Those investing in retail media have had an eye on connected TV (CTV) as a growing yet relatively new offsite channel. It’s one where Albertsons Media Collective sees an ideal middle ground to marry inspirational creatives and closed-loop measurement, but executives say the channel shouldn’t be siloed.
The comments were made by Evan Hovorka, VP of Product Innovation at Albertsons Media Collective (the retail media arm of one of the largest U.S. food and drug retailers), during a virtual roundtable discussion, including input from ad agency execs, about retail media that was held by the IAB earlier this month.
Retail media ad investment has continued grow, including 32% in 2023 to reach nearly $50 billion, according to a March forecast from Advertiser Perceptions.
“For context, that’s similar to the total amount US advertisers spend on national and local linear TV,” the firm’s report noted. And it expects retail media to keep bolstering digital ad spend, with the channel estimated to surpass $81.6 billion this year, representing 23.5% of all digital advertising in the U.S. That spend includes on-site search on retail websites and apps and on-site display. However, investment in offsite retail media channels – which includes CTV - is also expected to rise.
“Specifically, we forecast over $20B in spend on offsite programmatic retail media advertising next year, up from $7.5B in 2023,” said Advertiser Perceptions in the report earlier this year. “This will represent half of the programmatic market next year and a key revenue source for publishers of all sizes.”
A lot of discussion during the roundtable revolved around standardization and frameworks for retail media and the IAB’s work. But CTV is part of the picture too, where retail and agency executives cited both opportunity and ecosystem hurdles.
In a fragmented ecosystem in terms of how people consume online content, Albertsons’ Hovorka cited TV as a large screen that’s still taking a good chunk of shoppers’ time and serves as an environment to push messages that connect and inspire action. Traditional linear TV offers great branding and awareness opportunities, he noted, but lacks some of the transparency and SKU-level measurement retail media brands have been looking for.
“I see CTV as the perfect middle ground where we can still hit very inspirational, creative, inspiring messages to a targeted audience tied to all the things retail media is looking for, which is closed-loop SKU-level sales to an individual,” Hovorka said.
Siloed approach misses opportunity
That said, Hovorka and other panelists indicated CTV for retail media is best when part of a multichannel media mix.
“I think if we approach it as a silo channel, we miss some of the opportunity,” Hovorka commented, adding the channel also won’t achieve the opportunity for brands if CTV is approached without acknowledging the role of linear TV and larger agency awareness work that goes on.
Kavita Cariapa, SVP and head of Commerce Activation at Dentsu, agreed and said the agency is “fully adopting CTV,” but there are areas to still figure out with the nascent channel for retail media, namely around creatives and measurement metrics.
She noted the supply chain and the potential to create more shoppable formats with custom ad creatives that could possibly be tailored towards retail-specific audiences.
“Ideally, we would want to make sure [retail media] creatives are in line with overall creative strategy as it pertains to CTV,” Cariapa said.
Second, Cariapa said attention metrics are going to be necessary for retail media CTV investment, adding they won’t just be standard linear or CTV metrics.
“Customers are looking for attention and how that can actually translate to a retail media audience,” she said.
“This is really a growing channel” the agency executive continued. “There's a lot more to unpack, because… a lot of brands are just getting started investing in retail media CTV extensions, but we're excited to see how the measurement and the creatives pan out.”
And Dentsu isn’t treating retail media or CTV as a silo either, but rather as extensions for campaigns and integrating within its overall media approach.
“From our perspective, we are evaluating retail as extensions of any TV,” Cariapa said. “And for us, it's providing us with really valuable data and insights that we can help close the loop for brands.”
Streamers and retailers have been teaming up on data sharing and exploring retail media partnerships, such as Roku teaming up with Best Buy, Instacart and Kroger, among others. Disney partnered with Kroger to share first-party shopper data to target streaming viewers, while NBCUniversal has marked relationships with Walmart Connect, and more recently Instacart with a new retail media workstream that’s meant to open up audience-based advertising opportunities for CPG (consumer packaged goods) brands on Peacock. Executive at Target’s retail media business Roundel have also touted benefits of CTV.
In IAB’s own recent second part 2024 Digital Video Ad Spend & Strategy report found CPG brands and those in retail are leading the way for digital ad investment increases.
CPG brands are “leveraging CTV’s increased scale, ability to connect with consumers directly, and streaming companies’ partnerships with retail media networks,” wrote the IAB.
In the separate Advertiser Perceptions forecast, study author Eric Haggstrom noted companies would be served to build relationships with retail media networks and platforms, as it expects retail media to “evolve significantly in the coming years.”
“As ad auctions on retailers’ own properties become saturated, brands will look to utilize retailers’ data to power their buys outside of retailers’ digital walls,” wrote Haggstrom. “Media and ad tech companies need to form relationships with retail media platforms or risk missing out on one of the few large and quickly growing segments of the digital advertising market.”
Where does CTV fit in the retail media mix?
With the evolving landscape, retail media and CTV are set up for convergence.
A key aspect of that, according to IAB’s Jeffrey Bustos, VP of Measurement Addressability Data, is the CTV channel brings transactional closed-loop measurement to TV, where brands can have visibility beyond just whether an ad was seen or brand lift, to tie ads to actual outcomes. Moderating the discussion, Bustos noted a best practice or consideration is about balancing justification of that closed-loop measurement and the awareness being driven with CTV.
When thinking about CTV, Riyaad Edoo, executive director of Commerce at EssenceMediacom (GroupM’s largest agency that formally launched in 2023), noted a pivot with CTV where creative and copy may be more geared toward a brand, as opposed to a more transactional commerce play.
When considering CTV, he said the bigger question the agency asks itself is where the channel fits within an advertiser’s commerce mix, rather than the consumer journey.
“The question is not so much sort of ‘where does CTV belong in the consumer mix’, but it's where does it exist within my retail media budget,” Edoo said. And as the ecosystem is currently set up, there’s consideration of whether CTV investment should be done with a retail media budget at all, or perhaps is better through the Upfronts where an advertiser may get exclusivity, premium placements and may be a bit more efficient, he noted.
Hovorka echoed agreement with Edoo and emphasized that he believes brands would be happy if people in the industry could break down walls and remove constraints. For example, citing budget allocation decisions currently being made in an imperfect world where elements of SKU-level data and top funnel awareness can’t always be blended.
“If we remove some of those preconceived notions and let linear TV, CTV shine as bright as it can, I think there's a perfect mix of awareness, conversion, all the funnel attributes can be achieved in a comprehensive CTV vision,” he commented.
To that end, Albertsons Media Collective in June launched its Collective TV solution, which aims to deliver combined value of retail media and TV and address some of the silos built around planning, executing and measuring CTV campaigns.
The retail media exec said if companies can just “open up the aperture to say ‘hey I want to push my message’” - be that a partnership with professional sports league, a sustainability story, or a tactical SKU-level regional sales gap - “all of that is achievable with proper shoppable commerce integration and agency creative integration.”
Albertsons sees CTV as a channel it can use as an extension of its retail media story, but also to connect with agencies, publishers and to bring shoppable ads into that ecosystem. Still, there’s work to do.
“I don't know that anyone has perfectly solved that, but like other media channels that have become popular with retail media or media in general, it's going to be a march towards inspirational messaging, shoppable content, local inventory feeds, without disrupting the consumer and the shopper flow,” Hovorka noted. All of which can be done on CTV and where there’s the opportunity to serve timely and moving messaging, which is somewhat lacking with less video-centric parts of media, according to the VP.
“I think we can bring the best of all worlds together and have it shine brightest on CTV,” Hovorka said.