Should Retailers Rent, Buy, or Build Their Retail Media Network? An Industry Review for 2024

Retail Media: Buy-Side, Sell-Side & Programmatic

The Sell-Side Commercial Model

There are three monetisation models worth examining in retail media. Offsite targeting and non-endemic advertising are difficult to monetise frictionlessly — the reasons include user experience friction, privacy concerns, and scale limitations.

Endemic advertising (ads from brands relevant to the retailer's category) represents the largest opportunity, particularly from programmatic demand. SSPs and DSPs are expected to converge as programmatic gains real traction in retail and commerce media.

Retail is still early in its development, but there is a clear opening for SSPs to aggregate retail and commerce media supply — disrupting CPG trade budgets and giving DTC brands alternatives outside of Amazon.

The Buy-Side View: Why Allocate Spend?

Tighter attribution and outcomes-focused accounting are what matter most to buyers in retail media. Spend allocation will follow platforms that can demonstrate clear performance accountability.

Product Listing Advertising (PLA): An Immediate Opportunity for Ad Tech

PLAs are native to retail sites, enabling the sell-side to access more programmatic spend while preserving the user experience that retail and commerce media prioritize.

The mechanics work as follows:

• SSPs pass contextual and product content data to DSPs
• DSPs ingest product SKUs and build standardized PLA formats to serve against aggregated supply
• SSPs aggregate PLA inventory across retail properties
• A new open RTB protocol is expected to allow buyers to target product- and context-specific retail and commerce inventory

It's a pure-performance format — structurally different from traditional display advertising.

Should Retailers Rent, Buy, or Build Their Retail Media Network?

Every few years, a dominant theme reshapes programmatic advertising. For the past couple of years, that theme has been retail media. Unlike some hype cycles that produced more noise than substance — blockchain in ad tech being a notable example — the enthusiasm around retail media is backed by real, already-materializing opportunities.

Understanding the Rise of Retail Media

Several market forces have converged to accelerate interest in retail media as a digital channel:

1. The end of third-party cookies in web advertising. Brands are finding it harder to locate target audiences across the web, serve relevant advertising, and measure campaign performance. While most will migrate toward alternatives like universal IDs, there are some that stand to benefit from building retail media into their mix. At its core, retail media is simply another digital advertising channel.

2. The shift toward first-party data. The deprecation of third-party cookies means companies across the media supply chain need to activate their own first-party data for audience targeting, measurement, and campaign delivery. For companies sitting on large reserves of valuable first-party data, this represents a significant opportunity — and retailers are among the most data-rich players in this position.

3. Advertising as a new revenue stream. Most retailers have already exhausted the obvious levers for improving margins on retail sales in a highly competitive, economically pressured environment. Advertising is a high-margin revenue stream that is relatively straightforward to access — which is what's driving many leading retailers to build their own advertising businesses.

Retailers could, in hindsight, have pursued advertising revenue years ago. But the timing now is particularly favourable: the end of third-party cookies and the shift to first-party data have brought the opportunity into sharp relief.

Powering a Retail Media Network: Three Options

To support an advertising business, a retailer needs a retail media network (RMN) — an ad tech platform that facilitates targeting, buying, selling, and measurement, and activates campaigns across channels. When it comes to developing that infrastructure, retailers have three main options: rent, buy, or build.

Option 1: Rent (Use an Existing Ad Tech Platform)

The rent option provides a ready-to-use tool that can get an advertising business off the ground quickly. That's the main appeal.

The drawbacks, however, are meaningful. An existing platform may not integrate cleanly with the retailer's existing retail systems. It will likely lack the flexibility to build the specific features and integrations needed to extract maximum value from the advertising business. And there is the persistent concern that valuable customer data may be exposed to competitors — a risk that is already well understood in programmatic advertising for premium publishers.

Option 2: Buy (Acquire an Ad Tech Company)

Acquiring an ad tech company offers a way to own the technology outright. The problem is that most retailers need only the technology — not the acquired company's existing client base, which is typically one of the selling points of any acquisition. That means acquiring 100% of a business while only needing one part of it.

Beyond the inefficiency of the acquisition itself, the technical challenges don't disappear. System integration issues are essentially the same as those encountered with the rent option.

Option 3: Build (Develop Proprietary Technology)

For many retailers, building proprietary technology makes the most strategic sense. Done correctly, it allows a retailer to develop technology that fully integrates with existing retail systems, and to build exactly the features and integrations required — nothing more, nothing less.

More importantly, the build option allows retailers to maintain full control and ownership of their customer data, preventing it from leaking to the open web or to competitors. This matters considerably as first-party data becomes the central asset in digital advertising.

Building is the only option that gives a retailer genuine control, ownership, and flexibility across their entire advertising operation.

What to Expect in 2024

Given the three options above, the economics of first-party data, and the margin pressures facing the retail industry, the expectation is that a meaningful number of retailers will opt to build their own technology rather than rent or buy. The strategic rationale — full integration, data ownership, competitive differentiation — points in that direction, and the market conditions make 2024 a logical inflection point for that shift.

On the sell-side and programmatic infrastructure side, watch for SSP/DSP convergence as retail media supply scales, the emergence of open RTB standards tailored to PLA and retail inventory, and continued growth in endemic advertising spend as the dominant monetisation model within retail media networks.