- Retailers of all kinds are aggressively entering the advertising business.
- Adtech firms have increasingly emerged to help them build and scale those businesses.
- These 10 companies are helping companies like Walmart, Dollar General, and Klarna crack retail media.
This is the 10th in a 10-part series that examines Amazon’s burgeoning ad business: the people driving it, the ripple effect on other companies, and what’s next.
Retailers like Walmart, Michaels and Kroger are aggressively building ad arms, and ad-tech companies want to cash in.
Retailers see an opportunity to get a piece of an industry dominated by Amazon but growing. Boston Consulting Group has estimated that eCommerce advertising will grow to $100 billion by 2026, representing 25% of total digital media spend.
Retail media is also a way for retailers to make up for their low margins. BCG suggests gross margins for ads sold on a retailer’s website should be at least 70%, versus retail margins of 19% to 38%.
“Retail media produces a set of revenues that can be transformative in funding a retailer’s core strategic bets – it’s a new net profit,” said Lauren Wiener, CEO and partner at BCG.
With billions at stake, a cottage industry of startups and tech giants, including Criteo, PromotionIQ and The Trade Desk, has sprung up to help retailers sell ads on their websites and across the web.
These retail ad tech companies help retailers with a wide range of services. For example, Michaels outsources its ad sales to ad tech company Criteo, while Walmart works with The Trade Desk for its programmatic advertising. Two competing ad tech companies, CitrusAd and Criteo, create tools for Target’s advertising platform. Other ad-tech firms help advertisers manage their purchases in the expanding retail landscape so they reach a large enough audience.
Matt Prohaska, CEO of Prohaska Consulting, compared the growth of the ad-tech retail industry to the early days of social media advertising, when dozens of third-parties sprung up to help advertisers buy ads on Facebook, Twitter and Snap. . Many of those companies ran into trouble once social media companies started offering advertisers similar tools for free, and Prohaska predicted that retail ad-tech companies could follow a similar path. He said he, too, saw these ad-tech companies as acquisition targets for retailers.
“There’s definitely an appetite in the M&A market to pick up some of these companies when they’re scaled and at appropriate valuations,” he said.
Insider identified 10 companies, listed alphabetically, that are helping retailers build ad businesses. We have listed funding or revenue figures where available.