‘An influx of investment’: Kroger sees retail media opportunities in ad slowdown

“There’s no doubt that there’s an influx of interest and investment — the vast majority of those investment dollars are coming from national investment teams at agencies,” said Pratt. That interest is primarily thanks to the private marketplace Kroger launched last October, she continued. And the hope is that interest holds up. Not least because marketers will be able to buy CTV and video inventory from those marketplaces as well as display.

Even so, it’s hard to get a fix on how big this growth is. Kroger doesn’t disclose ad revenue. It has, however, tried to hint at the size of the business without those numbers in other ways. 

There’s the number of advertisers it works with, for one thing. At last count (last year), it was working with just shy of 2,000 advertisers, of which 90% had worked with the media owner from the year prior. Then there’s those advertisers it wouldn’t usually work with — think brand marketers or those in non-endemic categories like travel and health and wellness. Increasingly, these businesses are cutting cheques for Kroger because it has data they want.

Still, it remains to be seen how far up the marketing funnel Kroger is able to go for ad dollars. Traditional retailers don’t have access to proprietary, upper funnel content and media to attract awareness of media dollars. It’s why Kroger is partnering with other ad tech vendors to offer reach extension across the open web as one way to offer full-funnel media activation.

“The slope of growth has changed since the pandemic accelerated some of the behavior in the market around e-commerce,” said Pratt. But it’s still growing, she continued. It’s just not growing as fast it has over the last two years. “We bear this in mind because we’re further along today than where we had projected to be three years ago before the world changed.”

Indeed, a lot has changed over that period. For starters, Kroger’s Retail Media Network isn’t a managed service-only platform anymore. Marketers can use their own ad tech to bid on its inventory. Similarly, Kroger’s data is a lot more accessible than it ever was. So much so that marketers can use the retailer’s data to judge the success of their campaigns across the web. Thanks to a partnership between Kroger and Roku, for instance, marketers can attribute TV campaigns based on store sales. As Pratt explained: “We act as a publisher in some cases, and an accelerator for other publishers in other cases.”

It’s a tricky balance, no doubt: figuring out ways to let marketers run their own media against Kroger’s audiences, while at the same time protecting revenue potential and customer data. Get it right, though, and Kroger stands to win more ad dollars — especially in the fast-growing digital budgets. Get it wrong and it’s just another walled garden: ad dollars go, but the true measurement of the results never come out.

The latter point is one the likes of Kroger are keen to avoid, of course. Protective as they are of their data, they’re trying to move past being walled gardens in a few ways. In short, retail media networks are in the unique position of having direct access to their advertisers’ sales. This allows them to focus on incrementality and be transparent with their performance.

“Retail media will become the more data-driven version of shopper marketing currently accounting for roughly $100 billion in annual spend by brand advertisers,” said Seraj Bharwani, chief strategy officer of AcuityAds. “These investments are part of the cooperative marketing agreements with the retailers to drive sales through lower funnel media investments into FSI/coupons, end-isle displays, retail rewards, and related promotional marketing.”