Sensor Tower’s Ian Simpson, EMarketer’s Sarah Marzano, Retail Breakfast Club’s Kiri Masters, Media, Ads + Commerce’s Andrew Lipsman & Sonata Insights’ Debra Aho Williamson: Retail Media Executive Brief

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1:20TVSB, who also moonlights as head of industry and client engagement at Flywheel, the commerce acceleration division of Omnicom. My co-host is the co-founder of Think Blue Consulting, the father of pop stars Ria Raj and Cat's Eyes Lara Raj. Their fans first call him Papa Raj, but to me, he's my BFF Sri. Last month, Sri and I attended the Can Lions International Festival of Creativity. Today's episode is the recording of a conversation that took place at La Residence, our home on the Riviera. More on that in a moment. To our audience, if you're getting value from these conversations, we have three quick asks.

1:52First, subscribe to the CPG Guys podcast on whatever platform you're listening on right now, whether that's Spotify, Apple Podcasts, Amazon Music, or anywhere else you get your podcast. Hit that subscribe or follow button so you never miss an episode. Second, leave us a rating. It takes 30 seconds and it makes an enormous difference in helping other CPG and retail media professionals find us. We've built this community one listener at a time and a five-star rating is the best single way you can help us keep growing it. Third, follow us on LinkedIn. Between episodes, we're publishing thought leadership, industry analysis, and content you won't find anywhere else.

2:29All built for the CPG and retail media community you're already a part of. Search CPG Guys on LinkedIn and hit follow or click the link in the digital show notes of this episode. Subscribe, rate, follow. Three simple actions that will help us bring you more of the conversations that matter. Today's episode came from an activation we hosted with eMarketer. This panel, sponsored by Sensor Tower, is called Retail Media Executive Brief, Separating Fact from Fiction. It features moderator Ian Simpson, Senior Vice President, Innovation and Strategy at Sensor Tower. Ian is joined by Deborah Aho-Williamson, founder and chief analyst at Sonata Insights, Andrew Lipsman, independent analyst and consultant at Media Ads and Commerce, Sarah Marzano, vice president and principal analyst for Retail Media and Commerce Media at eMarketer, and Kiri Masters, host of the Retail Media Breakfast Club podcast.

3:22Now let's get to the conversation.

3:27First of all, welcome everyone back up here. Andrew literally ran from a cabin in here seven minutes ago. So thank you for planning to have that little glitch out there. As I said at the outset, our goal here is to focus on what's happening right now is almost an executive read of what's going on in the industry. We have four amazing people here, two of whom have introduced themselves to you and two of whom have not. So I'm going to hand you the mic, Debbie, and ask you to say hello, introduce yourself, and then we'll carry and then we'll jump right in. All right. Well, hi, everybody. I'm Deborah Aja-Williamson.

4:07And I'm in a room where there's a few familiar faces because I was an e-marketer analyst for 19 years. I am now independent. I have my own business called Sonata Insights. I also write a newsletter called the AI Ad Economy. Judging by the name of my newsletter, yes, I do cover AI now as an advertising medium, as a consumer phenomenon. And I'm a little bit like a vegan at a barbecue here because I am the AI person here. And I'm in a room full of retail media experts, which is crazy. I'm learning so much from all of you. And I will continue to learn so much from all of you. But the question that I focus on and the one that I spend most of my time researching and thinking about and writing about is what happens when an AI platform sees a user's intent before the retailer ever sees it?

4:57Great example. Today, this morning, I woke up, my eye was red, puffy, swollen. I was like, I have an eye infection. What am I going to do? So I went to ChatGPT and I said, hey, you know, this is what's going on with my eye. Should I see, you know, what should I do? And ChatGPT knew when I was in a can because I'd have other conversations and said, there's, you know, there's a pharmacist down the road. You should go to a French pharmacy because the pharmacist can actually see you and talk to you. So that's what I did. And it even gave me a French translation of what to say about what was wrong with my eye and I go to the counter and the pharmacist looks at the one sentence that chat GPT gave me and then brings me two products which I bought and this is what I'm talking about when I say consumer intent and how the signals of intent sometimes don't ever get to other destinations where we're used to so that's what I follow that's what I pay attention to I'm really happy to be here thanks uh my name is Kiri Masters I write a newsletter and podcast or retail media breakfast.

6:00And besides all of the announcements that there's, you know, you're going to hear a million of them at hand this week. But I like to focus on the four sort of stakeholders in the ecosystem. We have the retailers running the networks. You have the brands who are advertising there. We have the agencies who work with both the brands and retailers. and the technology firms that power the networks and help brands with media buying it. And going around the horn, there's very few people that have had experience in all four of those areas. And I find that they're not always well understood. What are the incentives?

6:38What are the challenges? What are the extremes and fears of all these different players? Because we all need to work together to develop this ecosystem of retail media. and so generally I focus on what are the incentives and issues between these cast of characters like there's Spanish telenova there's always a little bit of drama and intrigue so that's what I cover in mind in my space Biri wants to put in our podcast if you want to talk to me, bring the tea stuff isn't which I thought was great I think it's very interesting that we are all here from a retail media perspective. There's obviously the specter of AI that hangs over everything.

7:25But I also noticed that, Andrew and Sarah, in your talks while you cover AI, you really spoke much more about organizational readiness and how we are in an industry that is in the process of maturing. We need people from different ad sales teams from different retail media companies, and they're all at a different stage of growth, but no one is done. No one's mature. And so you talked a lot about the need to close these major gaps. And Kira, you've also talked about internal demons at RMNs and that they're working in the background. So I thought we would start by doing something, by talking about that.

8:09I think that that is kind of the state of the art right now is what's happening in the organization. So Kiri, I'm going to start with you. We've done a series recently on the demons that are happening, that are lurking around in retail media networks. And I thought we could take a moment and expand on that for that. I mean, this underscores what Sarah talked about in her session, which is, you know, we have the threat of AI and the economy and tariffs and these external threats. But what about the things inside of a retail media network that are holding us back. So the organizational alignment, where does it sit?

8:46Who does it report to? I really think that where retail media sits in an organization dictates what it can be. You want to be brand focused and brand aligned and win that brand budget. Where are you reporting to in the organization because that actually dictates how much we're focused on performance, how much we're focused on next year's growth, how much we're focused on merchant alignment if it reports into the merchant. So question of organizational alignment, who funds it? Where do the profits go? There's different models for where do the profits go. In the instance of club retailers, it goes back into the member experience.

9:25In other retailers, it might go back to the, you know, directly to the bottom line. And who builds the technology internally as well? So within some retailers, because retail media is a profit center and it's technologically forward and there's so much demands on it being a forward-looking part of the company, they're funding a lot of infrastructure that the rest of the company is using around CRMs and data portability, data privacy, and things like that. So retail media is being asked to do so many different things, not just produce revenue for the organization. And that makes it tricky to look at the whole industry across this very diverse cohort that we have because they're built different beliefs.

10:09It's funny because when a few years ago, the story was about brands not being aligned for retail media, that like retail media was trade and the trade folks of all of the relationships with retailers and how that has had to shift. And now it's sort of coming back to the RMNs and having to shift kind of mid cycle. And Sarah, you said in yours equally, organizational readiness is emerging as the biggest challenge. And, you know, all of your slides were pretty jarring on that front. You have this bubble chart with Walmart and Amazon. It's gigantic. But I think it's worthwhile, especially for everybody here, to focus on that ball that you had that was the 60-plus others.

10:51Because I'm sure that there's a lot of best practice and a lot of bad ideas coming from those 60-plus. And I wonder if you have spent any time really unpacking those, or you can talk about what those kinds of things are. If you're not the biggest one in the room. Yeah, and I think it is necessary to sort of make the point in terms of the way growth is unfolding across the retail media landscape to group that long tail together. But at the same time, I acknowledge it's unfair to categorize them as a monolith because they're made up of a very diverse sort of array of players. And you have a lot of best practices emerging, I think.

11:23What's really fascinating is a lot of the retailers that fall into that long tail are the ones who aren't going to hit really scaled, massive growth by using the first version of the retail media playbook, right? I agree with Andrew, and I said so in my presentation, that there is a reason to keep optimizing your on-site experience and keep filling that demand and making sure that you're balancing advertising with user experience. And there's a reason to chase after that margin-rich revenue that's going to offset the bottom line for your e-commerce business. But a lot of the retailers that occupy that bubble of the long tail are the ones who are going to have to figure out how to activate their physical stores, how to activate their off-site data to sort of better reflect the size and scope of their consumer data assets.

12:05And I think we're seeing some really exciting areas of innovation from a really diverse set of players. Like the things that come to mind are players like Best Buy who have this deep category expertise in a category that is higher consideration, right? And the way that they're turning their stores into media platforms where brands can tell stories is a great example of something that's the right fit for a retailer like them. You've got Dollar General, which has more than 20 ,000 stores, which is insane from a store footprint perspective. And you've got them leaning into in-store audio, right, which makes a lot of sense given the size and the small format of their stores.

12:42And you've got players like Albertson who are sort of on this dual path to add a lot of transparency to measurement methodology in an effort to further the entire industry, as well as getting really innovative and playing with episodic creative content that's going to air in their stores that they're doing in partnership with the CPG brand. So a lot of great best practices. I think what's going to be really crucial for the long tail is the comfort of departing from that fixed blueprint for that phase one and thinking through like, what is going to reflect my unique retailer offering and how do I infuse media into that?

13:14So I have this kind of teed up for later, but just because of what you said now, it feels like as retail media matures, the relationship between the retailer and the brand has to mature as well and has to thrive. You can't just say we're going to put a moving video in the store. You have to think about what the campaign is and the relationship of the retailer and the brand to the campaign. And even think about the growth of the category. So are you guys seeing good examples of that growth happening? I would say that one of the mistakes retail media made early on is by not acknowledging that it was an industry that exists only because of the strength of the retail assets under it.

13:58When I first started covering the space, I didn't see a lot of folks on the media side of the business striving to understand how does the retailer work with our brands today? What do those relationships look like? What do those goals look like? How do our merchant category teams view and define success? And we got away with it for a little while when we were just setting up shop on retailer.com. You can do a lot with a little. right? But when you're looking to move into physical stores, when you're looking to scale, when you're looking to court more advertisers, you have to start thinking about the way the retail side works.

14:30And I think what's been exciting for me over the past few months is I feel like this has gone from sort of a niche conversation into something that's more mainstream, where there's this broad recognition that media has to fit better into the retail organization in order to better bolster that relationship with brands that already exist. I would say that just like There are silos within retail media, within retailers. There are silos within brands. And there are silos within agencies. And in the brand spend world, a lot of that advertising spend is dictated or managed by agencies. And agencies have the same organizational silos that all of the other players do as well.

15:12I've heard from some brands talking about they have very ambitious ideas for retail media. But when it comes down to the media plan that's being built by the agency, there is a single line and it says retail media. Retail media is just one thing. And it's not as it's being shared. There are different incarnations of retail media, but it's still often thought of as this monolithic line item on a media plan. I thought it was interesting looking at your two decks, Andrew and Sarah, that Andrew, you had this scalability index. I know you guys didn't coordinate that. So the fact that we're both, you're both looking at these kinds of things.

15:54I think what you said is that that index is the potential to scale, not the future, not the expectation to scale. And so I'm wondering if you can talk about that number. Is that a number that retail media companies should be thinking about in the future? Or is it something that you can use to hold on to and to maybe build upon so that you don't fall behind?

16:17Andrew Lipsman: There's a rubric there. So I think it's a way of cross comparing and understanding how you are across these dimensions that determine scalability. And there are some really big ones and it's very easy to gloss over the detail of it. But Dollar General has a 20 ,000 store footprint. Like they obviously rate five on that dimension of physical store footprint, right? Right. You have and that's one of the most important. I have heavily weighted that one because I think it's a big determining in the future. Marketplace. Marketplace where the money at. Like we don't talk about this enough. This is what Amazon was built on.

16:57Andrew Lipsman: This is why Walmart is scaling so much. This is the foundation for a huge long tail of advertisers. And that's why, you know, I look at like a lot of after the first few, you get to a lot of R &Ds that I would say are kind of in their adolescence. And they will do things that amaze you. They are very unique things and they're very cool in many respects. And they need to mature in certain ways. A couple of examples just this past year, though, that I love is you have some already among the stronger retail media networks like Best Buy, Lowe's and Ulta. They all implemented marketplaces. Well, it's like perfect for that.

17:34Andrew Lipsman: Right. And so I think you're already starting to see in public discussion of the earnings that this is starting to fuel some of their growth. We just need to literally look at all the pieces that you can block and tackle on. And some armaments might not have it. If you're a Walgreens or a CVS, guess what? You're probably not going to have an e-commerce business to speak of. And so that might not be something that's going to be a strength that you do have a huge physical store. So you just got to look across all these dimensions. Be realistic about what you have and what you don't have. And look at the gaps and say, what should I be doing better than I'm not today?

18:09Andrew Lipsman: and then focus on that. And that's part of why I push back on AI, because I just think it's a distraction. There's so much stuff sitting right in front of them for the taping that they already have a foundation. Flowing through it that they have a foundation for. And I'm not saying that you take your, you know, you don't look at what's ahead, but I hate seeing jumping to something that hasn't even manifested yet when you've got something like a marketplace business that could, you know, add billions over the next couple of years. So I want to pick up on what you just said, Andrew, and shift to you, Debbie, because you focus so much on the advertising side of AI.

18:50And I think, you know, AI is, as I said earlier, interestingly, like something that we haven't discussed that much today, but it's such a big part of the conversation generally. And you recently wrote something to the effect of, actually, I'm quoting, so it's exactly to the effect of, the industry categories that are investing first. this is about ChatGPT ads, and Strongest are among the ones that are the most vulnerable to the shift in discovery patterns that AI platforms are creating. And you were writing that as a result of noting that retail seems to be one of the largest advertisers to date within ChatGPT.

19:28So what signals do you think all this early ChatGPT advertising is, what are ascending in regard to that experimentation. Yeah, yeah. So a little bit of context around that. So Ian graciously gave me access to some sensor tower data that looked at advertisers' use and impressions on ChatGPT. And one of the findings, so I wrote a piece in my sub-stack a couple of weeks ago, which by the way is now the fourth best performing of all of my pieces in the past six months. So big plug for that. But I think there's a lot of hunger for data about what's happening with ChatGPT. And one of the big findings was that 40%, almost 40 % of ad impressions we saw or our censor towers saw in the first few months were from retailers.

20:14And so that was by far the largest category of advertisers on ChatGPT. And then within that, Best Buy was the top advertiser in that time period. And I think I want to go back to what you said about Best Buy a little bit ago, which is where are the other opportunities that these companies can look to to leverage? When I looked at the data from Sensor Tower a little bit more detail, we can see what the headlines of the ads are and what they're advertising. And so a query that I got after I published was, well, what are these ads for the retailer? Like brand ads? Like was Best Buy advertising Best Buy?

20:53No, I mean, I looked at as many ads as I possibly could and the headlines, but they're all product ads. They were literally all product ads. I did not see a single brand ad for Best Buy. And so I see that as an opportunity because someone pointed out to me in response to my piece on LinkedIn that perhaps this could be spending by the advertiser, in this case Best Buy's advertisers or Best Buy's retail media advertisers, being placed into ChatGPT. I'm not sure if that's really the case, but that does represent an interesting opportunity for companies like Best Buy to partner with these organizations to have a new place that you could consider off-site advertising.

21:33And I find that really, really fascinating. Yes. Retail media is expanding. Frenemies, clearly. I mean, I think that there's a lot of that just to kind of piggyback on the retail relationship here. There's a lot of, you know, we want to partner with these platforms, but yet we want to hold them at arm's length because the value of our data, our first party data is so powerful. Do we want to share that with these platforms? Even Amazon has started advertising and tracking BC as of recently, and they've been shot down on every other sort of alignment in the past. I think, Andrew, when we talk about the threat of AI, there is often a discussion around what are we talking about when it comes to agentic?

22:18Because agentic commerce, as we've already heard, can mean everything from better search all the way to a bot going out and buying something for you. So there's a huge spectrum there of how people use AI and what agentic commerce might really mean. And I'm wondering if you can, you know, take apart those nuances a little bit. I know we're running out of time, but I just wonder if you could sort of, as you talk about AI not being a fact, which I know is something that we feel very strongly about, do you see that differently in that continuum of what agentic commerce could be?

22:54Andrew Lipsman: AI will get integrated into everything. And what I think we're talking about when we talk about agentic commerce is not agentic at all. I call it advanced search or AI assisted shopping. We don't need to, I know agentic sounds like a cool term, but like it actually means something, which is autonomous decision-making. And there is this idea that we're going to outsource our shopping to an agent. It's going to do all this stuff for us. And that's why I focus back on the middle of the funnel. That's what humans do. We need to build confidence in a purchase. So we're going to do that. We've done it through a million channels already.

23:32Andrew Lipsman: It's not changing, it's just evolving in the way that it happens. And again, there will be some efficiencies. It's not like AI isn't an evolution, but it's not a revolution. Fair enough. I want to, Kiri, come back to you because kind of on the same point, you've mentioned that search, as it's advanced search, is also dark search. And what dark search is, is a dark spot in the world of commerce. So can you dig in on that a bit more before you run to the next? Yeah, so a lot of the time when we start a theory in an LLM and get referred over to a retailer, which is the majority of how AI assistant search is happening, AI assistant shopping is happening today.

24:17A lot of the time that referral to a retailer is arriving without any referral tags or indication that that came from an AI assistant. And so a lot of the data that we've seen about referrals to retailer websites is likely undercounting that traffic because it looks like direct traffic. And so this is a big challenge because retailers are seeing direct traffic surge and not necessarily recognizing that that is coming from AI. So there's a couple of challenges with this dark search phenomenon. on you could say well you know people watch an ad on tv and look for other that they've seen you don't go around that thing unnecessarily thing is people are making these decisions in an ai assistant without any interaction from the brand or from the retailer and that is what would happen in the past is i hear that and i go and look for more information about it often from a retailer I click around, I look around, and I'm getting information directly from that retailer or from the brand.

25:23But this time, the decisions being made inside of that AI assistant and before that person ever arrives on a retailer.com. So that is the major challenge with dark search that I think is concerning for retail.

25:39Andrew Lipsman: It's not totally dark, though. It might be dark from an analytics perspective, but you're looking at sensor tower data. Right now, based data, you can see what a visit perceives that visit. So it's not truly dark. You can reconcile multiple data sources to get a view, so you're not totally missing. You might not have the granularity of the referral. You don't have that UTM referral, so you know every term. But I think you can at least get a holistic perspective of how much it's linked to. Yes. Just to tell you, I'm a question. You think dark search, and you sort of lose the fact that if you don't yell and look you up, type-diped out was the true result.

26:19Yes.

26:20Andrew Lipsman: So in other words, when type-dip contributes to a place, it serves something for real knowledge that source that it's going to use that. Yeah, exactly. You don't know that it necessarily came from an AI conversation and what was in that, what was part of that conversation, what was happening in that conversation. The other thing that's happening is this LLM referred traffic is going directly to a product detail page 55 % of the time compared to organic traffic that goes directly to a product detail page 20 % of the time. And that data is from Shopify this year. So the behavior, once someone lands on a retailer front of those sources, it's coming to a different place.

27:00There's not a lot of data to show what they do after that point. But if they're going straight to a product detail page, we don't know if they're going back to the homepage, seeing all the ads on the homepage, doing a keyword search, you're seeing the search results have come up for an eagle and search so at the very least this is something that retailers seem to be tracking is from those referrals if you can see where it came from then how does that behavior look different from ai referred traffic versus from social from search i think what's interesting is there's more precedence of this than it feels like maybe there is right because retailers have been grappling with imprecise purchase journeys uh for a really long time, right?

27:42We do a massive path to purchase study every year. In Mark, we know how important word of mouth from friends and family are for both product discovery and also making a decision. Like talk about something where there are no signals to understand what shapes that. We also know how important the physical store is for discovering or considering products, even when the purchase ends up happening on an e-commerce website. And we also know that lower funnel entry points is something that has been skyrocketing ever since you've been able to swipe up on social media, right? And so I just want to give retailers a little bit more credit for adapting to some of these signals in the really fragmented ways that consumers discover and consider their products.

28:18And sort of point out that I think retailers sort of as first movers in terms of advertising in these environments, for me, sort of supports that, right? Retailers are used to customers evolving and changing the way they make a decision to make a purchase, right? And they're used to saying, how do we show up in this environment? How do we make sure we're top of mind? the hour has grown late. Thank you all for being part of this. I hope you learned something. We're going to hand off to our next session. Thank you, Ian.

28:53To our listeners and the nearly 47 ,000 followers on LinkedIn, thank you for doing what you do every day. Whether you're building brands, driving retail partnerships, deploying technology, or shaping the future of commerce. You are the industry we cover, and this podcast exists because of you. Today's conversation sparked something for you, a new idea, maybe a fresh perspective, or just a reminder of what this industry is worth showing up for every day. Share it. Tag us. Tell a colleague. The more voices we bring into this community, the sharper all of us get. Until next time, keep pushing the conversation forward.

29:28I'm PVSB. On On behalf of my co-host, Papa Entourage, this has been the CPG Guys podcast.

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