NEW YORK — As retailers look to level up the sophistication of their media networks, some are turning to a new partner: their biggest disruptor. Amazon last January launched a Retail Ad Service that allows outside retailers to tap into the e-commerce giant’s ad tech to run and manage campaigns while helping advertisers to discover new media networks via Amazon Ads. It’s a concept that has raised some eyebrows but is starting to attract players that are trying to boost discovery and stand out in a category that has grown hypercompetitive for ad dollars.
“The immediate impact is a commercial one,” said Michael Krans, vice president of Macy’s Media Network, during a panel at the National Retail Federation’s Big Show earlier this week. “What this helps us do is move beyond just [being] a retailer that’s serving ads. This positions us as a tech-enabled media solution to the community.”
Macy’s Media Network, which debuted in 2020 and encompasses the Macy’s, Bloomingdale’s and Bluemercury brands, signed on for a pilot with Amazon’s RAS in August, right ahead of the key holiday period. At the time, Macy’s was described as the first major retailer to join RAS, which also works with smaller and mid-sized names, including Tillys.
Macy’s Media Network has since drawn over 175 new brands to its sponsored products offering, according to Krans. Perhaps more importantly, RAS has improved credibility and confidence for advertising with the network due to Amazon’s sterling ad-tech reputation. In Macy’s case, a “vast majority” of its potential advertiser base was already in the Amazon ecosystem, creating a greater sense of consistency.
“I wanted to essentially remove friction from the ad-buying process,” said Krans. “I wanted to give another option, another way for advertisers to easily execute media campaigns, specifically sponsored products, on Macys.com.”
A degree of wariness toward teaming with Amazon is understandable for traditional retailers. RAS, which is built on Amazon Web Services technology, has controls to keep users’ data separate from Amazon Ads, the company has said.
At the same time, retailers are facing a retail media landscape that is maturing and now populated by over 200 networks, per industry estimates. Advertisers have indicated they want to be more selective with their retail media spending and desire partners that can deliver well-rounded services with meaningful reach. The initial retail media gold rush is over and the specter of consolidation has loomed large for some time now, a factor that could push more networks toward partnerships and cooperatives.
“My advice to the retailers there that are building these [networks] is: It’s not ‘Field of Dreams.’ If you build it, it doesn’t necessarily mean that the advertiser dollars will pour in,” said Mike Feldman, senior vice president of commerce at the Omnicom agency Flywheel, on the panel, which was moderated by an Amazon representative.
Grappling with ‘coopetition’
Rivals working together on functions ancillary to their main lines of business isn’t unheard of. Large chunks of the technology sector run on AWS. Retail media teams seeking out partnerships in the mode of Amazon RAS ultimately need to sell company leadership on embracing “coopetition,” per Krans, emphasizing that the potential business opportunity outweighs the perceived risks.
“I had to work with leaders at Macy’s to gain buy-in on this,” said Krans of the RAS partnership. “We talked about, openly, this idea of coopetition: How two retailers can actually collaborate in one space — in digital media advertising — and then also compete in another space. Two things can be true.”
Krans also tried to dispel the notion that RAS works on a “set it and forget it” model, with retailers effectively handing off the keys to Amazon to do the heavy lifting. Retail media networks still need to closely examine the needs and audiences of their advertisers to get the best returns, the executive explained.
“You can't mistake the operational ease for strategic sameness,” added Krans. “The brands and agencies may be very familiar with this platform, but you have to look at your own customer.”
At least in Macy’s Media Network’s case, the RAS relationship isn’t an exclusive one. Macy’s Media Network still works with multiple sponsored product ad servers in addition to RAS. Krans encouraged wider adoption of the service, positioning it as an option that could lift all boats.
“I’m very hopeful that Retail Ad Service will bring on more and more retailers,” said Krans. “That’s only good news for Macy’s. It brings more attention to the platform.”
