Dive Brief:

• Publicis Groupe acquired CitrusAd, a software as a service (SaaS) platform that helps brands optimize their marketing performance on e-commerce sites, per an announcement. Financial terms of the transaction, which is expected to close in the coming weeks, were not disclosed.
• Australia-based CitrusAd, whose clients include Macy's, Lowe's and Harris Teeter, will act as an independent business within Publicis' Epsilon data marketing unit. Its tech will be closely integrated with Epsilon's own retail media offerings, which leverage the agency's Core ID identity solution.
• Together, Epsilon and CitrusAd aim to provide stronger first-party data insights to help clients increase performance and improve targeting both within merchant platforms and in external environments, like publisher sites. The deal is the latest to recognize a growing need for marketing solutions that do not rely on third-party cookies, with Publicis eyeing the retail media space as a ripe area for alternatives.

Dive Insight:

Publicis looks to wed CitrusAd's e-commerce expertise with the existing retail media capabilities wielded by Epsilon.  The goal is to unify customer knowledge across publisher and e-commerce ecosystems — without the use of third-party cookies — so that brands can measure performance across channels and leverage transactional data at the product level to validate results. This will contribute to the creation of "a new generation of identity-led retail media networks," per the release, and capitalize on an e-commerce boom accelerated by the coronavirus pandemic.

Founded in 2017, CitrusAd brings over 130 engineers and retail media professionals to the agency group. More than 7,000 brands currently use CitrusAd's self-service platform, while it has relationships with more than 70 retail distributors around the globe. CitrusAd reaches 22 countries, though 50% of its activity is in the U.S. Service offerings for advertisers include sponsored product pages, banner advertising and branded landing pages.

Retail media currently commands an estimated $30 billion per year in advertising spend, according to Publicis. The agency suggested that figure could double within the next five years. In a statement, Publicis chairman and chief executive Arthur Sadoun said media investments in the online retail sector are expected to exceed those of TV by 2025.

Other agencies are forging into commerce to buoy growth following a pandemic period that saw mass client pullbacks and reshaped consumer habits. Companies including Walmart, Target, CVS, Walgreens and Kroger at the same time are building out retail media networks with a value proposition around melding in-store shopper data with online data — an omnichannel approach that digital giants like Google and Facebook struggle to replicate because they don't have a brick-and-mortar footprint. Packaged goods brands that want their products front and center on e-commerce sites have welcomed the variety while still expressing some concerns that the trend is establishing more walled gardens.

Epsilon and CitrusAd's combined forces may assuage some of those concerns as Publicis chases more CPG brand dollars. The company said clients will be able to measure the performance of their campaigns in real time, including validated transactions. Players in the space indicated that the CitrusAd deal could act as a competitive advantage for the ad holding giant.

"The acquisition is a statement from Publicis that they're going all in on retail media," Adam Epstein, vice president of growth at e-commerce advertising software firm Perpetua — a partner of CitrusAd — said in emailed comments. "By owning a whole technology stack they differentiate themselves from any other [holding company]."

Publicis continues to deepen its internal tech know-how through acquisitions. The agency purchased Epsilon for a towering $4.4 billion two years ago, although disruptions like Google's plans to kill third-party cookies — recently delayed to 2023 — have led to adjustments in the data unit's strategy.

Publicis in April partnered with The Trade Desk to pair Epsilon's Core ID solution with Unified ID 2.0, a cookie alternative originally developed by the demand-side platform (DSP). As part of the agreement, The Trade Desk became the exclusive DSP for Epsilon's Core ID.