Kroger Precision Marketing Meets Albertsons Media Collective: What a Merger Means for Retail Media

While most of the headlines last week about the planned $25 billion Kroger and Albertsons supermarket merger were about antitrust regulatory hurdles, us marketers were investigating it from a different angle. Namely, what would it mean for retail media? Retail media, for those who’ve been paying attention, is a burgeoning digital advertising medium that has been moving at the speed of a rocketship—albeit one that is weighed down by a steam engine locomotive, the decades-old, traditionally slow, brick-and-mortar way of doing business. In true digital fashion, the pending Kroger-Albertsons deal means a potential consolidation for a still-evolving industry. But it probably won't happen just yet. The FTC, multiple unions and the year of 2023 will all have their say about the antitrust angle. And as it specifically concerns those of us in the digital advertising business, there will be objections when it comes to retail media potential. I like this. Retail Media gets more real Consolidation is natural. This will be the first of many. The next combination could involve entire retailers merging. Others may simply partner to pool resources. That model already exists. One example can be found in solutions like the Walmart GoLocal-Home Depot partnership (in which Walmart delivers Home Depot orders of certain sizes) or tech stack decisions like Microsoft-everything (PromoteIQ, Azure, MSFT Advertising, Xandr, PowerBI). To Realize the Full Potential of Retail Media, It’s Brand Consistency or Bust Seeing this type of innovation and knowledge-sharing across retail media in 2023 is great for the industry, which has been racing to stand up a retail media network. But patchwork solutions make it difficult to track and scale results for brands that then need input and support from multiple retailers. When it comes to using first-party data in a more sophisticated way, brands not only need to be able to scale larger audiences, they also get more detailed within that scale, like “deduping” across retailers—especially in this case, since Kroger and Albertsons have some geographical overlap. A merger like this could also empower existing algorithms, like item recommendation, search results or other basket building optimizations, that then spit out smarter, faster results with the additional influx of audience data. Of course, additional first-party data is only as good as the ease of access and activation to hit brand goals. This means Kroger, which has a tremendously rich cache of first-party shopper data from its highly popular and long-running loyalty program, could bring its insights into a more accessible and actionable place. I believe that over the next year, with the increased access to first-party data via self-service, we should also have the ability to increase scrutiny to track and understand how effective retail media advertising actually is in closing the loop. That will also show us if the CPMs we’ve been paying are “worth” it. Not all first-party data is created equal—we just don’t have the data yet to do those comparisons at a meaningful level. What's next for Walmart? Case in point: Walmart recently announced a free version of its data and analytics platform, Luminate. Typically gated with a fee, this is a significant initiative to help brands understand more about their performance at Walmart—both online and offline. We’ve seen a move like this before. Take Google Analytics in 2005. It was a great example of a free platform created to enable visibility into Google performance. In reality, it was just a way for the search giant to build its advertising business. Obviously, many others have taken a page from that book since then. Still, I use Google Analytics as a gold standard of giving advertisers enough information to keep the spend flowing. Walmart does not have a loyalty program like Kroger and Albertsons. They’re focused on "everyday low prices" (EDLP for those in the know). So this an extremely logical offering for the brand to follow. And it will keep the pressure on even in the face of consolidation like Kroger-Albertsons. These types of innovations (like insights platforms) should also help marketers see a much clearer funnel of ad types against quality first-party data and access like never before—and at scale. For example, Albertsons has taken a content-rich and on-site engagement approach. It has recipes, guest chefs, inspiration and influencers, which typically starts at the top of the funnel. But in the environment of building a basket alongside content, this can lead to a quick trip from the top of the funnel into conversion. Combine that with Kroger’s deeply focused audience segmentation—like flavor profiles and modality (pick-up, delivery or in-store) and in a category with a lot more room for innovation and digital penetration—and you get to a much deeper level of audience behavior, which scales nicely over time. In-store experience evolves So what’s a marketer to do now? I clapped my hands with a little glee, but you do you. Prepare by understanding what other retailers have already had in the works to enhance their retail media offerings and what new goodies they are now developing to compete against this new and potentially behemoth retail player. (And I can tell you that several of them have some long-awaited competitive and compelling features that are about to launch.) 19 Brands and Retailers Enhancing the Customer Experience With the Most Memorable Executions Specifically, what marketers should look to see is competition on two specific fronts: delivery innovations and expansion of in-store experience enhancements. This could range from self-checkout carts to cooler screen doors, impulse lane or end cap screens via partnerships like Caper or Veeve and Cooler Screens. Delivery from the newly launched Boost membership pay-to-play program and expansion of dark stores powered by Ocado tech will also keep delivery rapid, costs down and customers happy. Whatever the feds decide on this particular merger remains to be seen. But one thing is clear—more mergers or partnerships will be on the horizon as regional retailers look for ways to compete against the giants. Hopefully, the result for marketers will be a competitive market with sophisticated options to build out a retail media strategy that enables brands to be where the customer is, when they’re ready to buy and to truly, finally, really close the loop.