What do we mean by fragmentation in Retail Media?

The retail media landscape has exploded in recent years, evolving from a niche ad product into a major disruptor in digital advertising. However, beneath the flashy headlines lies a complex and fragmented marketplace presenting both opportunities and challenges for brands. In this article, we’ll break down the sources of retail media fragmentation and what it means for advertisers.

While Amazon has dominated retail media, retailers from Walmart to Kroger to Carrefour have been aggressively building their ad offerings.

This proliferation means advertisers now have more options than ever to influence shoppers during their on-site journeys. However, it also introduces complexity across products, formats, tech and buying methods. Navigating this fragmented landscape requires savvy strategy and operational efficiency.

Proliferation of Retail Media?networks

The field of retail media players has exploded from a few giants like Amazon and Walmart to a crowded ecosystem of major and minor shopping destinations.

In addition to the two US leaders, top retail media networks include top retailers in most countries. However, the land grab is accelerating as retailers of all types seek high-margin ad revenue streams. Recent entrants span drugstores, big box retailers, department stores, and specialty retail.

For advertisers, more network choice allows greater opportunity to influence shoppers. However, spreading budgets across a growing array of partner retailers also strains resources.

Diverse products and?formats

Each retail media network offers its own suite of ad products and formats. Most provide sponsored search ads akin to Google, pairing product searches with relevant brand promotions. Popular search ad types are sponsored product and sponsored brand.

Display ads also proliferate via banners, custom branded content, and video. Retailers can run these ads on their owned sites and apps or extend their reach through off-site media.

This diversity allows advertisers to hit different shopping mindsets. Search captures transaction-ready shoppers while display builds early awareness. But more products mean added complexity in planning and managing campaigns.

Diversity of Retail Media?tech

On top of the variety of ad products and formats, retail media networks rely on an array of technologies to monetize their audiences. The largest retailers have built proprietary platforms to sell, manage, and measure ads. Others utilize specialized retail media tech partners. Platforms range from fully self-serve to requiring manual campaign management.

For example, Walmart built its own sponsored search and display capabilities but partners with The Trade Desk for off-site media buying. Target leverages network partner CitrusAd for on-site retail media. And Instacart relies on in-house technologies for its ad offerings.

This technology diversity means advertisers face disjointed workflows, data integration, and measurement depending on which retailer ecosystems they engage. Connecting insights and activations between partner technologies remains a key friction point.

Range of buying?options

Retail media networks provide several paths to purchase ad space:

• Directly through a retailer’s sales team
• Via retail media tech partners like CitrusAd and Criteo or Microsoft
• Programmatically (progressively!) through agency trading desks
• Through specialized retail media agencies

Direct buying provides control but eats internal resources. Partners and trading desks simplify workflow but add partnership management. Again, more options mean more operational complexity.

Budget fragmentation

With different internal teams often managing budgets for retail media, additional fragmentation occurs. For example, digital media teams may control off-site budgets while shopper marketing owns on-site spend. Trade marketing teams could also allocate portions of co-op funding to retail media.

When these disparate budget sources compete for the same ad inventory, problems arise. Teams may bid against each other driving up costs rather than coordinating spend. And they apply different measurement models making cross-channel optimization impossible.

Challenges for advertisers

Operational complexity

We already highlighted it, managing many separate campaigns, dashboards, and partner relationships strains even large brand resources. The proliferation of options and differences make retail media buying more disconnected compared to consolidated channels like Google and Facebook.

Budget allocation

With endless networks and product choices, allocating budget efficiently is difficult. Does more go to Walmart or Target? Amazon search or off-site video? Spreading dollars thinly risks diluting impact while over-focusing misses opportunities.

Data and measurement differences

Attributing sales to media and optimizing spend depends on consistent data and measurement. However, attribution window length, reporting metrics, data accessibility, and measurement models vary widely across retail media ecosystems. This friction frustrates optimization efforts and may prevent brands from investing.

Moving forward

Retail Media fragmentation looks set to increase as more retailers build ad businesses and formats multiply. While this expanding ecosystem provides greater influence over shopper journeys, it also introduces complexity.

To navigate effectively, brands should focus on core business objectives, streamline operational requirements, and leverage partners to connect data and buying. Consolidation and convergence will come in some extent, but getting back to retail media fundamentals is the best path forward for now.

?As options proliferate, strategy and efficiency (with the right platform!) become critical guideposts for brands seeking retail media success.