This post originally appeared in my column for Forbes.com on Wednesday April 2. Link to orginal post
The retail media landscape presents a striking paradox: Amazon and Walmart together command over 80% of all retail media spend according to eMarketer’s 2024 projections, yet more than 70 retail media networks in North America alone now compete for advertiser attention. The math doesn’t add up—especially when most brands can only realistically manage relationships with an average of 6 retail media networks, according to research from Skai and the Path to Purchase Institute.
Amazon's head start in retail media explains part of this imbalance, but there's a deeper issue at play: the advertiser experience itself. Brands face a fragmented ecosystem with inconsistent interfaces, workflows, and reporting methodologies across retailers. The result is an increasingly unsustainable environment where smaller networks struggle to compete despite offering valuable, unique audiences.
Part of the solution to these fundamental challenges may lie in a technology that transformed digital advertising over a decade ago but has been slow to take hold in retail media: Real-Time Bidding (RTB).
Why RTB Matters For Retail Media
Real-Time Bidding represents the backbone of programmatic advertising, allowing for the automated buying and selling of ad impressions in milliseconds. When you visit a news website and see display ads appear almost instantly, you're witnessing RTB in action—an entire auction has occurred in the background during page load.
For retail media, RTB offers transformative potential by addressing three big industry pain points:
1. Fragmentation and Scale: With the proliferation of retail media networks, brands face the impossible task of managing direct relationships with dozens of platforms, each with unique interfaces, metrics, and workflows. RTB creates standardization across networks, allowing advertisers to execute campaigns across multiple retailers potentially through a single platform.
2. Measurement and Transparency: One of advertisers' biggest frustrations with retail media is inconsistent measurement across platforms. Standardized RTB protocols would enable unified reporting and attribution models.
3. Democratization of Inventory: RTB opens retail media inventory to a broader range of advertisers, increasing competition and potentially improving yield for retailers while providing more options for brands to be seen in the right place at the right time.
RTB Has Already Transformed Two Other Advertising Ecosystems
There’s historical precedent for RTB in earlier “eras” of advertising.
Real-Time Bidding (RTB) originally brought standardization to the display advertising landscape by enabling multiple advertisers and publishers to transact across a unified, real-time marketplace, as opposed to making all media buys manually and separately.
This common protocol, called OpenRTB, was first introduced in 2010 was initially spearheaded by a few ad tech companies and then taken up by the IAB. As of 2023, over 90% of U.S. digital display ad dollars run programmatically, largely powered by RTB.
The same idea worked for connected TV more recently, where updated standards ("OpenRTB 2.6") let streaming apps and advertisers easily buy and sell video ad spots using the same principles.
The Technical Challenge of RTB in Retail Media
The slow adoption of RTB in retail media isn't for lack of interest—it's because retail environments present unique technical challenges.
While RTB is standard in display advertising, retail media has two major hurdles:
1. Latency: Traditional RTB involves communicating with external platforms in real time for each ad request, potentially adding 100+ milliseconds to page load times. In retail, where user experience is directly tied to revenue, this latency can significantly impact conversion rates.
2. Relevance: Unlike content sites where ads can be only tangentially related to surrounding content, retail environments demand highly relevant product ads that match user intent. The algorithm must deliver this relevance in milliseconds.
These challenges help explain why retail media has largely relied on direct deals and pre-cached bids rather than true real-time auctions. However, advances in technology are beginning to overcome these barriers.
The Next Wave: OpenRTB for Retail Media
The Interactive Advertising Bureau (IAB) and its IAB Tech Lab have been working to adapt OpenRTB specifications specifically for retail media’s unique requirements. Jeffrey Bustos, a former vice president at the IAB, highlighted this effort in his op-ed for the Path To Purchase Institute, "Democratizing Retail Media Through OpenRTB." Bustos explained how the standard protocol is being tailored to balance the technical demands of programmatic buying with the relevance requirements of retail environments.
"To adapt openRTB for retail, we are fine-tuning our technical specifications to account for retail-specific nuances such as the relevancy of ads to the consumer's interests and the retailer's product offerings," explained Hillary Slattery, senior director of programmatic product at IAB Tech Lab.
These improvements make it easier for retailers to share product information in a standard format while still keeping control over how ads appear on their websites. Simply put, retailers can join the programmatic ecosystem without sacrificing their unique shopping experiences.
Major Platforms Like Microsoft Lead The RTB Charge
Major advertising platforms recognize the opportunity in standardizing retail media buying. Microsoft, for example, is positioning itself as an aggregation point across retail media networks.
"We’ve really been thinking about how we become an aggregation point across various networks of high-quality retail media supply and then really make it easy to activate a product campaign that runs across those networks in a standardized way," says Lynne Kjolso, VP, Global Partner & Retail Media at Microsoft. "We very much believe that the best way to deliver that kind of advertiser value is going to be in a real-time environment."
Microsoft aims to extend its existing advertiser relationships—approximately 500,000 advertisers already using their platforms—to retail media supply, enabling a single product campaign to extend across multiple retail environments through RTB technology.
This presents a compelling proposition for retailers: access to a massive new pool of advertisers without the overhead of building direct relationships. For brands, it promises simplified campaign management across multiple retail properties.
Google’s advertising ecosystem is pursuing similar goals, though with different strategic emphasis points. Both technology giants recognize that the future of retail media lies in standardization and scale, which are two benefits that RTB delivers.
What’s Holding Retailers Back From RTB?
Despite the clear benefits, many retailers remain hesitant to fully embrace RTB. Their concerns generally fall into four categories:
1. Control and Brand Safety: Retailers value tight control over the shopping experience and are wary of letting third-party demand-side platforms directly bid into their on-site inventory. They may fear inappropriate products or messaging could damage customer trust.
2. Premium Inventory and Margins: In retail media, sponsored product placements represent premium inventory with high CPMs or CPCs. Some retailers worry RTB could introduce price competition that reduces average revenue per impression.
3. Data Protection: Retailers' first-party data—purchase history, loyalty information, browsing behavior—is arguably their most valuable asset. Sharing this data programmatically in real time raises both privacy and strategic concerns.
4. Technical Complexity: Setting up a real-time bidding environment requires significant technical infrastructure—ad server integrations, consent management, fraud detection, and more. Many retailers lack the in-house expertise to implement these systems at scale.
Looking Ahead To A Real-Time Era
The evolution of RTB in retail media likely mirrors what we've seen in other advertising sectors. When comparing retail media's current state to the progression of RTB in connected TV (CTV), we see striking parallels.
CTV initially faced similar challenges with format standardization, audience fragmentation, and technical implementation barriers. Yet the industry evolved rapidly, with standardization initiatives like OpenRTB 2.6 specifically addressing streaming media’s unique needs.
For retail media, the path forward will likely include:
1. Standardization Through IAB Leadership: The IAB's work on adapting OpenRTB for retail media will create the foundation for wider adoption, reducing technical barriers for retailers.
2. Hybrid Models During Transition: Retailers can begin with hybrid approaches—maintaining direct relationships with top-tier brands while opening secondary inventory to RTB. This balances control with incremental revenue opportunities.
3. Retail Media-Specific RTB Solutions: Specialized technology providers focused solely on the retail media space will emerge with solutions that address the unique challenges of product listing ads and sponsored search within retail environments.
4. Increased Pressure From Advertisers: As brands recognize the efficiency and measurement benefits of standardized RTB across retail media networks, they'll increasingly demand this capability from their retail partners.
The Business Case For Retailers
For retailers hesitant about embracing RTB, there’s a compelling business case beyond just technical evolution. Microsoft’s Kjolso says that retailers are protective of their first-party data and their inventory, “and I think we need to honor that.” But she adds that the pressures of really intense competition across a very crowded marketplace of RMNs, and the pressure to increasing ‘fill rates’ (the amount of dedicated ad space on on a retailer website that is successfully sold to advertisers) will lead retailers to adopt RTB technology in order to tap into more demand sources like Microsoft, Google, The Trade Desk, and other DSPs.
“Once you’ve launched a retail media program and become a new profit source in the retailer, it’s great,” she says. "But then you have to deliver. You have to deliver ongoing growth. How are they going to do that without taking a step towards evolution?"
This evolution is perhaps most critical for mid-tier retail media networks. While category leaders like Amazon and Walmart can sustain direct relationships with thousands of brands, smaller networks face an existential challenge: how to compete for advertiser budgets when brands can only manage relationships with six networks at most.
What This Means For Brands
For brands, the implications are equally significant. The current fragmented landscape forces marketers to:
- Manage dozens of separate retail media platforms, each with unique interfaces and workflows
- Reconcile inconsistent measurement methodologies across retailers
- Make difficult choices about which retail media networks deserve direct investment
RTB promises to alleviate these challenges by bringing retail media buying closer to the efficiency and standardization brands experience in other digital channels. A brand could potentially manage campaigns across numerous retailers through familiar demand-side platforms, with standardized measurement and optimization capabilities.
Conclusion: Preparing For The Inevitable
The question is not whether RTB will become standard in retail media, but when and how. The progression we’ve seen in display advertising and connected TV shows that initial resistance gives way to pragmatic adoption as the business benefits become clear.
For retailers, now is the time to begin planning for this evolution, by assessing current tech infrastructure for RTB readiness. For brands, the opportunity is to advocate for this change with retail partners while preparing internal teams for a more programmatic approach to retail media buying.
The retail media landscape is maturing rapidly, and RTB represents the next logical step in its evolution. Those who embrace this change early will help shape the standards and practices that define the industry's future—and likely gain competitive advantage in the process.
