Kroger Precision Marketing (KPM), the retail media unit of grocery giant Kroger, today (June 28) announced that it has been in-housing its services in a bid to wrest greater control over the business, including through the development of a recent promoting platform.
While other retail media networks have steered toward in-housing in recent months, KPM stands as one among the most mature offerings in the category and believes its relative level of technological sophistication and scale could make its in-housing decision an impactful one for an industry grappling with sharper growing pains.
“We have a high degree of confidence and excitement around this platform signaling the next stage of retail media maturity,” Cara Pratt, senior vice chairman of KPM, told Marketing Dive in an interview. “We look forward to being one among the leaders that influences change in the industry holistically.”
KPM also hopes it might deliver higher promoting experiences to consumers as marketers gain access to more self-service tools for targeting, optimizing and iterating on campaigns powered by the grocer’s troves of first-party shopper data, which largely stem from its loyalty card program. The platform at launch includes search-based insights and custom ad groups; creative design offerings and the ability to save multiple creative templates by brand and product; management options for campaign budgets, messaging and flighting; and the ability to construct reports and improve performance against deterministic retail data points like sales lift, household penetration and unit lift.
“We know we’d like to remove friction from the retail media buying process,” Pratt said in a press statement attached to the announcement. “Building a recent foundation of integrated technology empowers brands and agencies to maximize retail media’s potential. Together, we’ll deliver a more convenient, personalized, and inspirational shopping experience.”
KPM is initially focusing its in-housing efforts on existing on-site display and sponsored product listing formats but will eventually expand the purview to encompass its entire portfolio. The display and product listing capabilities will likely be available to select partners in the coming months before going wide across KPM’s marketplace in the fall, with a push into areas like offsite and programmatic self-service inventory expected to happen later. KPM two years ago introduced its own private programmatic marketplace.
While the in-housing news marks a milestone in KPM’s strategy, the unit remains to be counting on relationships with partners like demand-side platforms, publishers and data and analytics firms. Advertisers working with third-party vendors Pacvue, Skai and Commerce IQ can proceed to manage their inventory through those corporations, while KPM said it could detail further integrations down the line.
“We fundamentally consider that nobody retailer, brand or platform goes to set the stage and own the consumer-first future for promoting,” said Pratt. “It’s going to take very disciplined and deliberate connections to drive the right level of interoperability.”
Raising all ships
KPM, which launched in 2017 out of Kroger’s 84.51° data-science team, has been developing its in-house platform for about 18 months and added 100 net-new roles in the past yr to support the initiative, according to Pratt. Headcount growth stands in contrast to other digital platforms and publishers which have enacted mass layoffs due to an anemic ad market. Hiring has touched on areas including engineering, data science, media buying, operations, customer support and product development. KPM will not be more actively pursuing acquisitions consequently of the in-housing, Pratt said, but at all times considers a buy, construct or partner approach to technology investments.
KPM clearly wants to position itself as a model for other retail media networks, but that doesn’t necessarily entail encouraging in-housing, a typically costly and time-intensive process. The broader goal is to push retailers to not pursue the lowest-common-denominator applications of their data and to as an alternative prioritize value and consistency, according to Pratt. Those mandates could help set retail media networks aside from traditional programmatic media, which studies indicate stays rife with wasted spending and fraud.
“There’s a possibility for other players to lean into this variation with an elevated mindset on the business impact that they’ll bring,” said Pratt. “As a player, and a formidable player, on this space, we firmly consider we have to raise the boats for people.”
KPM’s in-housing arrives at a transitional moment for the category. Retail media is an undeniable magnet for ad spending whilst the remainder of the digital market contends with a downturn. The channel is forecast to be the third fastest-growing this yr behind connected TV and out-of-home, representing 14.4% of world ad revenues, according to GroupM.
But some advertisers have began to view retail media buys as less of a profit and more of a tax imposed as a part of doing business with stores that control other key business levers like shelf placement. A widely discussed January report from the Association of National Advertisers, a trade organization representing brand marketers, characterised many retail media buyers as “reluctant.”
Other retail media networks have tried to address the patchwork state of their business. At the Cannes Lions International Festival of Creativity earlier this month, Albertsons proposed an industry-wide standardization framework for retail media. The guidelines draw on existing recommendations from trade groups like the Interactive Advertising Bureau.
Albertsons is in the strategy of merging with Kroger, which might further shore up the latter’s dominance in the space. For now, each are individually beating the drum of industry unity to preserve retail media’s momentum.
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