After DoorDash’s Instacart bid, here’s the case for and against consolidation in commerce media

“We’ve seen this play out before in search, social, and streaming. Markets tend to consolidate around a few major players, and commerce media is heading in the same direction,” said Bill Wise, CEO and co-founder of Mediaocean, an ad tech company.

Should the deal, which is valued at approximately $17 billion, go through, it pairs DoorDash’s delivery network of 993 million total orders, per DoorDash’s Q3 earnings and Instacart’s grocery and fulfillment technology (as well as its 91.4 million orders, per Instacart’s Q3 earnings).

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Here’s the case for and against consolidation in commerce media. 

The case for consolidation

Perhaps the biggest case in favor of consolidation in commerce media is that the playbook already exists in ad tech. For example, Gopuff announced plans in September to leverage Instacart’s white-label retail media platform Carrot Ads. Both Gopuff and Instacart have separate commerce media networks.

“You could kind of argue data consolidation is also happening across partners who are working together to make their joint offerings more compelling,” said Briana Finelli, vp of brand and commerce media at Goodway Group.

As for the DoorDash-Instacart deal specifically, the upsides are a broader audience, more powerful closed-loop reporting capabilities, combined tech offerings and a more simplified media buying experience (buying with a single combined platform as opposed to across two individuals). 

“Add in a scaled ads platform featuring sponsored products, search, offsite capabilities, social and search and what don’t you have,” said Elizabeth Marsten, vp of commerce innovation and growth at Tinuiti. 

By 2028, eMarketer forecasts Amazon’s retail media revenues will rake in at least $75 billion. Advertisers are spending more on commerce and retail media, but are looking for simplicity in a fragmented marketplace.

“The opportunity is there to build a much more competitive retail media offering, but execution and speed will be critical,” said Nik Hengel, vp of analytics at New Engen digital marketing agency.

The case against consolidation

While the idea of bigger, farther reaching commerce media platforms sounds appetizing, consolidation doesn’t come without its considerations.

For starters, a shinier offering could come with a premium price tag. Or as Chief Media CEO Scott Paternoster puts it, “The cons could be everything that everyone thinks about consolidation, with price pressures and whatnot.”

There’s also the painful process of combining two separate companies’ culture, tech stacks, and staff that could disrupt how advertisers buy media. Already, advertisers have started to question what the DoorDash-Instacart merger means for capabilities and measurement. 

Expect other questions around audience duplication, said Greg Carlucci, senior director analyst at Gartner. 

While consolidation has its perks, one particular consideration is how much control advertisers have in negotiating with a behemoth. Just look at the relationship between indie agencies and major demand side platforms.

“That’s why independent infrastructure matters even more as the market consolidates,” said Wise. He added, “Advertisers need a consistent way to buy across platforms, with the right context, without being locked into any one ecosystem.”