Digital Marketing Redux   //   January 10, 2023

Microsoft unveils a retail media offering taking direct aim at Amazon

Microsoft wants to help more retailers turn their websites into retail media networks.

On Tuesday, Microsoft announced the pilot release of the Microsoft Retail Advertising Network, which is designed to help more retailers monetize their website traffic. Brands using the broader Microsoft Advertising platform will be able to set up their campaigns to serve ads on Microsoft and partner properties, as well as on the website of retailers participating in the Microsoft Retail Advertising Network. The company also said it has plans to help power retailers’ offline campaigns as part of this new program. 

Microsoft’s Retail Media Advertising Network is part of the company’s PromoteIQ offerings. PromoteIQ is a retail advertising startup Microsoft acquired in 2019, as it sought to better compete with rival Amazon’s fast-growing advertising business. Microsoft has worked with brands like Kohl’s, Kroger, and Office Depot as part of the PromoteIQ business. In a year when many retailers have launched or recently expanded their retail media networks, Microsoft has an opportunity to aggregate and operate a singular retail media platform that can help streamline buying ads across all channels.

As part of the announcement on Tuesday, Microsoft is also launching new features under the PromoteIQ umbrella. One such feature is PromoteIQ Offsite, which will enable retailers to use their first party data to help brands reach shoppers outside of their e-commerce websites.

Kya Sainsbury-Carter, vice president of global partner and retail media at Microsoft, told Modern Retail that the company has a vision to help its brand partners connect with audiences through on-site, offsite and in-store activations.

“The industry is made up of many retail media programs that advertisers have to engage with all over the place, which is a lot for advertisers in terms of lift and overall investment,” Sainsbury-Carter added. “Bringing all of that together into a singular platform enables the retailer to really understand their retail media business more effectively, and understand their performance making it easier than if they had two or three or four different technology partners.” 

PromoteIQ has more than 20 retailers on the platform right now, Sainsbury-Carter said.

“It’s designed to help retailers monetize more of their on-site inventory by partnering with brand advertisers who are using the broader Microsoft advertising platform and ecosystem,” said Sainsbury-Carter.

Mike Froggatt, a Gartner analyst said in emailed responses that combining Microsoft’s advertising platform and its wider range of media buying capabilities with retail media will help level the playing field with rivals. For instance, Microsoft is better positioned to compete with offerings like Google’s Performance Max tool, which is used to make audience management and optimization simpler when buying ads.

Froggatt added that Microsoft’s experience with handling siloed data is also a plus. “One of the key fears that we hear from retailers as they consider retail media technology and service partners is that they don’t want to share conversion data with competitors,” he said.

Microsoft on Tuesday also introduced PromoteIQ In-Store, a proof of concept that helps retailers as they experiment with content and hardware partners to create in-store retail media activations and digital signages. Microsoft says, however that Promote IQ In-Store will be available in the next 12 months. 

“The biggest news here is the offline piece, they are enabling a full-funnel retail media network solution for retailers,” said Andrew Lipsman, principal analyst for retail and e-commerce at Insider Intelligence. “The really interesting component is enabling in-store retail media. That is a massive opportunity,” Lipsman added.

Lipsman pointed out that every retailer, in some capacity, is going to need to have to digitize their store operations over the next decade. “And they’re going to need help. Between Amazon and Microsoft, retailers are going to want to partner with Microsoft because it is not going to compete with them. And so Microsoft has a really significant role play here,” he explained.

Ultimately, Microsoft is betting that retailers will opt for its streamlined retail media offering to drive high engagement . “For us the through-line is — how do we help drive performance as well as drive a relatively more scaled engagement between the retailer, the brand and Microsoft?” said Sainsbury-Carter.

And the network piece is a big part of that.

“Retail media is growing because it’s an amazing way for retailers to leverage their data and to drive a high-margin area of their business. But it is a pretty big evolution. Our vision is really this stack that can help them do that in a more consolidated way than having many partners that they have to deal with,” said Sainsbury-Carter.