenue opportunities.
• Data silos: Vast amounts of data are not shared or harmonized across departments. This is data that needs to be rationalized to deliver the sales traffic and measurement paradigms that brands require before they increase their investment in a given retail media network.
• Supplier management: Poor relationship management practices with multiple vendors and suppliers have caused some retailers to throw millions of dollars down the drain because they were unable to align their partners and technology stakes to meet the needs of brand advertisers.

In addition, scaling a retail media network isn’t as relatively straightforward as, say, setting up ad inventory in-house or securing shelf space at a grocery chain. To run a retail media business, several stakeholder groups must work together, including management, finance, sales and advertising operations teams, each with its own set of challenges to overcome.

Retailers need an ERP system for their RMN

For decades, companies have relied on enterprise resource planning (ERP) platforms to help them manage complex operations, multiple departments, and large amounts of data—think SAP, Oracle, Microsoft Dynamics 365, and others.

Similarly, retailers need a centralized operating system for their RMNs that centralizes key tools and analytics and enables retailers to monetize media assets at scale across all channels while facilitating seamless internal collaboration.

By taking a holistic view of the media landscape and leveraging advanced data analytics, campaign optimization, and real-time performance tracking capabilities, retailers will be able to unlock new revenue streams and increase their competitive advantage as retail media becomes the dominant advertising channel in the coming years.

Niche Weinheimer is executive vice president strategy at Skai, a multi-channel marketing platform.