Marketecture Podcast: Episode 103 Summary

Title: Marketecture: Get Smart. Fast.
Host/Authors: Ari Paparo and Eric Franchi, Marketecture Media, Inc.
Guest: Andrew Lipsman, Independent Analyst
Release Date: December 20, 2024
Episode Focus: Retail Media Trends, Walmart Strategies, TV Advertising Innovations, and More

1. Introduction to Andrew Lipsman

Ari Paparo and Eric Franchi welcome Andrew Lipsman, an independent analyst with extensive experience in digital media, advertising, and commerce, formerly associated with eMarketer, comScore, and MPD. Andrew currently runs a Substack focused exclusively on retail media, offering deep insights into the evolving landscape of commerce and advertising.

Notable Quote:
Ari Paparo [03:08]: "I described you as sort of an expert analyst on retail media, commerce media. Is that fair about what you've been working on?"

Andrew Lipsman [03:16]: "I think that's fair. I've been in all forms of digital media, advertising and commerce for quite some time, but those things intersected pretty nicely in retail media."

2. The Current State of Retail Media

Andrew outlines a robust growth trajectory for retail media, highlighting a 20% year-over-year increase predominantly driven by Amazon (75% market share) and Walmart (10%). He notes that while Amazon continues to solidify its dominance with consistent growth, Walmart has outpaced expectations with a near 30% growth rate.

Notable Quote:
Andrew Lipsman [03:51]: "The state of retail media overall is really strong. It continues to grow 20%, give or take, year over year... Amazon is just more penetrated, more saturated than other platforms."

3. Amazon vs. Walmart: Market Share and Growth

Andrew emphasizes the disproportionate market share of Amazon in retail media compared to its presence in overall e-commerce (40%). He credits Amazon's decade-long head start and relentless investment in proving return on ad spend as key factors behind its leading position.

Notable Quote:
Andrew Lipsman [04:32]: "Amazon, 75% in retail media, but about 40% in e-commerce."

4. Opportunities and Challenges for Smaller Retailers

Discussing the "long tail" of retail media, Andrew explains that smaller and regional retailers can monetize their inventory but should avoid becoming walled gardens. Instead, aggregation platforms like Instacart can provide the necessary scaffolding for these retailers to effectively participate in retail media without bearing the full burden of infrastructure.

Notable Quote:
Andrew Lipsman [06:04]: "Most C stores should probably get aggregated and you can do buys across all of that media. It should be a nice little additional incremental revenue stream at a nice margin."

5. Aggregation Solutions for Retail Media Networks (RMNs)

Andrew highlights the emergence of ecosystem RMNs that aggregate inventory from various small retailers, facilitating easier media buys for brands. He mentions companies like Critio, which focus on aggregating demand and optimizing inventory across multiple retail fronts.

Notable Quote:
Andrew Lipsman [07:19]: "There are actually surprisingly more walled garden opportunities than you might think. That begins with all the big players in grocery... you have to be up to at least 20 and maybe 30 viable players in this game."

6. Walmart's Strategic Move: The Vizio Deal and Performance TV

A significant portion of the discussion centers on Walmart's acquisition of Vizio, which Andrew deems a "game changer." By integrating Vizio's CTV capabilities, Walmart aims to emulate Amazon's retail media flywheel, combining media ads with commerce to create a closed-loop system that could revolutionize TV advertising into a performance-driven medium.

Notable Quote:
Andrew Lipsman [09:47]: "They have to do it through partnership or acquire inventory. So Vizio was a way to buy its way into CTV... we're entering the era of performance TV."

7. Attribution and Branding in Television Advertising

The conversation delves into the balance between performance metrics and branding in TV advertising. Andrew expresses concern that a focus solely on performance could undermine the branding benefits traditionally associated with TV, emphasizing the need for a holistic approach.

Notable Quote:
Andrew Lipsman [10:43]: "I worry that once we put the performance blinders on, we lose sight of the branding effects."

8. Retail Media Integration with Social Platforms

Andrew discusses the convergence of retail media with social media platforms, noting that the combination of robust first-party purchase data and the vast reach of social platforms leads to highly effective targeted advertising. Partnerships between RMNs and social media giants are becoming increasingly valuable.

Notable Quote:
Andrew Lipsman [16:30]: "We're entering into an era where we'll start to be able to attribute a lot of that [retail sales]. So I just think about the types of businesses that will be created out of that and it's... pretty considerable."

9. In-Store Media Opportunities and Challenges

The potential for in-store media advertising is vast, with retailers like Walmart seeing millions of monthly visitors. However, Andrew notes that the U.S. is lagging behind regions like Asia and Europe, where in-store media is more mature. He emphasizes the need for infrastructure and measurement tools to unlock this market.

Notable Quote:
Andrew Lipsman [19:00]: "We need measurement and all the things that support new ad markets. But these are scaled audiences, they're huge."

10. Addressing Fraud in Advertising Diligence

The episode shifts focus to the critical issue of fraud within the advertising sector, referencing the Ozy Media scandal. Andrew advises investors to conduct thorough due diligence, emphasizing the importance of verifying metrics and seeking direct confirmations from credible sources to avoid falling victim to fraudulent schemes.

Notable Quote:
Andrew Lipsman [32:08]: "Every time you see something where the numbers don't seem to match the reality in front of your face, just start asking questions."

11. Applovin's Expansion and Controversies

A significant discussion point is Applovin's aggressive expansion into e-commerce advertising and the strategic debates surrounding potential acquisitions, such as Snap. The hosts explore theories about Applovin's success, including data aggregation and attribution strategies, while Andrew cautions against investing in opaque systems without transparency.

Notable Quote:
Andrew Lipsman [39:18]: "Why you can't see where the ads actually run... you have to know what site and if they're hiding it from you, there's a reason they're hiding it."

12. Innovations in Retail Media Technology

Andrew praises companies like Maloco for their innovative approaches to retail media, utilizing machine learning to optimize on-site advertising inventory. He underscores the value of outsourcing technical capabilities for RMNs to focus on leveraging existing data effectively.

Notable Quote:
Andrew Lipsman [41:32]: "There's so much unoptimized inventory... that's the easy money for most RMNs and they're not getting it today."

Conclusion and Future Outlook

Ari and Eric wrap up the conversation by acknowledging the transformative trends in retail media, from performance-driven TV advertising to the integration of in-store and social media platforms. They express optimism about the evolving landscape and the critical role of data and technology in shaping the future of advertising.

Notable Quote:
Ari Paparo [43:25]: "This is a great show. Thank you so much, Andrew, for being here."

Key Takeaways

• Dominance of Amazon and Walmart: Amazon leads retail media with 75% market share, followed by Walmart at 10%, both exhibiting strong growth rates.

• Opportunities for Small Retailers: Aggregation platforms are essential for enabling smaller retailers to effectively participate in retail media without extensive infrastructure.

• Performance TV: Walmart's acquisition of Vizio signals a shift towards performance-oriented TV advertising, leveraging data-driven attribution.

• Integration with Social Media: The synergy between retail media and social platforms enhances targeted advertising effectiveness through robust first-party data.

• In-Store Media Potential: Despite existing challenges, in-store media represents a significant growth area, particularly with the right infrastructure and measurement tools.

• Fraud Vigilance: Rigorous due diligence is imperative to prevent investment in fraudulent advertising ventures, as highlighted by recent industry scandals.

• Applovin's Strategic Moves: While Applovin shows promising growth in e-commerce advertising, transparency and ethical practices remain critical concerns for investors.

This episode of the Marketecture Podcast provides a comprehensive exploration of the current and future trends in retail media, emphasizing the critical interplay between big players like Amazon and Walmart, emerging opportunities for smaller retailers through aggregation, and the evolving dynamics of advertising in both digital and physical storefronts. Andrew Lipsman's expert insights offer valuable guidance for industry professionals navigating this complex landscape.