How the Kroger-Albertsons Merger is Accelerating the Need for a Unified Retail Ad Network


There are a growing number of retailers competing for their share of available advertising dollars, and a big player in retail media has just upped the ante. The recent Kroger-Albertsons merger announcement sent shock waves through the retail and consumer packaged goods (CPG) industries, with the move cornering approximately 19% of the U.S. grocery market. The nearly $25 billion deal would combine two of the largest U.S. supermarket operators into one, expanding their national footprint and aggregating a treasure trove of first-party data.

Even as Kroger’s partnerships with Roku and Pinterest have grown its reach on a national scale, the company remains second in grocery market share — behind only Walmart. The prospective merger therefore has obvious industry significance from a business point of view. But more importantly for advertisers, while the deal represents a welcome step toward consolidation in the retail media space, it also signals the need for a truly effective national alternative that offers scale beyond just the largest U.S. retailers.

Massive companies like Uber, Best Buy and Lowe’s, and even app-based delivery services like Instacart and Drizly, have developed advertising networks that primarily use websites and apps to show brand messaging to audiences, targeted directly from loyalty programs and the first-party data that these companies collect from their customer bases. These networks have emerged to create new revenue streams for retailers, sometimes becoming more profitable than a business’ original product or service.

With U.S. retail ad sales estimated to increase 31% this year to $40.81 billion, nearly three times the total from just three years ago, retail ad networks offer a privacy-safe and effective avenue for advertisers as we draw closer to the cookieless future. By leveraging retailers’ first-party data, such as intent and purchase data, brands can better optimize their campaigns for performance.


Through closed-loop measurement, brands can measure how digital ad campaigns are driving both in-store and online sales. And with consumers benefitting from hyper-personalization and well-timed ads, brands can gain significant prominence on the digital shelf to ultimately stand out from their competitors.

All these factors have contributed to the retail media boom we’ve seen take shape over the past couple of years. But with new players entering and complicating the space, there’s an urgent need for centralized, automated buying methods and standardized measurement to maximize the industrywide benefit.

It’s becoming increasingly difficult for brands to navigate the fragmented space, determine where to allocate their budgets and measure campaigns holistically. For example, the typical CPG brand likely only has the resources to manage around seven to 10 retail ad networks at a time. Because of this, smaller regional retailers risk being marginalized and losing out on ad spend as the largest players are inevitably prioritized. Consolidation within the space only creates more opportunities for smaller players to fight for their fair and equitable share of media dollars being spent.

As we head into a potential recession-like atmosphere, media dollars will likely begin to shrink and warehouses will become oversupplied with product, driving brands to leverage promotions to stimulate consumer purchases and move volume as household budgets tighten. Brands will need to essentially drive both volume and share, which was also the case during past downturns. But a landscape of walled-garden networks makes it challenging for CPG brands to buy and execute media and target desired audiences effectively.

Creating a network that unifies individual retailers can further simplify the market for advertisers — making it easier to know where to put their ad spend and how to measure it using consistent methodology. For those companies not among the top five national retailers or party to a mega-merger, such a network could help ensure they aren’t left on the outside looking in when ad dollars are allocated.

Every ad dollar spent during an economic downturn is valuable and important, and the right marketing strategy that delivers ads in the right place to the right person can often be the difference between success and failure. Retail ad networks work, and they work for all the right reasons — they create simplicity for brands that are resource-constrained.

For consumers, there will be more advertising but better calls to action, driving people to value and savings opportunities that they need in today’s market and the environment just over the horizon. With only so many ad dollars to go around, and competition likely to increase, we could be witnessing the start of the inevitable next iteration of targeted digital advertising.

Currently serving as the VP of Retail and Partnerships for Quotient, Henri Lellouche is an accomplished business leader with over 20 years of experience and success in CPG, retail advertising and incentive programming. Lellouche has led in-store marketing and product development, implemented digital marketing technology and managed businesses in the digital, mobile and database marketing space relating to brand and shopper marketing solutions. He has overseen digital, in-store and home-delivered media focused on M&A, new products and international expansion. He resides in Fairfield, Conn.

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