5 Minutes with veteran retail analyst Doug Montgomery

The merging of retail and entertainment, exemplified by shoppable TV ads, may look like the latest shiny thing for marketers.

But to Aluma Insights’ Doug Montgomery, a 20-year veteran of the entertainment and retail businesses and formerly of Warner Bros. Discovery, it marks an evolution of the retail playbook.

In the U.S. alone, Walmart, Target, Kroger and of course Amazon are competing for ad budgets through their retail media offerings. And not just among themselves — but with the streaming giants, too, some of who have launched their own retail-adjacent ad offerings.

Montgomery discusses with The Current how advertising’s hottest space will evolve in the near future, as well as the innovations marketers can’t afford to miss.

The following interview has been edited for length and clarity.

What are you seeing in the shoppable TV space?

After nearly 50 years since the inception of immersive TV, shoppable television is finally having its moment.

In the fall of 2023, Amazon embraced shoppable TV by broadcasting an NFL game for the first time on Black Friday, the busiest shopping day of the year. Amazon introduced a plethora of interactive features, including gamified time-discounts, QR code shopping, and even sponsored turkey sandwiches from Whole Foods for the hosts.

This marked a significant milestone in the evolution of television advertising.

Concurrently, Walmart entered the shoppable TV arena with its own innovative approach. In December 2023, Walmart introduced Add to Heart, a 23-episode series designed to mimic an advent calendar.

Dubbed as “rom-commerce,” this series was broadcasted on various platforms, including YouTube, TikTok and Roku, marking Walmart’s first self-produced shoppable commercial series.

Add to Heart seamlessly blended entertainment with shopping, providing consumers with a unique and immersive shopping experience directly through their screens.

Walmart’s introduction of Add to Heart showcases its commitment to innovation and its willingness to carve out its own path in the shoppable television landscape.

As both retail giants continue to explore the potential of shoppable TV, consumers can expect even more interactive and engaging experiences that blur the lines between entertainment and commerce.

Streaming giants are also moving into retail media. How do you see that play out?

Disney announced in January 2024 their own Gateway Shop, a shoppable ad format with major CPG [consumer packaged goods] advertisers such as Unilever.

Billed as a “holistic approach […] for viewer-first ad experiences,” Disney’s Gateway Shop aims to keep ad dollars on their networks. NBCUniversal and its Universal Checkout also has promise to bring commerce and viewing together, thereby preventing the loss of ad dollars to RMNs [retail media networks].

Reality shows such as Love Island seem to be well suited to a hybrid of media and shopping. Retaining viewers with entertainment while providing a shortened purchase funnel is the traditional networks’ main hope against retailer-driven RMNs.

What’s next for retail media?

With the growth of RMNs, the first casualty will likely be linear TV networks as their subscription fees fall with lower subscriber numbers and the shift of ad dollars.

Outcome-based advertising is a very attractive proposition in an industry still fighting the more-than-100-year-old John Wanamaker quote “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

The rapid ascent of RMNs signals a transformative shift in the advertising landscape, where those who hesitate to embrace this evolution risk significant challenges ahead.

The data-driven precision, unparalleled targeting capabilities, and seamless integration of commerce within content offered by RMNs are reshaping consumer engagement and advertising effectiveness.

Traditional advertising channels face mounting pressure to adapt, or risk being left behind.