Black Friday 2023: Retail Media’s First Big Stress Test

July 6, 2023

If they ever make a movie about digital advertising, Black Friday 2023 will be a pivotal scene. Here’s how the story would unfold:

– Advertisers are hungry for an alternative to cookies.

– Retail media begins to explode, with consultants and the trade press calling it advertising’s “third biggest wave” after search and social media. 

– Amazon takes a commanding lead but the first few billion dollars roll into newly launched retail media networks (RMNs) in 2022 and the first half of 2023.

With the 2023 holiday shopping season right around the corner, the next scene is set: Headlines are trumpeting the return of a bull market. Gas prices are falling. Brands are anticipating strong consumer spending during the holidays, and eMarketer projects advertisers will spend $45 billion with retail media networks by the end of the year.

The moment of truth is here: Godzilla is rising from the sea with Tokyo in the distance. Get your popcorn ready. 

Putting Commerce Media to the Test

Truthfully, this movie should have been a romance. Advertisers and commerce media are a match made in heaven with rich customer data, true attribution, improved customer experiences, and new revenue streams for retailers operating on thin margins. But the holiday season will soon test the bounds of this relationship.

Ecommerce sites are still learning how to be good media partners. And as more money pours into this emerging channel, the stakes will only continue to increase. Is this the year we smooth out the bumps in the road? Will this be the tough love retail media partners need? Time will tell, but here are all the ways RMNs will be tested this upcoming holiday shopping season: 

Increased Demand for Inventory

Simply put, retail media networks don’t have enough inventory to meet demand. Search advertising is in limited supply. Contextual and behavioral ad placements – such as post-transactional advertising on purchase confirmation pages – are gaining steam as a natural complement to retail media campaigns, but they won’t be enough. 

Currently, RMNs run programmatic campaigns informed by their customer data on behalf of their clients to supplement the low supply of ad inventory. It has value, but the ad is far from the buying environment. Ultimately, advertiser demand will push commerce media to innovate, so look for new offerings this holiday season.

Higher Ad Rates

Premium ad pricing will surely arrive just in time for Black Friday. In a recent Ad Age webinar, Nicolette Hawks, VP of Growth Strategy at Horizon Media’s in-house commerce media agency, Night Market, recommended that clients allocate their ad spend accordingly. 

“We know that the holiday season will carry a lot of premiums,” Hawks said. “Are there things you can do upfront to negotiate lower premiums during those time frames?” Conversely, higher prices will bring higher expectations from advertisers. Commerce media partners must get ahead of this by providing better data, reporting, and optimization tools.

Pressure to Showcase Data Capabilities

The holiday shopping season is an opportunity for RMNs to further refine their targeting algorithms and audience segmentation by leveraging customer data. Jerry Sommerville, VP, Activation – Search, Social & Programmatic at Quigley-Simpson, recently said, “Not only do (RMNs) have recent data and accurate data, they have very highly segmented data to the point where we can run highly personalized advertising, and we know that can be very impactful.”

Hawks echoed Sommerville and added that Night Market was using new technology to develop deeper relationships with retail media networks. “There are more opportunities to leverage retail partners’ clean rooms,” Hawks said. “So being able to take that first-party data and do one-to-one matching with the retailer data is…very impactful in the cases we are able to do that.”

Better Performance Tracking and Optimization Tools

The 2023 holiday season may yield friction between advertisers expecting real-time campaign optimization and some commerce media partners who either can’t or don’t want to provide this capability. According to Sabiha Tudesco, VP of Business Development at Fluent, access to real-time performance data is crucial to building “…a holistic picture of what’s working not only for the advertisers and brands buying into it but also what it means for the consumers [and] retailers.” 

If commerce media is going to deliver on the promise of being digital advertising’s “third wave,” it lives and dies with the tools that allow for data-driven improvements on the fly. There is little doubt it will happen, but some commerce media partners are experiencing a long learning curve as they figure out how to protect their interests and those of their customers. 

Consumer Privacy Concerns

Protecting consumer privacy is tantamount to everything else. Amid all this pressure to innovate and service the advertiser, commerce media must be vigilant with the customer’s interests. Not only because it is the right thing to do, but because being careless with customer PII will kill the goose that laid the golden egg. In the changing privacy landscape, data clean rooms will be useful for advertisers and retailers looking to share insights and enhance the consumer experience without jeopardizing shoppers’ privacy.

Black Friday 2023: A Blockbuster or a Flop?

In the end, we control whether this ends up as a blockbuster or a flop. “Commerce media doesn’t have to relive the sins of programmatic’s past,” said Hawks, who sees we are at the precipice of an important moment in digital advertising. 

Fortunately, commerce media is in the hands of a smaller group than programmatic ever was. And this small group of retail businesses are all interested in protecting their existing businesses. Done right, and everybody wins – customer, retailer, and advertiser. However, if it’s done wrong, the retailer takes the biggest hit. If we choose our partners carefully and keep the customer as our north star, everything else should fall into place.

Need help getting started with commerce media this holiday season? Contact us here to learn how to leverage Fluent’s post-transaction advertising solution to elevate your Black Friday strategy.