How Do Consumer Brands Really Feel About Buying Ads From Retailers?
A RetailWire article on how retail media networks change the game for consumer brand featured Carol Spieckerman’s comments.
Consumer brands often feel as if they have little choice when it comes to purchasing ads from retail media networks (RMNs), according to a new survey of its members by the Association of National Advertisers (ANA).
Eighty-eight percent of advertisers said they felt pressured by retailers to purchase ads to one degree or another. Forty-seven percent said that retailers exerted a lot (44 percent) or complete (three percent) influence over their buying decisions. Forty-one said that retailers exerted some influence and eight percent said a little. Only two percent said they felt no pressure to purchase advertising.
The report said that those interviewed said that using RMNs was rarely a “choose to use” decision but a “have to use” one. Numerous factors influenced buying decisions including product sales, shopper marketing and joint business planning goals. Advertisers expressed concern that RMN budgets have remained largely unchanged even as overall spending on marketing has been cut, which shifts the emphasis from brand building to sales promotion.
Fifty-eight percent of respondents said they have used RMNs in the past year. Fifty-three percent of those have been making RMN buys since 2019, with most of those dollars going to Amazon.com.
The list of places where advertisers go to spend their money is expanding as more retailers have created their own networks. The study found that 40 percent are buying from five to nine RMNs and 16 percent use 10 or more.
Advertisers, no surprise, are attracted to the biggest RMNs. Eighty-two percent buy from Amazon and/or Walmart. Sixty-five percent use Target, 61 percent use Kroger and 53 percent have bought from Instacart. Dollar General (38 percent), Walgreens (27 percent), Albertsons (24 percent), Costco (21 percent), Sam’s Club (20 percent), HEB (15 percent) and CVS (14 percent) follow on the list of most often used RMNs.
The good news for retailers is that consumer brand companies plan to continue spending on RMNs. Fifty-eight percent expect to increase their spending and the balance plan to stand pat. No respondents said that cutbacks were in the works.
Advertisers clearly value RMNs as a sales promotion tool, with 75 percent saying that is the most important role. Fifty-two percent see RMNs becoming more valuable to their marketing efforts as many expect that improvements will be made to deliver on key performance indicators.
Carol Spieckerman’s RetailWire weigh-in:
RMNs are a carrot-and-stick proposition. Retailers are touting the benefits to brands while strongly encouraging them to pony up (or else?). The ad spend competition has evolved quickly from retailers competing with outside agencies to furiously competing with one another. All of it will be good for brands in the end as options abound and retailers up the ante with new perks. Brands will be in the driver’s seat soon yet strong-arm tactics may be in the picture for the short term.
