How retail media took off, with Dentsu’s Mike Feldman

Mike Feldman knows a lot about how people shop, whether they’re ordering stuff online or picking up a desperately needed rotisserie chicken at the grocery store.

As Dentsu’s SVP, head of commerce and retail media, he oversees a part of the industry that’s exploded in the last few years—growing from $13 billion in ad spend in 2019 to roughly $41 billion last year in the US, according to Insider Intelligence—as retailers from Walmart to Dollar General to Best Buy have started or expanded their advertising networks.

Marketing Brew spoke with Feldman—who, as the son of a retail consultant, spent his childhood helping his dad audit Costco stores—ahead of the National Retail Federation’s annual dog-and-pony show this week about why some advertisers have shifted their budgets into retail media networks.

This interview has been lightly edited and condensed for clarity.

How do you explain your job to your parents?

So, my team and department is commerce and retail media. Those are two of the biggest buzzwords in the industry. There are a couple key capabilities within that. If you want to think about the retail media side, it’s the buy side of retail media…Basically, any time that we are running [ads] on a retailer’s property or using a retailer’s data, we consider that retail media.

How has the relationship changed between brands and their retail partners?

It is different in every scenario. I’ll put on my Jack Ryan hat here and say, “I’m going to follow the money.”

For brands looking to enter retail media and get more involved, yes, it unequivocally creates a deeper relationship with the retailer. Not only are they able to target more audiences from the retailer, it can break down purchase behaviors down to specific categories, brands, or even individual SKUs or products. Especially for CPG, but across categories, in many cases, the retailer has more data on the brand’s consumer than the brand itself.

If I’m marketing a seltzer, and I already have a deal with a retailer that says I want some in-store advertising, how does digital retail media fit into my budget?

All brands handle it a little bit differently…Brands fund about a third of retail media from brand media budgets, a third from shopper marketing, and a third from e-commerce…What we recommend is looking at total value creation. What is the media return? What are any additional trading variables you get at the retailer, even things like IRI studies? Because retail media doesn’t just drive sales at that retailer; it drives total market sales as well.

How do some of the larger retail media platforms, like Marriott, Kroger, and Uber compare? Are they all offering the same thing?

Media networks are digital advertising, utilizing a publisher’s own properties and data; anyone with properties, anyone with data, can make a media network. I think Marriott could probably be doing a better job. They’re outsourcing the whole thing to Yahoo. They have great data, they have great properties—they could be monetizing it even further versus just purely outsourcing.

For each of our brands, it becomes [about] which retailer is most important to them. Where do you have distribution? Where are your key bets? Which media networks have better offerings, which perform better?

We have a client, I’ll give as an example, a CPG [that has] basically 60% of its retail media budget tied to specific retailers…A certain percentage of their spend, no matter what, is going to go to Walmart, Kroger, and Albertsons. That remaining 40%, we then optimize to drive the most total value. So if, say, Walmart is performing better…we can certainly flex in that manner.

Are any specific retailers gaining more traction than others?

Amazon’s obviously the biggest player by far, and I don’t think anyone’s going to unseat them…We are never telling a retailer how to go and beat Amazon because it’s unattainable at this point [because of] the size and scale of their first-party audiences and the deals they have in place.

If you look at the rest of the mix, I would say Walmart has certainly made really interesting strides in the last couple of years…In their partnership with The Trade Desk, getting self-service, that’s been incredible for our clients…So I think their forward-looking approach is really strong because not only can we do all the great Walmart-specific stuff, we can do it now self-service. We have flexibility to operate in a way that makes most sense for the client’s individual tech stack and their business.