[00:00:00] Hi everybody, and thanks for joining our weekly podcast. I’m Shelley Kohan and I’m very excited to welcome Dave Simon, EVP of Advertising for Mood Media and President of Omics and in-Store Marketplace. So, hey, listen, you are a seasoned vet in the Ad Tech. Space and you specialize in programmic strategy, marketplace development.

And my favorite thing that you do is you bridge supply, demand gaps in retail media, advertising a very, very hot topic for retailers and brands today. Yeah. Yeah. Thanks so much for having me, Shelley. This is, uh, this is great and very exciting and a big fan of the podcast. So thanks for being to letting me be on.

Oh, absolutely. It’s a pleasure having you here. So retail media networks, I know we’re gonna talk about that in a minute, but you know, Macy’s Media Network, which is their retail media network, just did a partnership with Amazon Retail Ad Services, and that’s gonna help. Fourth quarter, and of course Walmart has [00:01:00] generated, I think it’s over a hundred million in revenue from retail media networks, from their Walmart Connect, which is responsible for get this, Dave, 12% of the company’s profits.

So when I look at these numbers and I understand the direction retailers are going. You probably have a pretty good point of view about the missed opportunities that may be out there for them. But before we jump into all that, tell us about omics and what is mood. Sure. Yeah. Uh, so, so. Uh, mood Media is a fascinating company.

Um, it’s, I think 60 years old. Uh, the original Elevator music, the Mu, that’s where the company was created and its origins are in, uh, the, the notion of experiential retail experiences. Uh, and, and so what Mood Media does is, is this, it’s the largest provider of in-store or retail based experiential solutions.

We do everything from. Big complex audio and visual build outs and retails, uh, retailers. You’ll see, you know, 20 foot [00:02:00] tall LED screens that are sort of a very rich experience. Mood will do that all the way down to like designing the speaker and the headset that goes into a drive-through. Um, so audio, visual scent.

Uh, if, if, if you’re of my age, you shopped at Abercrombie with blasting music and that really strong smell, that’s actually a designed experience, uh, that, that Abercrombie picked. And so Mood Media has, has sort of had several iterations. Uh, the most recent is that they were bought by a private equity firm called Vector Capital right after COVID.

Uh, and they realized that this retail media advertising opportunity was becoming a very real solution, that they wanted to bolt onto their suite of offerings that they built. And so they acquired a company called Omics, uh, omics, specialized in. Helping retailers figure out how to turn their inventory in store into a digital inventory pool that buyers could buy and sell the same way that [00:03:00] everyone else has done in programmatic.

And so omics really pioneered the idea of turning, uh, an audio spot or a visual spot into an individual number of impressions based on who and how many people are shopping in the store. Uh, and so they were acquired three years ago. Uh, I jumped on about four months ago after the founder decided he’d sort of gone through the process and transitioned the business and so they were looking for, to bring somebody else in.

And so been here for four months. Um, and it’s been fascinating. It’s been a lot of fun. Oh, that’s amazing. And I know that you have done a lot of work in this space. You’re kind of a rock star. You came from Fiber, right? Yeah. And you were Chief, chief Revenue officer there, and I think you grew it from a hundred million to 500 million, something like that.

Yeah. I mean, look, you know, so the, the quick background here, and I tell this you all the people this all the time, um. It’s really good to be very lucky about where you wind up when you wind up there. Um, I started in the notion in this whole idea of programmatic, before it was [00:04:00] called programmatic, it was called RTB back then, and we traded our first impression in February of 2009.

Um, and, and so. Like at the time, the market size was the value of that one impression that we traded. Uh, fast forward, you know, almost 20 years now, and it’s uh, you know, well north of a hundred billion dollar market, uh, most media is traded at least in part programmatically. Uh, and so what I’ve been very fortunate to have is a front row seat for how money used to go from hand sold through relationships and phone calls and iOS, and now traded through machines.

And I, I’ve had a lot of, uh, a lot of really interesting experiences. I’ve done it in the mobile app space with fiber on the sell side. I did, uh, demand side work with moloka, which was the most recent company I was at, which was a heavy machine learning based approach to, to programmatic. Um, I was at, I was running an online video business called a OL on after we sold a business called ible.

So I’ve done online videos. CTV, mobile app. Mobile web, [00:05:00] desktop web, and now retail media. And it’s fun because there are some things that are always different about each of these markets. But at the end of the day, the way this technology gets deployed and the way money moves through the ecosystem tends to follow very similar paths.

And so what we’re seeing in retail media right now is this maturation where. Programmatic is becoming more and more important and a lot of the, you know, sort of timeless rules around programmatic apply in the same way. It’s just that they haven’t been done before, and so we get to take a lot of what we learned in the past and apply it here and it’s, it’s been a lot of fun.

I. Yeah, I mean, let’s see, about three years ago. I do, I always do my top retail trends every year, and so about three years ago my, one of my top retail trends was retail media networks, but that was back when it was just a revenue generator, so retailers coming outta the pandemic looking for another source of revenue, they really kind of bought into this idea of getting revenue.

But this year. I kind of changed my, uh, retail trend and I call it retail media [00:06:00] empire because now they’re really what they, they’ve gone beyond just the source of driving revenue to actually evolving this retail media ecosystem that’s brand building, it’s partnership attracting, it’s an analytics gold mine.

And from my understanding, this whole idea of retail media networks is gonna account for 25% of total digital ad spending by 2026. Which is just next year. So, but you also, uh, it’s interesting you had mentioned that, um, tariffs are accelerating retail media strategies. So tell me a little bit about that.

Yeah, well, so it is interesting the, the, the. The KPI that I keep in mind when I think about market sizing is the revenue of a, of retail media networks compared to the total gross market value, the total transaction volume of products sold in the store. And you know, we heard a great data point coming out of the Ascendant Network event last week where.

It used to be that if you were at 0.1 to [00:07:00] 0.3% of total gross market value, right? So if you sell a, you know, a hundred dollars of of product in store, you’re selling 30 cents of stuff. That was sort of the, the benchmark. That number in a lot of cases has now crossed over 1%. And if you look at the margins that are associated with selling products in the store, we’re talking about low single di digits.

But if you look at the margins coming out of retail media, you know, oftentimes they’re well north of 50%. And so from a profit driving, uh, opportunity, retail media. Is like one of the most investible opportunities in the market. And the funny part is, you know, if these were independent companies, they would be being funded by VCs and Growth Capital left and right.

It’s just they live within, within these retail media groups. And so, you know, there was a great quote by, um, by Quentin George from McKinsey where he talked about like, if your CEO is not jumping up and down about the opportunity with retail media, he’s missing the vote. Uh, and so I think there’s a [00:08:00] really interesting opportunity here.

I think there are two trends that, that, that are in line with what you asked. Um, the first is that COVID scared the heck out of every retailer and, and there, and every, and every advertiser, every brand that sold in store, and there was this panic rush into, I have to be building my business with an e-commerce shelf strategy first because the vast majority of products will be sold.

Online and I need to be able to figure out how to merchandise myself in a digital environment. Don’t get me wrong, e-commerce is is really important. And if you look at the customer base by segment, e-commerce has an increasing importance, the younger you go. That said, when you talk about retailers. On average, 80% of products are still sold in store.

If you talk about grocery particular, it’s over 90%. And so what’s interesting is there was this, the bit of a whiplash for these poor retail media networks where it was like build, be an [00:09:00] e-commerce strategy. Everybody needs to build, sell products on digital shelves. And now the pendulum swinging back because what they’re realizing is that all the investment that’s gone into driving e-commerce sales.

Is nowhere near as profitable because you’re still having to sell products in store. And so there’s this pendulum swing back to in store and that that’s really gonna drive, I think 2026. You know, we talk about it, we think about retail media. 1.0 was all about onsite search. Onsite display. Retail media 2.0 was about accessing those data that those users, offsite social, CTV web, retail media 3.0, which is 2026, we think.

Is all about accessing users in store at the point of purchase. And so there’s this really interesting dynamic where brands are starting to figure out the right balance between those strategies. Uh, and so we’re seeing a massive amount of, of capital investment from the retail media networks and in particular the retailers and store experience folks in building out these better shopping experiences [00:10:00] that also help highlight the brands that are ultimately responsible for the sales volume that go through those retailers.

That’s amazing. And the other thing, Dave, I just wanna point out is that, you know, you talk about the profit obvious, you know, 70, 90% margin on the retail media networks revenue, but also it’s driving loyalty. It is driving deeper loyalty, which feeds that, you know, customer lifetime value. Yeah, right. You know, it, it, it’s interesting, right?

Because mood media does not have a background in advertising or retail media. They’re much more about experiential, uh, shopping, uh, shoppers. There is an opportunity. For retailers to fundamentally rethink what it means to provide a shopping experience. And you know, we’ve seen dozens of examples where retail experiences are more popular than like big concerts.

You know, if you remember back in the day when Nike opened their Nike flagship stores, there were lines around the, around the block to get into those stores. [00:11:00] If you think about the, you know, one of my favorite, one of my favorite Buildouts is we, we did this, uh, this build out for. The Ferrari location in the lawn, and there’s this massive LED screen, uh, that people can step into and feel like they’re inside of a car.

There is often an hour long wait list to get in there. Now granted, Ferrari is a brand that everybody wants to go experience, and, and there are those things, but the fact is that if I think about in a grocery store, those big physical pallets that have, like, you know, in the summertime it’ll be a Coors Light sponsored pallet and you’ll have some cooler and some sort of like beach thing.

There that’s possible to turn into a digital experience. The, the, the, the, the tech exists, and frankly, the cost isn’t that much more than what you’re already doing. Well, Coors Light is more than happy to create and be associated with a very cool execution in store. And so is it like, is it the same thing as like, you know.

A massive, you know, 20 tall, tall, uh, LED screen like we have on Victoria’s Secret Store on Fifth Avenue. No, but you can [00:12:00] absolutely create these experiences and now that brands have shown a willingness to invest alongside these digital experiences in store retailers have the opportunity to fundamentally rethink what it means to bring their brands to light in those stores.

I love that and I love that. Um. That story about the Ferrari, because you’re right, people just wanna go and experience. And same when you’re in the grocery store, I think people are kind of getting a little bit, um, weary of all the LEDs and all the signs and all the digital, uh, billboards. And so whatever retailers and brands can do to kind of bring more of a experiential to that shopping journey is great.

Do you have other, um, data stories where retailers you think are missing a return on investment? Um. Well, yeah, so I think, look, this is, it’s, it’s not so much a, a miss. It’s part of the evolution, you know, so look, we, we power, um, a dozen or so retail media networks for their in-store [00:13:00] advertising experience, end to end from hardware all the way through, um, measurement.

And what I can tell you is that the, in what I’m seeing is very common for businesses that try and convert to a programmatic or. Basically stepping into the modern way of monetizing media. You know, I’ll give you my favorite example, because Disney is, is, I think, has done a phenomenal job, but the first five years of Disney’s transition from linear to streaming was incredibly bumpy.

Yeah. You know, if you think about it, and, and there’s a lot of parallels between the streaming and the, the TV space and the shopper marketing space. First majority of money is allocated on an annual basis. It’s not spot market based. It’s very, very heavy upfront plan. Second, there is a high concentration of inventory among a very few number of players.

There are six broadcasters in the US that basically reach everybody. If you look at the, the grocery chains, there are probably five or so grocery chains that [00:14:00] reach all of the us. Um, and so there’s a lot of, lot of consolidation and, and not much fragmentation. Um. Yeah. The third thing is these are businesses that are going from a linear or analog advertising model and trying to convert to a digital model.

What most re uh, what most publishers, if I can consider, retailers a publisher in this example, what, what most publishers miss is that they, they take protectionist attitude. Toward the inventory and try and create these strict business rules that look and feel like the business rules that were possible and held up their business on the analog side, but don’t work for digital.

And I’ll give you an example. Um. If you are a, a, an A brand who’s focused on buying from, uh, from a retailer, you have a joint business plan. That joint business plan often locks your inventory into, okay, I’m doing the, the trade marketing for couponing with this much budget. Then I’m gonna do my shut, my, my end cap digital or, [00:15:00] or, or physical print signage at this budget level.

Then I’m gonna do this tactic at this level. Well, that makes sense when you have to have a 30 day lead time to get posters into a store. But when you have the opportunity to change the impression on the fly in real time, those business rules don’t work. And so what we’re seeing is a lot of these retailers are now taking a much more omni-channel approach and coming to the brands with a much smarter question, which is how much money do you have to spend and what are your specific objectives for next year?

And you can imagine that if you’re Pepsi and you’re trying to push sell bottles of Pepsi, that’s, that’s a very different goal than trying to sell cans of Poppy. Poppy’s, a challenger brand doesn’t have the same brand recognition appeals to a different audience. So your objective with Poppy might be increased market share, increased total sales volume, and make sure you’re driving new customers to purchase.

Right? For Pepsi, it’s lapsed purchasers. It’s hitting your loyalty people. Well, the fact is that all of the inventory and all of the data that someone [00:16:00] like a Kroger or an ahold have make those strategies very, very possible, but they’re different. Yeah. And so what we’re seeing is less about like, Hey, go buy your onsite search two months later.

Okay, now come buy your, um, your, your offsite display two months later, okay, now come by, you’re in store. Instead, they’re approaching that upfront, that JBP negotiation from what’s your objective? And here are all the assets we have to make that objective come true. How do we map to that? And so once that’s done and you have flexibility of the budgets within them, then you can really take advantage of things like programmatic, of things like machine learning to drive technology, that use technology to drive activation of media, where it’s gonna make the biggest impact.

And so it’s just a part of the journey. But at the same time, what I will tell you is that this is so new for so many retailers. That there’s, there’s a bit of hesitancy and there’s a bit of trepidation around like, well, yeah, okay, that’s all great, but I still have my a hundred million dollars shopper marketing budget over here that I don’t wanna say [00:17:00] no to.

How do I do this without putting this at risk? Yeah, it’s so true. And retailers are kind of funny. They love technology. They’re not the quickest to jump on technology, but once one or two success stories happen, then the whole industry runs towards that technology. So you’re gonna see an avalanche coming up here.

Um, the other thing that’s interesting about what you said is that there seems to be more like flexibility, real time flexibility to change the in-store marketing experience plan. Yeah. As consumer trends are bubbling up, is that something that you would agree with? Yeah, absolutely. And I think, I think what’s, what’s really fun, frankly, about my job is that we get to stress to stretch the creativity of these retailers.

You know, one of the things I’ve been blown away by is the level of depth at which the average retailer understands the shopping experience. And I think what’s what’s been interesting is that we bring a unique set of capabilities. And we’re [00:18:00] really good at those capabilities, but I don’t know the shopper the same way that a Kroger or a, a Lowe’s or a Dick’s Sporting Goods does.

And so when I bring these, these, these assets to bear, the, what the retailers come up with is incredible. Uh, and you know, I’ll give you a great example there. There’s a fun little stat that, that we, we’ve pulled out. We’ve now run this study a dozen or so times. If you look at online advertising and combine it with.

In store audio. The results of those two things being run together is around 60% better than in just any one of them on an individual basis. If you run audio and visual in store, in conjunction, the recall is four x higher, right? So like all of these things that we, we know we can do audio, we know we can do visual.

It took somebody from a retailer telling us like, how do we time these things together? So that we can effectively do a store takeover and the results were [00:19:00] unbelievable, right? And so I, we, we love to see how these retailers can use their understanding of the shopper understanding of their store, the physical real estate, and then bring these technologies to bear and create a unique experience for the brands.

Oh, that’s, that’s amazing. And I love the fact that you now, you have tons of data and you can actually come away with analytics from those, that data real actionable things that you can do. Um, tell me a little bit about what retail media can learn from the mobile gaming data exhaust model. Yeah, that’s really interesting.

Yeah, so talk about getting lucky. I, uh, after we sold Fiber, um, I left and joined a company called The Loco. And you know, every once in a while you come across those people in your career that just fundamentally change your perception of how the world works. And Moloka was that, you know, to give you some context, when I joined Moloka was, uh, about 200 people.

When I left, it was about 800. When we were at 800 people, we had over 150 PhDs in machine learning and data science. This is sort of the gold standard [00:20:00] for how you think about machine learning. And I got to engage with these guys all day every day and, and some of the things that that stood out to me are that machine learning, especially with the deep neural network based models, not the LLM stuff or the generative ai, but really the sort of pattern recognition machine learning.

Is so much better at understanding the correlation between multiple data points at a given time, that really what you want to do is generate as much data and then figure out the value of that data as it relates to your end outcome. So for example, there is, you know, I’ll use Instacart ’cause it’s relevant in our grocery world and also one of the best apps out there.

If you think about what it takes to become a customer of Instacart through the app, you have to download the app, you have to sign up for it. You have to browse web products on the site, on the app. You have to add products to your cart. You have to check out, you have to come back, you have to add products to the cart, you have to check out, you can build lists.

All of those data points are [00:21:00] all indicative of what my ultimate LTV will be for Instacart. And so what’s interesting about the app world is every app developer basically tags every single one of those data points and then feeds it back to their partners for whom they use to buy media. And so if you think about this world, you have loyalty card data that you have, email address, phone number, physical address.

You know how often they’re purchasing at your store. You know what they’re purchasing, you know what their total shopping cart value is. All of that data is right now being used and packaged into these like static segments. So if you’re fruit loops and you want to conquest tricks buyers, you can do that.

And that’s great, right? But the fact is that there are nuances between people who buy fruit loops and people who buy tricks, and oftentimes it’s more than just what did they buy last time? There are probably different things around income, location, number of kids in the household, attention to health, whatever.[00:22:00]

All of that data being fed into ML models can ultimately be the thing that determines when to serve somebody, an ad and how, and, and what the objective is gonna be. And so if I look three or four years down the road. That to me feels like the, the ultimate holy grail where I’m a brand, I, I wanna sell, you know, a million dollars for the poppy in this quarter.

I put $800,000 into the machine. The machine figures out which ads to serve, when and where within the store, how to time it with audio and visual together, uh, and then spits out the result to tell you how much got sold. And so, like the, the part that’s really exciting about this space is that there’s very little development of machine learning in this space.

In the in-store space. Uh, but there’s a tremendous amount of data that’s very reliable, very predictive, and very associated with future outcomes. And so that to me feels like one of the natural places this market evolves. Oh my gosh. That’s like a big [00:23:00] goldmine there. Yeah, it’s pretty cool. Yeah, so my other retail trend that I know, uh, listed out for 2026, the evolution of AI powered retail analytics, and you just beautifully explained the power behind that.

So, I mean, it’s, it’s one of those things, Dave, it’s one of those things. My, you know, one of those things I think about if you, if you buy media from Facebook and Google through their AI tools, right? Um, it’s an interesting process because there’s a lot of trust. They basically say, gimme some creative assets.

Tell me your objective. Get outta my way that like that’s what makes a dollar in equal a dollar 30 out. And I think these retail media networks are in a position to offer similar products across their entire PO portfolio of offerings. Yeah. David, I think one thing you nailed on the head a little while ago is retailers are brilliant about knowing their consumer base and their customer.

And so if you take that knowledge with all this AI powered analytics, you can really. [00:24:00] Develop a program that is going to not only resonate with their customer, but continue to drive that loyalty. Yeah, absolutely. Always a pleasure. I hope you’ll come back. Thanks, Shelly. Appreciate it. Happy to. Thank a great day.

Thank you.