WPP's GroupM has shuttered its retail media agency Triad, according to a report in MediaPost.
GroupM attributed the shutdown of the Florida-based agency to the changing retail landscape and the coronavirus pandemic's impact on the economy. Triad will wind down its operations over the next few months.
The news follows Triad's sale of its proprietary technology and engineering team to Sam's Club in the fall of 2019.
Triad's closure serves as a reflection of how the retail media space has quickly evolved over the past couple of years, with major players like Walmart, Amazon and Target all ramping up the sale of ads on their websites through in-house teams — a reflection of how brands in the category are looking for ways to reach digital shoppers closer to the point of purchase. As a result, third-party agencies focused on helping retailers sell ads are likely to struggle.
In fact, Triad's biggest client, Walmart, took its ad sales business in-house last year, which led to the hundreds of layoffs that Triad never fully recovered from. Walmart pushed harder on the in-house model in a move to better compete with Amazon, which has also increasingly brought its media sales operations in-house in recent years and seen that area of business expand significantly.
Triad's failure additionally signals the challenges that can face agencies that tailor their business largely to a single client. It's a model that's grown in demand from brands looking for bespoke marketing services, but could be particularly fraught with danger during an economic recession like the one currently developing in the U.S, which has led marketers to tighten their purse strings, and in some cases, rely more on internal teams.
The coronavirus pandemic, which has decimated retail sales amid mass store closures, seems to have been the final straw for Triad. Many other agencies have announced furloughs and layoffs, but this is one of the most significant outright closures attributed to the virus.
Several companies were rumored to have shown interest in acquiring Triad, which WPP paid $300 million for in 2016, including Walmart's chief big box competitor Target. In the end, Sam's Club, the warehouse club business owned by Walmart, agreed to acquire the proprietary technology stack and some of the team members from the agency last year.