Kroger is taking the next step to more fully control its retail media network: The grocer is in-housing its self-service ad platform.
As retail media continues to heat up, Kroger Precision Marketing (KPM) is betting on building its own self-service platform to better compete as well as improve its retail media business. The in-house self-service platform will give advertisers access to Kroger’s existing product listing ads and display advertising. Kroger, an early player in the retail media space, provides access to its first-party data via its data science unit 84.51; KPM previously worked with Microsoft’s PromoteIQ for its self-service ad platform.
“As we’ve grown, as our scale has grown, as Kroger’s ecommerce business has grown, we knew we had an opportunity to not just in-house the technology – that’s just the foundation and accelerator for some of it – but really impact customer behavior and experiences in a different way than we could through a third-party platform,” said Michael Schuh, vp of media strategy, KPM at 84.51.
By owning the full tech stack Kroger will “deploy capabilities that are unique to Kroger,” explained Schuh, adding that doing so will increase the grocer’s ability to deploy its first-party data from 84.51 and “improve outcomes for brands as well as experiences for customers.” Initial capabilities for the in-house self-service ad platform include using search-based insights and custom ad groups; designing creative within the platform; templates; optimizing budgets, messaging and flighting as well as building reports.
The grocer has added “nearly 100 net-new roles across Kroger and 84.51,” according to Brian Spencer, marketing director for KPM, who added that the company has also re-directed some of its in-house talent from other projects to work on the company’s in-house self-service ad platform. Roles are focused on engineering, data science, operations and customer support. As for Kroger’s overall retail media operation the company has “hundreds of people within Kroger and 84.51,” per Spencer.
Advertising working with third-party measurement tools from Pacvue, Skai and Commerce IQ will continue to be able to manage their Kroger inventory on those platforms. The grocer plans to announce other third-party integrations in the future.
Kroger isn’t alone in in-housing its self-service ad platform. Earlier this year, Lowes announced that it would be in-housing it would be doing the same. “As a business hits a certain level of scale, they want to bring that closer to the business,” explained Andrew Lipsman, principal analyst at Insider Intelligence, adding that retail media players need a combination of self-service and managed service offerings to compete. “Kroger in some sense has one of the more mature retail media arms of the business. More mature players are starting to in-house.”
Bryan Gildenberg, founder and CEO of Confluencer Commerce, echoed that sentiment. “My suspicion is that they are working to remove barriers,” said Gildenberg. “The expectation that self-serve piece would be a different collection of brands than managed service but today a lot of brands want to plan both. So the ability to bring them together for them is pretty powerful. It makes the process of planning self-serve with more managed service easier to integrate. The largest brands are going to want both from Kroger.”
Going forward, industry analysts expect that as retail media networks scale they will likely rely less on third-parties for fundamentals and that in-housing self-service offerings may become a trend for retailers of a certain scale.
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