This story was originally published in the 2022 Summer issue of strategy magazine.

By Mike Connell

Retail media in Canada is still in its infancy. It’s growing and evolving, but from a true “network” perspective, there isn’t really a scalable marketing or advertising full-funnel platform that brands can truly rely on. Yet.

The “one platform we all buy on at scale is Amazon because they’re ahead of the curve in terms of their technology,” says Gautham Pingali, head of performance at Mindshare Toronto. Meaning, for the most part, advertisers can easily access inventory programmatically. Other than Amazon, most advertisers in Canada “buy direct with the big, extremely critical partners like Walmart and Loblaw” – for now.

Retail media is being heralded as a $100 billion opportunity, “depending on who you want to believe,” says Judy Davey, VP of media policy and marketing capabilities at the Association of Canadian Advertisers (ACA). And Amazon, unsurprisingly, has a big chunk of that. According to its Q4 earnings report, the online retailer sold $31.1 billion in ads on its platform in 2021.

“It’s very shiny,” says Davey of retail media’s promises. And there is considerable pressure on retailers to jump in – which is good, but “while the opportunities and ambition [to start a retail media network] to improve the customer experience, consumer loyalty and sales is very alluring,” says Davey, it’s not always as simple as it sounds. “Execution is important and there are a number of questions that need to be answered.”

Looking at retail media in stages, the first was about “monetizing eyeballs,” says Mark Williamson, SVP, client strategy and development for CitrusAd, an Australian-based ecommerce ad-serving platform that connects brands to retailers. In Canada, CitrusAd – which was purchased by Publicis in July 2021 – powersthe likes of The Bay, Jim Pattison Group and Save-On-Foods. During that first phase, Williamson notes, “neither retailer nor brand really knew what best practices were because they hadn’t been established yet.”

The second phase was driven by “data utilization within a walled garden, with super high walls built to enable exclusivity and premium rate cards,” he says, which gave retailers control, creating an environment where brands have little choice but to pay-to-play.

We are now in the midst of phase three, Williamson says, “which is where a leveling of the playing field is giving brands a stronger voice to demand from retailers the same capabilities, service levels and performance they would expect from other media publishers” and then some.” Phase three requires more retailers providing more options that drive up category sales and engender an environment where everyone wins.

“A retailer needs to think like a typical media publisher,” says Williamson. “They cannot force a media product into an onerous trade-funding mechanism. Instead, they need to pursue transparent, performance-based pricing models that are competitive among other retail media and traditional media alternatives.”

Dana Toering, VP of Walmart Connect Canada believes the future of Retail Media Networks (RMNs) is going to be about personalization and connectivity. “We changed our name to Walmart Connect [from Walmart Media Group] for a reason,” he says. It’s not just about “media,” it’s about connecting media assets with retail experiences, and then further connecting all of that with digital experiences – whether that’s online at home or on a device in-store. Toering references its partnership between Walmart and Stingray, where it can now weave digital audio into the media mix.

He also believes that the potential around RMNs is not just in first-party data, but also in improving reach. “Reach is hard to find, and fragmentation is real. Talk to TV buyers. They don’t get the reach that they used to unless they’re buying around popular live sporting events.” If the Blue Jays get two million people watching one live broadcast, that’s big – however, he says, major retailers get two million people a day shopping online and in-store.

Samantha Kelley, Touché Toronto’s managing director, agrees that the next phase of retail media will not only be about accessing consumer data and understanding purchase patterns, but also about creating a seamless consumer journey from online to in-store, and vice-versa, she says.

That’s a key focus for Loblaw Media, says the retailer’s VP Ian Hewetson. “One part of our future roadmap is to bring more dynamic, connected media into real stores to close the loop for advertisers and create a more immersive experience for the customer,” he says. “The realistic near-term future of retail media is the smart use of technology to accurately stitch together the customer journey from outside the store all the way down the aisle and through checkout.”

While retail media’s potential seems limitless, Jason Dubroy, Mosaic North America’s SVP, commerce and experience, notes that very few Canadian retailers are currently exploring opportunities beyond selling shelf space. As an example of what retailers should explore next, Dubroy references a recent Business Insider article that speaks to how Amazon sells ad placements on digital signage in its physical stores in the U.S., but also builds ad opportunities across the entire consumer experience – including shopping carts, digital smokescreens on refrigerator doors and checkout booths. The key, Dubroy points out, is to close the loop between in-store capabilities and online/programmatic ad inventory.

It isn’t just big box and grocery retailers that are trying to capitalize on retail media opportunities or grapple with privacy loss and forthcoming cookie degradation. Marriot recently launched the Marriot Media Network in partnership with Yahoo – arguably the first-of-its-kind for the hospitality industry – with strong data and engagement opportunities around people who travel. The network will offer ad spots across the hotel chain’s online presence, and eventually TV sets in guest rooms.

However, as more players get involved, more maturity and responsibility will be required. The increasingly high walls of these networks can be daunting, and they’ll have to pivot their thinking, acknowledging and embracing their role as a purveyor of media, as well as that of a retailer selling goods.

On the flipside, Williamson predicts that the walled garden concept won’t fly for much longer. While data needs to be locked down, it will, perhaps counterintuitively, also need to be more transparent. “Increasingly, brands will want to buy their own media versus a retailer doing it. More and more demand is being managed through third-party aggregators and platforms like Pacvue and Skai. Retailers need to be open to receiving demand from a variety of sources.”

Toering agrees that, from a business perspective, the future of retail media is going to be geared towards automation. “It’s about providing media the way clients want to buy it,” he says. “Right now, they’re buying keywords and sponsored search listings on their own. They don’t have to call us,” and the next step is to develop richer content experiences in that vein – which means expanding the planning and purchasing of ads on websites, apps and other media in an automated way.

Similarly, Loblaw Media is in the process of rolling out self-serve, says Hewetson. “Which is very exciting,” he adds, since that would make the retailer’s platform one of the only (as far as he knows) networks “that enables [advertisers] to target an audience and then – in close to real-time – see whether the group of customers bought in-store that day.”

Advertiser education is key, Hewetson says, noting that they have “a very deep strategy team” to help guide brands on closing the consumer journey loop, all while offering self-serve and automated options.

While there are plenty of opportunities, there are also challenges, says Williamson. “In their quest for growth, retailers are launching more and more channels… While this brings new revenue, it also tends to create fragmented, unwieldy and ultimately untenable stacks that cause retailers to hit a ceiling earlier than desired.”

This means retailers need to have “a clear vision of what they want to be when they grow up,” Williamson adds. “This will determine how they build their tech stack and partner ecosystem. They need to put a premium on flexibility and agility so they can pivot whenever needed.”

Social commerce will also play a role in the future of retail media, Dubroy says, but it’s too early to tell how viable it will be. During COVID, and post-pandemic, “we have seen the growth in social commerce both in Canada and the U.S. through different social channels from Facebook and Instagram to Pinterest, Snapchat and TikTok, even Twitter is testing it out.”

Social commerce is ideal for apparel, accessories and consumer electronics, Dubroy says, “as they typically index the highest for total engagement. There is still a long way to go to prove this is a viable channel for retail media, as it’s not beneficial for one SKU to drive to a retailer. The beautiful problem to solve for is how to grow basket size at the retailer to make it mutually beneficial for the vendor to support the investment.”

The integration of retail media and the metaverse is also frequently talked about, although more aspirationally than practically in most cases. “If you’re going from sitting in front of a screen, to putting on a headset and walking down an aisle, there are incredible opportunities,” says Toering. “You can imagine more immersive and high-quality media experiences,” but what that will truly look like and how it will scale is still a big question. Google “Walmart metaverse shopping,” says Toering, and you will see the potential being discussed. But that’s all it is – discussions.

Loblaw’s Hewetson agrees. “Before we think about diving headfirst into a virtual world, we should focus on the tangible benefits of retail media. The technical overhead of stocking virtual shelves with 3D products would probably outweigh any benefits to the customer at this point; it all feels a bit gimmicky,” he says.

“Until meta commerce is mass adopted as a significant volume channel, it will have a very small role to play outside of gaming and community spaces for now,” adds Dubroy. “The real opportunities right now are augmented retail storefronts that allow for commerce to take place that virtually mimics the physical experience.”

All told, retail media has an interesting future, with varied implications for advertisers, retailers and consumers alike. It will involve more personalization while protecting personally identifiable information. To be successful, it will need to be scalable and omnichannel. The media itself will also need to be self-serve. And the ever-growing revenue opportunities will keep the door open for new players – with some brands, like Nike for example, refusing to sell on networks like Amazon and going direct-to-consumer.

“Nike knows its customers. They know their purchasing behaviour. They know how to upsell and use that data,” says Alex Panousis, global executive client leadership and solutions lead at Valtech. “That’s not what a brand is going to get when they jump in with Walmart,” so in order to legitimize and solidify the value of a retail media network, Panousis says the future is about building the relationship between advertiser and retailer.

Canadian retailers have a real opportunity through retail media networks, says Dubroy, “but they must adapt to the needs of the brands, follow the success of the U.S. and global innovation in the space, and invest in models that fish where the fish are.”

He adds that Canadian RMNs should continue to showcase their value propositions, not just why to use them, but how to spend efficiently within the platforms themselves. “This will help RMNs to rationalize that they are the best place for brands to spend their dollars and justify the premium cost over traditional media, which is a discussion still had in many client boardrooms.”

“Retail media has to be part of a brand’s omnichannel strategy,” Panousis says. “But as the industry becomes more mature, we’re looking more at advertising effectiveness and better customer experiences – where the retailer and the brand are increasingly co-conspirators or partners in that media relationship.”