Retail Media Networks and Their Impact on Attribution

The Landscape of Retail Media Networks

Retail media networks have become a pivotal component of the retail industry’s advertising strategies. However, their methodologies and practices are often shrouded in mystery, particularly when it comes to attribution rules and programmatic metrics.

The Attribution Conundrum

Retail media networks have capitalized on the power of closed-loop purchase attribution, which is often touted as one of the main selling points of retail media. This has led to RMN placements being relatively expensive compared to open programmatic.

However, this method of attribution can be manipulated by programmatic metrics. This creates incentives for RMNs to serve ads on low-quality and low-transparency inventory, thus gaming the system.

The Core Issue

The main issue with this system is the lack of transparency in RMNs’ advertising practices. Many RMNs serve ads across the open web without adhering to even the most basic standards of transparency. This leads to situations where RMNs can serve ads on cheap network sites or MFA sites, and claim attribution credit if a purchase is made within a certain timeframe.

How RMNs Exploit Attribution Rules

A study by Adalytics found that Amazon’s retail media network was heavily utilizing MFA sites for ad placements. While these placements do not add any real value, they allow RMNs to shift sales attribution from organic sales to Amazon Ads.

The crux of the problem is that RMNs, like Amazon and Google, often adopt a walled garden approach, limiting access to log file data or URL reporting. This creates an incentive to serve ads on MFA sites as a means to claim attribution credit.

The Role of Consumer Packaged Goods Brands

Consumer packaged goods (CPG) and grocery brands have traditionally had limited access to customer data, relying heavily on store data and paying premium prices for physical shelf space. As shopper marketing budgets shift towards programmatic, these brands are often required to spend a certain percentage of their sales on retailer platforms.

The Impact on Brand Perception

One potential downside of this approach is the potential for brand damage. Many brands have developed their own standards for programmatic media, but when they spend through RMNs, they lose visibility. This can lead to situations where ads appear on low-quality MFA sites, damaging the brand’s reputation.

The Growth Potential of RMNs

Despite the issues surrounding RMNs, their growth potential remains significant. Retailers have valuable data and demand, but often lack the necessary ad space. As such, they are constantly looking for ways to expand their ad inventory.

The Drive for More Supply

Retailers are constantly seeking to add more supply to their RMNs. A common strategy is to improve the efficiency and return on ad spend (ROAS) metrics of their ad platform. This can be achieved by claiming greater attribution credit, often by serving banner ads across MFA and other nontransparent network placements.

The Push for Transparency

While some retailers are part of the industry’s push for transparency, many are not. Those with scale see transparency as a way to distinguish themselves from smaller RMNs. However, the lack of transparency in the sector as a whole is a significant issue, leading to inflated ROAS claims with little connection to actual customer purchase cycles.

The Data Disparity Challenge

Brands often face an imbalance of power in their relationships with retailers. This can lead to a significant issue of data asymmetry, where retailers can exploit their data disparity to great effect. This can lead to RMNs using advertisers’ ad dollars to serve ads into placements they would not pay for themselves, cutting into profit margins and contributing to the problem of digital media scammers.

Conclusion: The Future of Retail Media Networks

The future of retail media networks remains uncertain, with many challenges to overcome. However, their potential for growth is undeniable. As these networks continue to evolve and adapt to changing market conditions, it will be crucial for brands, marketers, and consumers to stay informed and vigilant about the practices of RMNs.

Despite the issues, RMNs offer immense opportunities for brands to reach their target audiences in a more direct and personalized manner. However, it is essential that these networks operate transparently and ethically, respecting the rights of brands and consumers alike. Only by doing so can they truly unlock the full potential of retail media advertising.