Cannes Confessionals #2: Retailers Should Tap Brand Budgets & Small Sellers

Yesterday I shared some highlights from the early hours of the Cannes Festival of Creativity. The announcements are starting to come in hot, but I'll be sharing

But first a quick comment on the Retail Media Celebrity Death Match hosted last night by Zitcha, QSIC and Grace & Co. According to ADWEEK, I won the debate against fellow industry commentators Colin Lewis and Andrew Lipsman, due to my nasty insults and personal attacks!

But the real winner is hopefully a shakeup to the polite panels that are a mainstay of events like this. We all vigorously argued things that we may or may not believe about retail media (retail media has 'peaked' for example). Debates are a great exercise since it gives one an opportunity to hear and understand the perspective of stakeholders who have different perspectives and beliefs. I'd love to see this format be more widely adopted. It was fun and engaging, and very well attended.

Let's dive in to two other themes from today.

Retailers need a plan to get brand budgets

At the Mirakl cabana, Daniel Gospinov from BCG presented research on the opportunities and challenges in retail media from a retailers' perspective: 'Six Questions for Scaling Retail Media Outside the US'. Some key takeaways:

1. Brands invest 20%, on average, of their advertising budgets in retail media, and virtually all plan to continue growing this share.
2. The top cited reason for retailers to invest in retail media was to tap into net-new funds from brands – especially brand marketing dollars. This addresses the argument that retail media is 'just re-allocated from trade media or shopper marketing.' Retailers know that to be successful, they can't just be robbing Peter to pay Paul.
3. My highlight from BCG's proposed solutions to cure retailers' media ailments is to structure retail media sales teams such that there's a dedicated team that deals with brand marketing. This is a simple but clever idea. One criticism I've heard of RMNs is that few have any media sales background. The art of selling performance media is one thing, but brand marketing is a whole different kettle of fish. I do wonder how many RMNs are willing to make this large human capital investment though (and actually have the brand marketing capabilities to back it up)

Smaller advertisers: outsized opportunity

Nikhil Lai from Forrester then revealed his research sponsored by Mirakl, called Are you sitting on a retail media goldmine.

This research concludes that a substantial growth opportunity for retailers comes from tapping into the longer tail of advertisers, the smaller brands and – you might have guessed it – marketplace sellers.

Some of my highlights:

• The opportunity to capture more ad spend from 3P sellers comes from those sellers re-allocating from current search and performance advertising – whereas 1P vendors are often buying trade and shopper marketing which may be stickier due to the merchant-brand relationship.
• Forrester's survey of 160 RMNs found that 28% of their revenue comes from mid to long tail of advertisers
• Retailers have focused on developing tech and processes that suit the enterprise brands needs – and less thought has gone into tech and processes to attract and retain smaller advertisers. Retailers should consider adding more accessible, automated campaign types like PMAX in order to reach incremental advertisers.

That's it for today – more announcements and confessions coming tomorrow!