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- [00:00]
A
All depends what these ads actually look like, right? As to whether people will engage with it, if they will still feel like their AI assistant is a trusted collaborator rather than someone just, you know, a sleazy salesperson trying to pitch things to them. I have different criteria as a consumer compared to you. You live in New York, I live in Atlanta. I might be a value based shopper and you might be a premium shopper. Absolutely. Dietary. I mean just look, just look at us.
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B
Look at my shirt.
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A
I'm an optimist. I think that ads in LLMs have the potential to actually be.
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B
This week on Nexty Media I spoke with Kiri Masters, leading expert on retail media and the host of the podcast Retail Media Breakfast Club about, you guessed it, all the recent news surrounding retail media. We talked about ads coming to ChatGPT, Walmart partnering with Gemini. Why she's still a believer in the retail media long tail. On that note, Kiran and I talked about whether we're going to see some consolidation in this space this year and whether she's a believer in shoppable tv. Let's get started. Hi everybody. Welcome to nexting Media. I'm Mike Shields. My guest this week is Kiri Masters. She hosts a daily new, writes a daily newsletter, hosts the podcast Retail Media Breakfast Club, noted retail media, commerce media, an agentic commerce expert. Hey Kiri, thanks for being here.
- [01:21]
A
Hey, great to be here. I love your newsletter and podcast so it's a, it's a thrill for me.
- [01:26]
B
Thank you. Sam. I have come to know your work in recent years and I think we were probably been at the same events and stuff but it's really great to meet you today. So many things to talk about in this world, particularly the last couple of weeks since the beginning of the year. A lot of news in this category. So I wanted to kind of get your take on some of this stuff. Why don't we start with the, I mean the obvious one and this is not necessarily retail mean the only thing but just ads coming to to chat GCP and then the just ads coming to this category of conversational search, let's call it. I think we all knew that was going to happen at some point. I have all these thoughts but what is your initial take on and we haven't seen a lot yet but what do you, what are you thinking about when it comes to this announcement?
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A
Yeah, so I think about, you know, what happens to the existing sort of retail media world that I've been a, a close part of for the last 10 years. What are brands and Advertisers thinking about this and then what's that consumer experience going to be like? So if I think from the brand side and I think about consumer brands, grocery, apparel, electronics, et cetera, the endemic brands primarily what they want to be where the consumer is. They want to be on TikTok, on social, on the web, wherever people are spending time and especially, especially when they are close to a purchase. And that is what retail media has been so strong at is being right where that transaction is happening and using.
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B
That data right below this, you know, on the search box on the retailer site or on their app right there when you're, when you're at the registrar, so to speak.
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A
Exactly. And so if, and this is the question if AI enabled commerce becomes one of these surfaces that people are using for transactions or very close to transaction behavior, then brand, I like to say brands are fair weather friends. They will just, they'll just take whatever but they have that's not working as well somewhere else and they'll move it right over. There is absolutely no loyalty that they have once, once a new game is in town showing better roi. So I would even say we don't need to get to like agentic commerce with agents buying stuff for us. We're already seeing some of that behavior up front. People are doing their research portion of their buying journey in LLMs.
- [03:47]
B
Yep. So I got. I guess the. Here's my. There's no reason to believe this shouldn't be a huge business. I guess I am a little bit skeptical or just wary of us assuming that it will work the same. Like people have compared this to like when Google and Facebook started advertising. Boom, you turn the spigot on and it's automatic. And I know that open a OpenAI and these companies are, they're going to be cautious when they roll these products out.
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A
Right.
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B
But are. Is it. Do you think it's worth questioning whether people will respond to ads the same way and whether you're going to have the same just breadth of advertising in a. In. In experiences that are about sort of like they're, they're different than I want 2020 blue links. I want to have an answer like are we, are we sure this is going to be as powerful as we think?
- [04:37]
A
Great question. And yes the, the proof is going to be in the pudding. It all depends what these ads actually look like. Right. As people will engage with it. If they will still feel like their AI assistant is a trusted collaborator rather than someone just, you know, sleazy salesperson trying to pitch things to them. So I think it will really depend on what that ad unit looks like, how it is served. I personally am very optimistic that we don't necessarily need that won't necessarily look like the sponsored products of the past for a few different reasons. One, with AI, not so much now, but in, in the future I believe we'll, we'll have much more multimodal engaging surfaces to interact with AI, voice, video, things like that, try ons. Right.
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B
We shouldn't be limited or we shouldn't limit our thinking to what we see right now.
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A
Exactly. So I, and I think, you know, for certain types of shopping behavior, having that multimodal ad would be really helpful. Like for example, I would love to be told about a product drop from my favorite clothing brands and have it, you know, shown on my, you know, avatar to show me what it looks like and just have a pop up like hey Kiri, one of your favorite apparel brands have just dropped a new line. So that would actually be cool. Another thing is around context and how much these LLMs know about us. And ads are annoying when they're relevant. Right. A lot of people love the ads on Instagram for example because they are super relevant. I'm like I didn't know that I ever wanted that thing and now I do. And so it can feel additive when it is super relevant. And you think about all of the context that these LLMs have. We're sharing not just our requests for recipe ideas, but we're sharing our hopes, dreams, fears, marital counseling questions.
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B
Literally having therapy sessions.
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A
Yeah, exactly. So I think that there is, I'm an optimist. I think that ads in LLMs have the potential to actually be really cool. And big question is if they sort of take that direction and run with it or you know, try and get some, try and sort of copy what has been done on other platforms.
- [07:06]
B
That's a really interesting point. I hadn't thought of it that way but because it is, there is a trust, there is a unique level of trust. I mean again, it's really early in our journey here but like people are really personal and they, you know, they sort of buy into their these products talking to them in a way that where traditional search you could be and it took a little while before Google became like nakedly commercial. But then I don't think people had that expectation that it wouldn't be where they'll have to be careful how hard or how fast they go where they can mess with that.
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A
Also, I mean this is it. It's a utility for most people, most people are not paying for chatgpt even $20 a month.
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B
Right.
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A
And I think that there is an expectation or an understanding for most people that if something is free, you are the product. So I don't know if I think that people have been primed for that in, in some way. So I don't think that these ads have to suck necessarily. But we see, Yep, okay.
- [08:10]
B
That other big st. There's lots of big news. But even for a couple weeks ago you had the Walmart and Google announcement which was interesting for a number of reasons I guess are getting back to the, the bigger. I guess the big question is you think people are ready to shop whether it's through advertising or not or, or, or do you think people are ready to shop, I should say in, through, through these interfaces, are they still going to be inclined. It's not that hard to shop online right now. So it's, you know, it is a behavioral shift for people to make this, to jump, to take this leap.
- [08:43]
A
I agree. I think that probably very little shopping is happening through LLMs right now. I think that that will change over time because of constant and continual exposure to these LLMs. They have become an essential part of our daily lives. Many people, when you look at the data on not just usage across the entire population, but like how, how many times people are using an LLM per week, it's just kind of going up. So we're relying on this more and more and these little features just get subtly sort of pushed out and we engage with them like ChatGPT Health. Hey, do you want to try this and have a doctor in your pocket? Hmm. Yes I do. And so I think because of the frequency that we're engaging with this technology, we will become accustomed to trust it more and to start using it for little things. I want to tell you a little story. I was just thinking about this yesterday Mike, about the first thing I bought online, which was this really clunky, chunky version of an iPod in 1999 and.
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B
I bought it on ebay pre like it was, it didn't hold a thousand songs, one of those like 30 minutes of music kind of things.
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A
It was, it was actually like this really chunky one with a screen and I thought it was awesome because I could put movies on it.
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B
Nice.
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A
I bought it on ebay from my dial up Internet connection at home when I was 13 and hit by now I'm like this is awesome. I'm going to get this thing. Three weeks later I go to the post office And I hand over $100 in cash to pay cash on delivery because we didn't put our credit cards online back then. And. But after that first experience was like, you know what? I think I can trust ebay. That was pretty good. The next time I shop on ebay for whatever it was, I did pay with a debit card. And because the trust starts to build over time.
- [10:47]
B
True things that seem crazy initially become pretty normal the more you do them.
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A
Yeah. So I think that we're, we're still in this infrastructure stage. To be honest. There is. I just try, I was just trying to do my grocery shopping last night on ChatGPT with Instacart. It was okay, it was an okay experience. There wasn't anything really about it that was better than going to Instacart's app. If anything, it was a little bit more tedious.
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B
Okay.
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A
But I think we are, this is, we're so early days with this and, and the infrastructure is just being built. I still think that we have room to move in terms of trust from consumers as they start to use these tools more and more and as the technology itself gets better.
- [11:35]
B
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- [13:14]
A
It's a really good question. What I have heard from the retailers at NRF a couple of weeks ago is that they, a line that they are not prepared to cross is giving up being the merchant of record with identic commerce. So they're interested in it being a new surface that shoppers use to engage with their assortment or even, even have an agent sort of hand off part of that transaction or hand it off to their agent. You know, there's lots of different iterations. But what, what they all, all said about the limitations is they want to be the merchant of record. They want to handle the returns, handle the customer service, handle the warranties. They need to be. Otherwise what is the, what is the value?
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B
What are they? Right, you want to have, you want to have that direct relationship, the data that your, your brand president. They don't want to give all that up.
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A
Yeah, and I can totally see that. I also can't imagine why Google would want to get into that business themselves.
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B
Yeah, I mean, you think about what Amazon has built over that period of time. There's still logistics and warehousing alone is just so massive. You're right. That is not something that you just turn on. What about, you know, this is early, it's an experimentation. Presumably if this goes well, every other retailer is going to be calling OpenAI and everybody else about making integrations. Do you think that, is that going to be tricky? Like if, if these interfaces have to be, have to cater to 10 different retailers, 20 different retailers, but still maintain their objectivity, you know, like how, and, and they're, and they've been adamant about. We don't, we want to make sure that our results are, are still, you know, pure, not driven by advertising. Is it going to be true to.
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A
Get all, everybody, make everybody happy there, making everyone happy? I think, you know, you have to bring the consumer into that economically. When you think about making everyone happy. Well, you can't just make the retailers happy. You have to think about what the, what the consumer is, is Right.
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B
They don't always want the answer to be Walmart when they're shopping or something necessarily.
- [15:26]
A
Yeah, exactly, exactly. Because I have different criteria as a consumer compared to you. You live in New York, I live in Atlanta. I might be a value based shopper. You might be a premium shopper. Absolutely. Dietary. I mean, just, just look at us.
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B
Look at my shirt.
- [15:43]
A
Yeah. Dietary preferences, whatever it is. So we don't all make decisions based on prices. Right, right. So I think that there, there are creative ways to look at this. Back in 1916, when how we used to shop was going to a grocery store and a clerk behind a counter would go and fetch the items for us, that was very costly. And it also ran on a credit system so you'd pay your household's credit account at the end of the month. Piggly Wiggly was the first retailer that actually brought up that self service model with aisles and you go pick the items yourself. Wow.
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B
Did not know that. I like this history lesson.
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A
Yeah, this is, this is a great story. And so how did they get people to change their behavior to be. They had to do the work. Now these shoppers, well, they passed on this dramatic cost reduction in operating expenses onto customers. And so now you felt really savvy and clever going to Piggly Wiggly and picking out your own items because you saved a bunch of money. So I think if you want consumer behavior, if you want consumers to get on board with something, you might need to cut them in on that with some rewards, with something's got to be.
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B
In it for them.
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A
Something's got to be in it for them. So that's going to change consumer behavior. And then if the, you know, amongst the retailers we, again, we, we have this calculus that we do today as shoppers about what types of retailers we want to engage with and what kind of experience we want to have. And it can come down to assortment. It can come down to, I want to pick something up on my way to soccer practice today. I don't want to wait for a delivery. There's so many different sort of ways to engage for retailers that, you know, this, this is not a race to the bottom, I think.
- [17:39]
B
Right. I want to step back a little bit. We were, you know, we're getting deep into, into these recent bits of news. Overall, you know, you know, these are, we're talking about experimental frontiers. But overall the retail media space, even though it's not that old, is thriving. Everything seems great. Right. Where everyone's. The dollars are up, everyone, all these new businesses are rolling out. Most of the big guys are talking about, we've got to get this. Either I think Scar talks about like the third wave or we've got to go off platform. We got to bring our data to beyond our Site and app. How's it, how's that going in your estimation?
- [18:16]
A
Yeah, that's an interesting question. Look, the reality of retail media as it stands today is it's dominated by two giant players and you can even narrow that down to one. Right. That is driving a tremendous like portion of retail media industry growth just because of the size. Advertisers love it. They just have such a huge headwind. I'm talking about Amazon in case anyone missed that. And brands, brands are on board with it. I was just chatting with a brand yesterday and their head of E commerce and she was saying look, our CFO just loves Amazon because of the reporting that they get back. They have been trained, trained by Amazon to be able to see how this incremental dollar flows from advertising on prime day. Getting that, you know, getting that repeat customer data, retargeting them, getting them on board for the next prime dates. They've been this, Amazon was early to the game. They've trained brands on what to expect and other retailers just, you know, they, they can't compete with what Amazon has done specifically. So there's other, the two other big areas of retail media which are not nearly as big as on site sponsored product ads are off site retail media which is, you know, activating a retailer audience on CTV or social or other, other platforms. And finally in store retail media which is still very, very small but people are very excited about it. That's very resilient to AI enabled shopping by the way.
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B
Right.
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A
There's a good reason to be excited about that. But actually I want to run this by you Mike because I want to get your opinion on this.
- [19:52]
B
Sure.
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A
When I think about off site retail media for that it's not as high profit margin as on site but in the event that people are doing actual transactions through LLMs, I see that as being, as creating a big risk for retailers off site media networks because now another party has that transaction data and they have that intent and data and the, and the pre purchase activity data. What do you think that's interesting because.
- [20:25]
B
I was going to say in general when people talk about off platform you're right, it's, they want to, they want to, let's use that data all over the place. But I, my mind always goes towards the open web because that's, that's where you think that there's, the infrastructure is already there and it's. The open web is hurting theoretically. Right. Like the. So, but, but in my experience, at least for me, I don't see retail media ads all over the place. Like I think, like I would expect maybe now that could just know it. I don't. Would I know it? I guess, yeah, I guess. I guess I'm not sure if I would feel it or not. But. And, and I, and if I think it's still an intimacy in CTV even with influencers and stuff. But I do think, I, I do think that if, if shopping takes off through chat experiences that, that can hit retail media in general. But I hadn't thought about. But I think you're probably right. You were. You're going to. The brands will go to what works and what is closer to a transaction than something that feels a little bit disconnected. So that, that would make it vulnerable. That does make sense to me.
- [21:29]
A
I think it would. It might bring the premium CPM down a little bit I think because there'll be a bit of competition for that, that audience data. So you know, now ChatGPT knows I'm in Atlanta, I'm a mom, I live in the suburbs. I kind of shop this stuff. I've been searching for new recipes, I've been searching for, you know, high protein lunchbox snacks or whatever. Walmart also has that search intent data and so they could, you know, a protein brand could retarget me on Disney with a snack commercial or something like that.
- [22:11]
B
Right.
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A
But also ChatGPT knows that. And so I think this all comes down to if the LLMs choose to pursue an off site media business. To me it makes sense because then you're not sort of quote unquote cluttering the chat experience with ads.
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B
Right?
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A
Right.
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B
You'll have a lot more surface area with where people were theoretically more receptive. That's actually really interesting. I hadn't thought about that.
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A
We haven't seen any LLMs talk about it. Certainly not release it. ChatGPT has even said something very specific like we will never sell consumer data to advertisers.
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B
There's a lot of nevers in this business that don't.
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A
Yes. Well, true to me it just seems like if I was in charge of monetization at one of these LLMs path I would seriously consider. But maybe there's a good reason why they haven't.
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B
Right. Okay, I gotta ask you the question everyone always asks. Probably you and everyone in the space. There's so many retail media networks. Right. Aren't we going to see consolidation or roll up or is everyone going to partner with Instacart or something? Doesn't seem like that's happening without maybe some exceptions. What is your take that in 2026.
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A
I think it will absolutely start happening more and more in 2026. The stat that gets thrown out there from, and this is from a number of different surveys is that brands, including the really, really big multinational conglomerates, they only want to work with 5, 6, 7 RMNs.
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B
So you hear that when you, when you talk.
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A
Absolutely, absolutely Firsthand as well. And there's over, you know, there's 250 globally. Right, right. Something's not adding up here. I don't. So I think that we're going to see more retailers like Macy's partner with Amazon retail.
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B
I thought that was a real big sign. Right. Where things might be headed. Yeah.
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A
And, and they, you know, Michael Kranz, the, the head of that network was on stage with Amazon at NRF talking about how great the partnership has been and how look, they're bringing in demand. We are competitors, but there is a way to cooperate with competitors where you can both win. And I think we will see more of that this year as the sort of, as the chickens come home to roost with growth.
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B
Right. Okay. The other one, the, the other obvious one I got to throw at you and I've written about this recently, I'm starting to get impatient for CTV shopping. I'm probably being too impatient because it's still really early and you're even seeing YouTube now push these shoppable ads more and more. Where are you on how fast this is going to come? Is it coming?
- [24:53]
A
I, I, I have to admit I don't watch a whole lot of TV and I, I don't have a super strong POV on this one. I'm going to be a pretty disappointing answer for you. I, I don't have a good, I.
- [25:04]
B
Don'T want, that's all you just, you sit in your living room and just listen to classical music. You're above television. You're reading novels. I, I am, I be, I just feel and I'm again focus group of one probably in I, it just, it's jamming shopping into my entertainment time is unless it's again there are, if I'm watching show watching YouTube or stuff about products or cooking things, that's one thing. But yeah, it's hard to in the middle of a, of a football game to want to think about shopping when you're trying to check out a life. But again that, that's, that's also might be generational. I don't know. I just don't, I haven't seen a lot of signs of it working. We'll see. What, what else are you thinking about these days? Like what's, what's a big topic in your mind that, that we maybe the audience should be thinking about more.
- [25:52]
A
Yeah. These days I'm, I'm talking a lot about how AI enabled shopping may impact retail media in the future. What kind of existential questions does this throw up for retail media? What might be some more collaborative ways that retailers and brands can work together on shared outcomes? I think let's get back to that question. Rather than a retailer sort of, it's become a bit of a land grab, honestly. Like let's sell some of our real estate, let's activate our customer data, let's sell off some of these assets that we have rather than really thinking about it from the brand and the brand's perspective of how can we together grow more, you know, grow the category, which is what trade marketing, back in the day, decades and decades ago, that was all about, it was about growing the category on a shared basis between retailers and brands. I think what will be challenging now is there's an expectation set from retail media around performance, around roas and being really close to the consumer. It might be, that's, that's a drug that's really easy to get hooked on. Right. So it might be challenging to kind of go back, to, go back to that way that things were around growing the category, growing new to brand customers and bringing new customers to brands and that's how brands grow.
- [27:16]
B
Yeah. Well, you know, well, you are seeing some of the big guys, I guess, like certainly Amazon Talk, full funnel more. You're going to see a lot more of that talk in the category, so be interesting to see if that takes hold. Curious. So many things we could talk about. Awesome conversation. Thank you for making time for this today and let's do this again.
- [27:30]
A
Thank you so much. Great to be here.
- [27:33]
B
A big thanks to my guests this week here, Masters of Retail Media Breakfast Club and my partners at sabio. If you like this week's episode, please take a moment to rate and leave a review. We have lots more to bring you, so please hit that subscribe button. We'll see you next time for more what's nexting Media. Thanks for listening.