Retail Media: Build vs Buy

Retail media platforms are growing rapidly – with 38% year-over-year growth in 2020 – and will dominate future ad spend. Brands like Walmart, Amazon, and Instacart see billions from their custom, in-house retail media ad platforms. As other retailers look to do the same, they're asking themselves: “Should I own the platform or outsource it to a retail media ad network?”

Building from scratch is complex, and few companies have Amazon’s time, money, and resources to launch a flexible, full-featured ad platform.

The alternative isn’t ideal: while retail media ad networks provide instant access to tech and advertisers, they come with limited customization and ad tech middleman fees.

Or, unfortunately, retail brands often avoid ad monetization altogether, a boon to competitors who have their own.

In this article, we discuss the pros and cons of owning versus outsourcing your retail media platform, and we highlight why owning your retail media platform is the best way to scale your business.

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What is retail media?

‍Retail media means monetizing your digital space, whether online or in-store, by allowing your partners to promote their products throughout the user’s browsing experience. Ideally, your retail media platform has the flexibility to reach users in-app, online, and in-store, with personalization based on customer data.

Retail media is dominated by the eCommerce giants: Amazon takes 75.7% of current eCommerce ad spend, with Walmart second earning 4.9%. But smaller brands like SlickDeals and Chairish have built profitable retail media platforms too. What matters isn’t your size, but rather your desire to invest in an additional revenue stream.

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Why outsourcing to a retail media network is not a long-term solution

None of the aforementioned companies use retail media networks, but many retailers do, as these out-of-the-box solutions provide sponsored listings tech, turnkey access to advertiser demand, and a known self-serve platform.

This seems appealing, but is not a long-term solution for retailers who want to maximize their ad revenue, as:

1. You forfeit direct relationships: Retail ad networks force you to use their demand, and you can’t sell directly to your current partners and manufacturers.
2. One size does not fit all: Networks succeed thanks to streamlined ad units, targeting, and pricing. If you’re looking for something more — like auction pricing, complex targeting rules, more native advertising units, and so on — then you will likely get frustrated by the lack of customization.
3. You can’t incorporate your customer data for ad premiums: Your user data is one of your biggest assets, so why not monetize it? Retail networks, unfortunately, do not provide the ability to target using this data at scale.

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You own your in-store shopper marketing, why not online too?

Retailers practiced shopper marketing for years, maintaining total control of how product placements appeared in store. It’s important to bring this control to your digital ad platform too, which you can only accomplish through building the ad platform yourself on your terms. The benefits of this approach include:

1. Privacy: You can monetize your valuable first-party data without sharing it with anyone else. Plus, as you aren’t using a third-party ad network, you don’t have to worry about data-leaking JavaScript tags or hidden cookies on your site.
2. Customization: Build what you want, by your rules. Designing the platform yourself means you get a custom-built solution. Expand to new ad units not offered by an ad network; price how you want; and offer your own self-serve ad portal. No out-of-box solution will match the flexibility of an in-house build.
3. More profit: Networks charge hefty fees, taking a portion of your ad revenue. Why share revenue when you could keep 100% of the profits?
4. Maintain partner relationships: Without controlling which advertisers buy your inventory, you risk damage to your brand if the ad contradicts your company values. When you own advertiser relationships, you ensure ads are congruent with your brand.

As 60% of ad spending is going digital by 2023, clearly, advertisers are ready to migrate to retail media. But they want to work with you directly. They want you to target their ads better with first-party data. They want their ads to be customized and user friendly with your site. They want direct relationships– and they’re willing to pay for it.

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How do you build a retail media program?

Top retail media platforms are effectively walled gardens: ad platforms in which publishers handle all the buying, serving, tracking, and reporting. They maintain total control over their eCommerce ad platform, enabling full customization and scalability.

Many large retailers opt to build their walled gardens completely from scratch, although this won’t work for everyone. Building from scratch is costly, and you could spend hundreds of thousands of dollars on server fees, engineering salaries, and maintenance costs.

Additionally, building a full-featured retail media platform takes years. Every day you don’t launch is a day of lost revenue.

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Fortunately, you can own your ad platform without building it entirely from scratch

Retail media isn’t a build vs buy decision. There is, in fact, a third option: build it faster with Kevel’s ad APIs. With Kevel, you get the tools to build your own retail media platform in just weeks, saving you potentially millions in costs and years in build time.

With retail media expected to be a 50 billion dollar industry by 2026, the time to launch yours is now. Contact us today to get started.