Rich, I appreciate you providing some Industry Insight in and around digital media and advertising. As the market and technologies have matured, you’ve seen it all from a content and tech programmatic landscape. It would be great to get your take on some current hot topics in the digital media advertising space and their talent implications. Let’s dive in.

Retail Media Networks

First, let’s talk about retail media networks (RMNs), which seem to be all the craze. According to ‘Inside Intelligence,’ there are over 600 retail media networks, and their ad spending is on track to surpass TV. Aren’t retail media networks simply ads on E-commerce sites that have been going on for a long time now with retargeting? What is so different about RMNs, other than almost everyone is shopping online now? Why have they taken off the past few years?

There’s a one-word answer to your question: “data.” Think about what Coca-Cola wants; they want to sell more cases of Coke. What does L’Oréal want to do? Sell more cosmetics. Retailers have the consumer data that brands need to sell more.

To answer your other question about why it is different than retargeting, retargeting is when a retailer is selling their goods, anything that’s on their site, whether it’s Amazon or it’s L’Oréal, when a cart gets abandoned, one of the best ways to get a consumer to go back and purchase what they put in the cart is through retargeting. Retargeting is a cornerstone of their e-commerce efforts. With retail media networks, retailers become media companies. Yes, it is about ads on their site. But, more importantly, it’s about using their data to serve ads, whether on their site or anywhere on the web.

The stats are astounding already. In the next three years, 25% of all advertising will be spent on retail media networks. It took digital media overall 28 years to get to where it is today. Retail media networks have existed for five years, so the growth is explosive. Why do retailers want to do it? Because it’s an extremely high-margin business.

The bigger retailers, particularly in grocery, have 4 to 10% margins on a good day in retail. For the ads they run on their site, the margins are 70 to 90%. When they run it on the open web, they have to pay for the media, but the margins are still 50-60%.

I’m very bullish on retail media networks. I think it’s good for both the retailers because it’s a brand-new revenue stream, and I think it’s good for the advertisers because the number one KPI I’ve seen for retail media networks is ROAS, return on ad spend. It’s much less about impressions and clicks, and as a businessperson, what do you want to know? If I spent a dollar, did I get three back?

Just a quick brief follow-up to that point: has the data gotten better? And when we say data, how do we define it beyond emails? From what I understand, everything must be in the aggregate vs. individual user info.

Right, what has changed that the data is so valuable? Even if cookies weren’t going away or Apple hadn’t updated their privacy policy with the release of IOS 14, the trend was moving towards first-party data.

Now, think about it. Even in the new world, with direct-to-consumer advertising, the most prominent brands and retailers don’t have one-to-one relationships with consumers. But the retailers do because the retailers are taking credit cards. They’re setting up a loyalty program.

Walmart’s loyalty program is 45 million people – first name, last name, email address, home address. Even though it’s anonymized, it’s highly valuable. They can use data modeling to anticipate what this person will buy, and if it’s 7:00 p.m. and they’re walking into Walmart, we know what to target them for because we know what they’re there to buy. We know what they purchased the last time they were there.

It’s become that much of a science, so the retailers and brands don’t, by and large, have that information. There are exceptions, but the retailers have collected that information for a long time. That’s the reason why it has exploded in the last two years.

Because of cookie deprecation, it’s what Apple has already done. It’s what Google promised to do and now says it will be 2024. So, first-party data is really what’s going to supplant cookie-only targeting.

Over The Top/Connected TV

OTT simplifies TV buying in many ways. Now, does it mean everything is simple? No, because there are cable systems, there are content providers who say, “No, I’m not going to make all my inventory available via OTT.” But more and more are, and what advertisers like about it is that it’s way more accountable.

It’s not about just a Nielsen rating. They can get all the data from an online ad buy. The level of granularity in what they know about what consumers have purchased is much deeper. The accountability is much higher. Many people, myself included, think this is a better way to buy TV.

Do you think that’s a mistake or missed opportunity for cable companies?

I think some cable guys would argue with me about that, and I would point to the numbers and say look at how OTT has taken off. The cable guys didn’t make it easy; the OTT guys have made it easier. Are there still problems? Yes, there are. It’s not a panacea.

Mobile Advertising

The last topic I would like to cover is mobile advertising. What interesting things do you see to attract eyeballs on our mobile devices?

The mobile ad experience is much better than the web experience, and I make that big statement because there are too many content sites you go to where you are inundated with ads and pop-ups and sign up for a newsletter.

Mobile is a better experience. While the ads are noticeable, they feel less intrusive. Some content sites are almost impossible to read because they bounce all over the place while the ads load. The app environment for publishers is so clean. Also, for publishers, apps super-serve their heavy users.

Talent Implications

What do we need to know when we’re making a hire in the Retail Media Network space?

The only “surprise” here is that you can get executives with RMN experience. It’s a new space – but not so new that you can’t get a former RMN exec to make a move. Especially if it’s a move upward. The first is to look at the RMN space.

Second, you need people with digital experience.

Third, you need people who know retail — ideally, have worked in retail. If not, then an executive who’s called on retail and understands how it works – particularly merchandising.

Lastly, you need people who know data and have worked with it to target ad campaigns. For leadership positions, particularly President/GM and Chief Revenue Officer, you need senior managers with a track record of collaboration. For that CRO, if they’ve been a CRO and called on retail AND understand data, home run.