Customerland
Customerland is a podcast about …. Customers. How to get more of them. How to keep them. What makes them tick. We talk to the experts, the technologies and occasionally, actual people – you know, customers – to find out what they’re all about.So if you’re a CX pro, a loyalty marketer, a brand owner, an agency planner … if you’re a CRM & personalization geek, if you’re a customer service / CSAT / NPS nerd – you finally have a home.
Customerland
Measuring What Matters in Retail Media
The world of retail media is experiencing a seismic shift as networks struggle to bridge the gap between traditional in-store marketing and digital advertising approaches. In this fascinating conversation with Paul Brenner (Global SVP of Retail Media and Partnerships at InStore Marketplace) and Steve Gray (Director of SG Retail UK), we explore the fundamental differences between US and European retail media evolution and why these differences matter.
European retailers, gaining market share earlier than their American counterparts, developed in-store retail media networks from a position of strength, setting the agenda rather than following brand directives. Meanwhile, US retail media emerged primarily through digital channels first, creating a disconnect that persists today. This regional difference reveals a deeper organizational challenge: how to unite the measurement approaches of two worlds.
"You've got one half of the business measuring one thing, even though they've got amazing data, but they're applying a sales uplift mindset. And you've got the other half of the organization spending the big media dollars and they're acting without much data, but they're applying a different standard," explains Steve.
The science of brand growth offers a potential unifying principle: brands only grow by acquiring new customers, requiring both mental availability (awareness) and physical availability (presence in-store). Retail media networks have the unique advantage of influencing both sides of this equation—something no other media channel can claim.
As Paul notes, retail media networks must address this physical-digital transition through restructuring and rethinking their approach: "If they're not there in three years, it's really going to hurt them overall because there is no way a brand is going to say all my money's going into a place where 10% of my product is sold."
Discover why cost-per-shopper models might provide a transitional language to help brands move traditional trade spending to retail media, and why the coming years will likely see significant organizational changes as CPG companies work to integrate their shopper and retail media teams to maximize growth in this rapidly evolving landscape.
You've got one half of the business measuring one thing, even though they've got amazing data, but they're applying a sales uplift mindset. And you've got the other half of the organization who are spending the big media dollars and they're acting without much data, but they're applying a different standard. But is there a sort of unifying theme here? And actually there is.
Speaker 2:Today on Customer Land, I'm with Paul Brenner, who's Global SVP of Retail Media and Partnerships at InStore Marketplace ISM, and Steve Gray, who's Director of SG Retail in the UK. Thank you both for joining me. I've been looking forward to this, actually been challenged and looking forward to this because our schedules were such a hacked up mess, but thank you.
Speaker 1:Well, thank you.
Speaker 2:So there's so much to talk about in retail media. It's an explosive industry, it's an explosive topic with lots of different opinions, and I think we're still at this point where, at least in this country, we're still feeling our way around the explosive marketplace. Because it's my own poor analogy on it is that take a snapshot of RMNs today and then do the same thing in two weeks and you'll see the same landscape. But it's almost like the Sahara Desert overnight. It's all there, but it kind of looks a little different than it did yesterday. And I don't know if that analogy holds, but it sure seems that way from where I sit.
Speaker 2:So I wanted to kind of just throw this out there, get your. I just takes on maybe some of the, the trends and the opportunities. But I think your teams also pointed out some of the distinct ways that people are viewing RMNs and their effectiveness and measuring them in the UK versus in the US. And I don't know, paul, if you wanted to take that or Steve, you had any any thoughts there, and I don't know, paul, if you wanted to take that or, steve, you had any any thoughts there.
Speaker 3:I mean, there's definitely a difference between what I see in the US and what I see in the UK, and I'd say, start with the positive. Maybe let Steve talk about how the UK has led the way on in-store, because that's been what I. That's a lot of what I'm learning from him, so I'd probably lob it to Steve first. Okay, Steve you're up.
Speaker 1:Just to somebody called me the grandfather of retail media the other day. I think they just were making the point that I'm old and been around the block a lot.
Speaker 3:We both have white hair, steve, so we both have white hair, so I'm not sure that that could be any indicator.
Speaker 1:But yeah, I grew up with retail media it wasn't called retail media. Then I was with P&G the first 10 years of my career and then PepsiCo. And then I had this very interesting move just well 20-odd years ago to pioneer, initially data analytics, but then we created a media business at Dunhamby working with Tesco, and that became sort of the UK's first advanced retail media network. Again, we didn't call it that then, but we took that template and reapplied it to Kroger and that gave birth to 8451 and Kroger Precision Media and so I guess, and then SG Retail kind of followed on later from that and our focus is on advising retailers how to get started or how to optimize their retail media network. So it's definitely a topic that I live with and I'm very, very passionate about and it's wonderful to see it still evolving.
Speaker 1:And there are some big differences between uh uk and um, you or europe in us and I I wrote about this recently. I mean essentially because the retailers in the in europe gained market share much faster uh than in the us. They've been able for a long time to kind of call the shots on their suppliers and whereas in the old days and I'm I'm now talking the 1960s, 1970s, it used to be the case that the, the big cpg brands in europe would would sort of turn up with their own kind of install, pause and install marketing and kind of impose that on the retailers, and the retailers would be grateful to receive it um. For the last 20 or 30 years that's no longer been the case. And now you, now you have um, it's very, very normal where the, the, even the biggest cpgs, the proctors, the unilevers, would adapt their programs around the retail. The retail was is essentially setting the agenda.
Speaker 1:And so the retail media networks in europe have have evolved um much earlier, I think, than in the us, and they've evolved out of install because they predated digital and um. Whereas in the us what happened? You know, it's much, much bigger market, very regionalized. Still the case, I think, that that only walmart and kroger are in double digits in terms of market share. I think it's something. I don't know precise numbers, but um, and that's um, uh, still only recently. So so it's still the case that when you you take the fmsg pie in the us, it's it's stacked much more in favor of the big cpgs. And I remember when we were working with kroger back in the early 2000s. They were saying at the time it would never occur to them not to take on the big PepsiCo or the big Coke promo at Halloween or whatever. And it made me realize actually, that it's still the case that the suppliers are sort of calling those shots.
Speaker 1:So the retail media networks never really evolved in the US in the way that they did in the UK.
Speaker 1:You know of the pioneer work from Amazon and then Walmart and all the CPGs, all the CPG retailers now introducing digital retail media networks driven by sponsored product ads, etc.
Speaker 1:Etc. So it's very exciting to see this sort of focus now on the US and a kind of a learning from what's happening in Europe. But then the other thing that is also really really exciting is and this is what Paul really and his team are kind of pioneering is the opening up to install of the programmatic demand coming from media agencies, because that actually has not yet happened in Europe and the demand for retail media from media agencies in Europe is coming to digital. But the really exciting thing I think, is opening that up to install. That can be transformational for retail media networks. But it's not straightforward. You need proper technology and it needs to fit into the programmatic buying tools that the agencies are using, and that's why we're very excited with what Install Marketplace ISM are doing, with what install marketplace ISM are doing, and I could see that you know getting a lot is getting early adopter traction in the US. I think that's going to be a big thing globally actually.
Speaker 3:Yeah, I think the key that you just mentioned there from my learning with you, steve, is Europe led the way on the organizational change to make in-store part of retail media. Right, all those relationships, and you know just the fact that you know the LS11s or the MMGs or, right, tesco Media Insights. They first got the kind of the power or the authority right to do that, to drive the revenue, but they didn't really lead with technology, they led with organizational change, right, yes, that's correct. And now in the US what we've seen is technology is trying for in-store, is trying to catch up with the digital phase one efforts, right, and then we're trying to apply that to the Europe efforts, right, and then we're trying to apply that to the Europe. So kind of us working together is trying to cross benefit each other. You know, in a lot of ways and, yeah, I think that's how we get down to this discussion, but we're, you know, we're coming in there.
Speaker 3:You know, steve and I might be working with someone together, or just, you know, talking about our experiences and you know, or just talking about our experiences, and we'd say, oh, we need to be digitized, we need to sell on CPMs, to make programmatic activations more readily available. And then I get a little more history on what it took for that organizational change to occur in the UK specifically, and so I have to kind of adapt as well. That's why the cost per shopper thing came to mind, because one of those big organizational changes was, you know, people talking about trade and co-op and in-store in those traditional ways and using that same language and those same words to make that organizational change happen right, and so that that's a really a big driver. I've. I've noticed and I'm trying to figure out how to apply that here, because, you know, in the U S because that organizational change is lagging Right, right.
Speaker 2:You know, um, for we actually stopped tracking how many organizations were standing up RMNs because it just became like why are we tracking this? There are directories out there. It's no longer news that another fuel and convenience chain stood up their own RMN. It's inevitable at this point. If they're not, they're choosing to lag. On the other hand, in-store is its own thing. In-store is an entirely different technological lift and it's a different kind of conceptual lift as well. And I'm just curious, because you both probably talk to people on both sides of that. Look, if you're just doing an RMN on the digital space, yep, it's not as straightforward. You don't just plug in and go Lots of considerations there, but it seems to be maybe not infinitely more complex. But there's, there are retailers out there who are looking hard at in-store and trying to figure out what does this really mean to us?
Speaker 1:Yeah, I mean, fundamentally you're trying to do the same things, whether you're trying to influence the shopper, you're trying to influence the customer. Trying to influence the shopper, you're trying to influence the customer, and if the customer is on your website, then you're going to try and influence them through um, the way that they're searching to sponsor product ads or the way that they're navigating through the website via display. And if they're on social media, you may be looking to influence them because you've been able to match your loyalty data to Facebook or some such, and in-store it's no different. You're trying to persuade and influence shoppers. So I think that's important to say.
Speaker 1:We're trying to do the same thing, but obviously then, in-store you've got different media and in the early days you had cardboard at hand and you had to put cardboard up and you had to take it down. But cardboard can be very cardboard with the right messaging can be, and still is, very, very, very effective. We work very closely with one big supermarket chain in the UK and it's not uncommon for the supermarket. They're literally making tens of millions of dollars per year putting up and taking down cardboard. Okay, it's a fantastic business in many ways.
Speaker 1:And then, of course, now that's digitizing and you know that on the one hand is very exciting because you can do a lot more with a TV screen than you can do with cardboard, and you can do it quicker, faster, better, and it has environmental benefits, all sorts of things but also brings with it its own complexities and challenges. But that's just one media. You have things like supermarket trolleys where they've been proven for many, many years to be very, very effective to put an ad on the front of a supermarket trolley. There's been in-store magazines, in-store radio very, very effective, described recently as the unsung hero of retail media. Very, very effective.
Speaker 1:So the challenge there, of course, is that those media tend to come with their own specialist providers, and that means, from a retail media network point of view, there isn't really one entity or one solution partner that you can find who would just come in and do it all, whereas on a website you plug in critio or you plug in citrus epsilon and you've more or less done the job and, um, so it's. Yeah, it's got much more complexity. And then, of course, you get into the big debate around well, yeah, but we've kind of been putting cardboard up for many, many years and some of these things, but we call that, we don't call that retail media, we call that kind of shopper or we, or it's all funded out of the JVP or the commercial agreement. So we're kind of doing a lot. That's not really retail media. How do we make it incremental?
Speaker 1:And then we're into the you know, a kind of a wonderful debate around that which we can, we can talk to, and and of course then you also confront that from the retailer's point of view, that I think they are much better adapted to thinking about their customer from an omni-channel point of view and and they know that that almost all of their e-com shoppers are our shoppers inside the shops too, and there isn't really a separation. They just sometimes will shop online and sometimes will shop in-store. But from the brand's point of view, they divide their world up absolutely by channel. So you'll get the shopper marketeers who are really only thinking about in-store, and you get the e-com teams with their big organizations, and they often bring with them technology and they're getting all the resource and all the investment. But they're taking a very narrow view of perhaps 5%, 10%, sometimes 20% of the retailer's audience and they're only looking at that.
Speaker 1:And they don't think from a customer-joined-up point of view because they've never really been able to from a measurement point of view. And that takes us into the whole, whole thorny topic of measurement.
Speaker 2:Well, that's, you know that's a, it's a. It's a great topic, hugely thorny, and you know, nobody ends up really loving each other after you really get into the weeds on these discussions. But you know, we're adults here, some respect, we can have these kinds of talks. But I think I guess it was Paul a few minutes ago you were starting to talk about the different ways that US versus UK are starting to measure these things, talking about CPS versus CPMs. I actually would love to have that discussion. I think there's some learnings there. I'm going to resist getting on a soapbox and giving my opinion because, frankly, it doesn't matter. But measuring what matters is difficult. Measuring things is easy. Measuring what matters is difficult. Measuring things is easy, you know, measuring what matters it turns out to be a bit more of an artful process. So let's just start with CPS cost per shopper which is kind of a departure from traditional CPM based. And Paul, you were about to, I think you're about to go there.
Speaker 3:Yeah, I was CPM based and, paul, you were about to. I think you're about to go there. Yeah, no, I was. And I think, I think, for all the reasons that Steve just talked about, right is pretty much everything in store is at some level. It's a transitory conversation. It is a migration from legacy signage to, and the way the store operates, to, retail media, owning that, um, that inventory. And I think, if you think about just basic control, two PNLs, right, you know the, the, the brand being in charge, the store operator, right, and in some ways giving up inventory revenue on other aspects, not having to worry about somebody putting up a sign and taking it down every day, right. So efficiency's there, um, but it has to migrate in some way, and so that's. You know.
Speaker 3:I was at lunch with a guy Steve knows well, matt Lee, over at SMG. He was telling me the stories in the early days of how he would convince trade people to take their in-store money and move it over to the retail media, right. And he would say well, how much are you paying for that shelf location? How much are you paying for that paper sign? How much are you paying for that onsite activation with someone handing out food, snacks, right, and samples, and everything was about cost per shopper. Everything was about it's going to cost me $50,000 to put up this sign for this many days, right, and it's a cost per shopper model. And you know it was. And that I was at lunch and I said, man, that's, that's pretty much what we're saying to the retail media, but they live in a CPM world and they're talking about you know how to do it more efficiently, more dynamically? And so I started just kind of putting this idea out there and started getting some attention and, like I said in the beginning, I've further taken that conversation to how it could apply to the average revenue per shopper. Right, and I don't think it's like trying to eliminate the CPM by any means, right, it's really just.
Speaker 3:Is there a way to talk about this that helps people that have controlled in-store revenue for so long? The brand right, the buyer, the control being. I have to negotiate my JVP, so getting those people comfortable with what does that mean? To move my investment over to retail media? Right, give me some translation from here to here, right, and that's really what I think the value of that cost per shopper discussion is, because, once you get through the organizational challenges of. Wait a minute, my P&L is the one that gets that tens of millions a year for paper cardboard. Now you're going to take it away from me. How is that? How does that happen? Right? And then, how do the brands better understand that?
Speaker 3:I think there's education that's needed of the retail media networks, of how a retailer actually operates.
Speaker 3:Sometimes I think they could benefit from some of that education on the in-store.
Speaker 3:But I think of it more as a transition conversation and I think to further that what Steve touched on really well, there is a cost per shopper model is only as good as how much retail media defines that audience. Right, you have to, really, and I think that digital conversation about who is the audience in the store, whether that's by people count or dwell time, but even personas or, you know, type of buyers that are in the store during certain times that audience definition it really isn't there yet from a standards perspective, or us or uk. So it's kind of like, well, cost per shopper is a math model but it's based on how many people just walk down the aisles, right? How is our retail media defining that as a digital audience in store so that that carryover can occur. So I think there's a lot of change that has to happen here in order to get that to the right place. But that's really what we're focused on is trying to help define that in a way so it can kind of more easily shift.
Speaker 2:Right. I mean, you know, getting rid of CPM as a measurement as much as as much as people hate it and everybody kind of sees where the you know it's. It's a pockmarked measurement. It does some things really well and it does other things kind of terribly. I think that's kind of understood. The thing is, though, it's so rooted in in media, like it's it's that's just the language right.
Speaker 3:It's the only way we can comply with the measurement on the backend. Yeah, exactly Right If I want to do omni-channel loop measurement, closed loop measurement. I have to deliver CPMs Right.
Speaker 2:You have to speak that language, you have to deliver CPMs, and you're not going to get anyone of any size or scale to alter that. But I think your approach is really interesting too. It's like you're not really trying to change that. You're, it seems to me, um, creating a language that the retailers already speak, and it's it's kind of a language of translation. So, you know, retail networks themselves are going to operate on CPM forever and ever because they have to, they will, they're gonna, there's gonna be changing it, but yeah, I'd love to hear what steve has to say about that, because I just say this is a yeah, this is a great we've we've done a lot of work on, on, on this, this, this topic, and it it's still.
Speaker 1:It really fascinates me because again, we were, um, we're working with it with a retailer, and everybody would say one of the big drivers of retail media is that the retailers are sat on this amazing data and of course, they've got daily EPOS data so they can track precisely what's selling by the hour in which store.
Speaker 1:And then they have loyalty data which allows them to join that up with the e-commerce so they can see for every shopper how frequently are they shopping in store, how are they going to the website, what are they buying, um, what are they not buying? They can see what are they browsing on on ecomps incredible data sets, and it seemed to me that that whatever, but however whatever data the they would they would give to the brand, it would never be enough. And and this used to sort of throw me a little bit, because you think, well, what are the brands getting from TV companies or from meta or from durations? They're getting nothing. They're getting we showed your ad to this number of people and that's it. And yet the brands would sort of take the view that they've somehow got a sort of scientific approach to media measurement.
Speaker 3:You saw what is on the look-alike audience. By the way, based on look-alike audience.
Speaker 1:Yeah, we've got these, you know, we've got, we did this incredible media mix modeling and you think, well, that's just regression analysis on small sample sizes, that you know indicative sense, that one channel is, you know, slightly better than another. The retailers are set on this absolute granular data and then then, if you then sort of track that back you, basically what you uncover is you've got this sort of dual, uh, double standard, really, a sort of a duality of approach, and that the the world of media because it was never very data informed or very data rich has to exist on these sort of, um, small sample size modeling. But you apply a media kind of mindset to it and you're looking at things like you know, how many people did I reach and did their attitudes change or did their intentions to buy change, which again is just small sample size research. But on the in-store or on the retail media, because it's typically governed through the commercial teams what they're applying is a did my sales go up? Mindset. So it's a sales uplift and cost per sales uplift. So then you say, well, what should they? Okay, so you've got one half of the business measuring one thing, even though they've got amazing data, but they're applying a sales uplift mindset. And you've got the other half of the organization who are spending the big media dollars and they're acting without much data, but they're applying a different standard.
Speaker 1:But is there a sort of unifying theme here and actually there is which is, if you sort of dive into the science of how brands grow, which we're really, really big fans of, what that tells you is you need to grow your mental availability of what's going on inside people's heads about your brand, obviously, but you also have to grow your physical availability. So you know, how can I, how is this brand showing up on an e-com site or showing up in store? Both of these things that are needed to grow the brand. And the only way that the brands will grow which is all now proven, you know all the big CPGs buy into this is through new user growth, through you've got to acquire new customers. So you say, well, okay, well then, that's the answer. Customers. So you say, well, okay, well then, that's the answer. You should focus all of your media, and all of your retail media, but also all of your shopper, all of your um category activity should all be focused on new user growth. That's the measure.
Speaker 1:And and you know we're big fans of that, and and and then then the question is okay, well, how do I get at that um in a in a granular way? And and then you've got to be clever about it because, um, the retailers will say, well, we can tell you that, because we can tell you how many users you've got from our loyalty data, and so we can tell you if, if, this media impacted a new user. Problem is that the commercial teams aren't really looking for that. Just told me my sales went up. That's all I need to know.
Speaker 1:But, but but then, uh, they are susceptible to the challenger when somebody says, well, yeah, but walmart, you know that's true that you, um, uh, you did attract this campaign, did attract a number of new use, new, new users, but they may have been at um kroger or 7-eleven beforehand and we may have converted them there. So how do we know that? So, to get the skin of all of this, you've got to have some kind of external panel, um, which gives you that sort of where am I getting my new users from, linked to some very, very granular you know, probably daily store epos, in order to the skin of which of my activations are driving this, and that's where we're trying to go with our clients.
Speaker 3:I think I'm going to use what you just described as an example for cost per shopper, Mike, because I think that what Steve just gave was very thorough. That's a challenge, I think. If you look at the history of in-store. Let's just say you were a brand trying to seize category grow new shoppers to a couponing system and you would pay some amount of money to make those coupons. Let's say, you know five, six cents, right. And then you know, because people converted that you, let's say, you reach some percentage of those people and then you converted a certain amount at the point of sale, right? So you paid maybe five cents, but at the end of the day, your total cost to grow market share was 60 cents per person, per shopper, right. So you're doing that math all day, Right, Steve? You're like I'm the brand, I'm trying to grow my category share. That's been my legacy way. So now you go to a digital environment and you say, OK, I've got a screen, Right, I'm going to buy it on CPM, but it's going to be, you know, one and a half cents per shopper, Right. I'm going to use my audience tool to know it reached about 70% of the shoppers, 80% of the shoppers that were in the store and then I'm going to use my point of sale to attribute how much that exposure created message. So now my cost per shopper is maybe 6 cents, right To grow market share, right.
Speaker 3:And so the game is the same like Steve described.
Speaker 3:I'm a brand making an investment in something and at the end of the day, I want my basket size to go up or I want my category share to increase over my competitors. I've been thinking about that, using a paper coupon or a sign because of this model work on a cheaper, more efficient medium right with the same amount of capability, and look at it as truly a category share increase, right. That's kind of the applicable way to think about what Steve's describing. You know, and that's my argument with brands is like there's plenty of brands, there's plenty of companies here in the US that are generating hundreds of millions of dollars right, selling on a cost per shopper and a paper sign and a coupon printed at the receipt, checkout or something like that. That math can apply. It's probably more efficient, right, and it's more digital across all the channels that are being sold by the retail media, right? And at the end of the day, did it change the brand, Did it move more product? Did it grow my share? That's what you want to know.
Speaker 2:You know we have this discussion, the same discussion. I should have just recorded that little snippet right there, because that applies to almost every discipline that we cover. Like getting to the core measurement, which is how did it affect my shopper? What was the shopper outcome? If it doesn't measure that fairly directly, you're probably not measuring something correctly. But let me ask you something, because both of you deal with this and have dealt with this apparently for some time, but the argument is rock solid. There's no poking holes in it. The math is the math. This is an investment-based analysis. But you're in the boardrooms, or you're talking to the CTOs, or you're talking to the marketers, whoever they are in this case. What are their objections? Let me rephrase that what do you think the biggest hurdles are to the sensible adoption of this that you see in your experience?
Speaker 1:Of what Mike, the adoption of.
Speaker 2:Of in-store of CPS, of this kind of just like pure investment-based analysis lens Okay.
Speaker 1:I mean for me, I think. I think brands have, you know, they've always, always, um always had the challenge of do I really know what's working? Um, you know, there's that famous quote. You know, I'm sure that half my advertising is wasted, but I'm not sure which half. It's just, you know, that's just been been a thing ever since there's been advertising. I don't think it will ever get purely solved. There's always going to be new innovation that will give you more and more insights. It's just almost like an arms race where you've just got to keep. That's a good analogy, I think. That's the one thing.
Speaker 1:On the other hand, there has been this sort of you know the science from erin load bass, which is proven now, that that the only way you can grow a brand is by acquiring new customers. So I think, I think that has been understood. The issue for big cpgs, though, is that they've understood that mostly within um, within the marketing teams, and so that's that has informed changes in media buying, and, and you know broadly that it's better to go um for a thousand people once rather than you know um 100 people 10 times. So so another you know category entry points. A lot of that is now being understood, being applied. What? What I don't think that they've quite solved, or or this is where I think they, they, they don't need to focus is they've always known, of course, that you have to be in in widespread distribution and you have to get a lot of presence, but they don't bring a. They don't, they don't quantify the extent to which that is contributing to new user growth. If you're going to build a brand from scratch, the first thing you need is distribution in a shop. You put the brand on the shelf, a certain number of people will see it and they'll buy it. That is building the brand. It isn't all about advertising. You need the two things together.
Speaker 1:And then the next problem they have is okay, well, if the science says we have to acquire new users, how do we measure how many users we've got? Because they have no clue. The people who know that are the retakes. So they have to find other methods to understand how many users. And then they have to get under the skin of.
Speaker 1:Well, what of all the things that I'm doing, is making the biggest contribution to new user growth? And and, of course, all of their media mixed modeling tools. They don't. They don't take into account the things that you know drive growth more as much the distribution, the category, all of the in-store activity. These things are driving growth. And then then we, and then the, the retailers have the, the ace card up their sleeve which is look, folks, in it, we can help you to grow the mental availability side very, very precisely, very granularly, but we also can obviously massively impact the physical availability side. It's that we are the only media that can do that um and um. That's that's the case card. So so I think I think what does that? That says that you know retail media, for all its complications and challenges, is this is not a passing phase. This is just going to get bigger and bigger as brands seek to solve this there's two.
Speaker 3:There's two sides here that I think ultimately can lead to brand benefit. One is you've got your legacy brick and mortar that runs a certain way and they always have and they most likely will continue to operate that way, right, Because they operate a physical store. And then you've got the retail media network, which do digitization using their loyalty card data. The whole purpose of that is to help the brands grow their market share, Right, and you know it's been created. This space has been created now where the RMNs have shown hey, brand, if you spend more money directly with us as opposed to all these other forms of social media, our full funnel can help you get there, Right, but now you've got this kind of this anchor of brick and mortar in the way they've always operated at holding that back, Right? So that's that's the issue that has to be solved, Right? You know, and it is the art of war, I think it's what opportunities are increased as they are seized, or something like that.
Speaker 3:Whatever that quote is, and I think what the arguments have created is this digital space where brand dollars are flowing 50, 60 billion a year. Now they have to stop thinking so much like a retailer on the brand building side and look at the total tool set they offer. Right, how the social media and the offsite and everything can funnel into their website or into their stores. If they want to keep growing and, in my opinion, be more of an agency than they've ever been right and they're deliverable they have to address this transition from the physical world. It has to be in some way absorbed, restructured, rethought, Otherwise the opportunity will not grow because they didn't seize it. It will just stay kind of flat and in fact, I think the brands will start to turn on them. Um, because the growth won't be there anymore, Right? Um, and, and you know, RMNs will start oh, we're a national play, and then brands will go wait, I'm confused.
Speaker 1:Right.
Speaker 2:No, wait a second.
Speaker 3:I thought you were bringing them the value of your loyalty data across all of your channels and now you're a national player. I'm really confused that that position of those two sides the physical world and all the benefits of retail media. If you can't pull this cost per shopper or audience or targeting or whatever that is it makes sense, or digital to round that out I think retail media is going to be in a really tough spot in three years. I just feel that it's not only like the brands are asking for it. I feel like in-store as part of retail media, if they're not there in three years, it's really going to hurt their overall because there is no way a brand is going to say all my money's going into a place where 10% of my product is sold Right. That makes no sense to me, Zero sense to me.
Speaker 2:Well, I can't imagine that that brands and and you know no brand right now has got their head in the sand that I'm aware of in there. These are smart, aggressive, energetic people and you know there's enough momentum behind that convergence. I think it's going to become a more commonplace conversation at the board level, or at least at the senior level.
Speaker 3:Yeah, retail media are still arguing over who's going to pay the capital. They're arguing over who gets to pick where the sign goes, the screen goes. They're arguing over how many ads are played in the store. Right, right, who gets to pick where the sign goes, the screen goes. They're arguing over how many ads are played in the store. Right, I'm in the vents of losing a very good deal with a drink company because the retailer put the product on the wrong shelf in the store.
Speaker 1:The big challenge for the CPGs is it's actually organizational. And I think retail media's rise is really throwing us into very, very sharp relief because they've adapted to e-com by building big e-com teams and that's taken a big chunk of their resources. They've said it's worth us investing in that because that's where the growth is, even if it's a small chunk of their resources. They've said it's worth us investing in that because that's where the growth is, even if it's a small percent of the business. And we've seen the rise of Amazon. We've seen the rise of others. We've really got to win on e-commerce. We've built these big e-commerce teams. Then is retail media the digital retail media driven by sort of sponsored product apps, and then the credios and making that easy for retailers to market, sponsor and display media and ad tech.
Speaker 1:The CPGs, I think, have said oh okay, now this is sort of a new thing. This is not unlike Google and Meta, so we'd better bring our agencies in to start buying this on our behalf, because it's you know, it's kind of complicated. So you've then got this huge resource um and technology and and now media agencies coming into the world of of of kind of shopper. Meanwhile you've got the um've got the other half of the business, the sales and the commercial teams focusing on sales-driving activities and category and shopper, all of these things, and it's just become very, very disparate. And you hear a lot of things like oh well, the thing with retail media networks is there's so many of them, they're not all going to survive. And of course they all are going to survive because every brand has to invest money with every retailer, otherwise it's going to lose market share. So it's kind of like a given that they're going to suffer. Some will do, you know will prosper more than others.
Speaker 1:But for the CPGs, I think the big thing is how do I organize my resources now much more effectively so I start to win by acquiring new customers better than my competition in every shop in the country in an efficient way, and we think that that well for many of them, that no longer requires them to outsource all of this to an agency who doesn't really understand retail, doesn't really understand commercial, only really understands buying. And I think we're going to see a lot of organizational change and, you know, this sort of coming together of shopper and retail media teams, absolutely convinced about that, and also to take a, you know, joined up view of the channels. It's. You know, it's a single customer. It doesn't matter whether they shop on e-com or in store. They're going to, you know, do both customer. It doesn't matter whether they shop on e-com or in store, they're going to do both. What you need to focus on is am I winning with them and am I acquiring more of them faster?
Speaker 2:than my competition Right. It's an interesting moment, for sure, and it's a moment that is probably going to be protracted for a little while, because these kinds of changes don't happen overnight, because they're systemic and they're often cultural, and getting people to think different is expensive and time-consuming and arduous. I was talking to somebody recently.
Speaker 1:They said you know, this is very similar to e-com. You know, when e-com first became a thing we had sort of small specialist teams. It was a new thing and you know now they're big, big parts of their organization. But I think then, you know, there needs to be like a redesign of these organizations now, and I think we're going to see that.
Speaker 2:It's already happening. I can tell you, just in the past, say, three weeks, several of the agencies that I interact with because of this platform, they're reconceiving of themselves in some pretty big ways. What's their real purpose in the world?
Speaker 1:Well, that's what I wanted to say, mike as well, just for one brief point, which is that, of course, for many media agencies, as this world of retail has opened up to them, of course, they've seen that there's this vast, vast, vast spend from their point of view, on trade funds. Or J, you're buying, you would look at that and you'd be saying to your stakeholders why don't you apply our professional buying methodologies to these other areas? And this debate is going to be a great one to observe as to which way to go, because, you know, imagine being a commercial team and having your own sort of shopper team, and then you get the memo saying oh, good news, guys, we've given your budget to a media agency. I mean, this is, you know, these debates are playing out as we speak, actually, and you know it's going to be a great point to see how they land.
Speaker 2:Yeah, yeah, I'd like to be a fly on the wall in some of those conversations Not recordable conversations at all, I'm sure. Well, paul, steve, thanks so much for for bringing this up, for, you know, kind of shedding the light on on what's happening in the space. I mean, we said at the beginning this is, it's a super dynamic space. It, I mean since its inception, you find out where that point was. It's just changed everything and brought along so many different kinds of thinking in its wake and I think, like it's just happening. It's just happening. So all that, I'm going to be posting links to both your organizations when this publishes. But again, just thank you. I look forward to doing this again.
Speaker 1:Yeah, thanks, mike, it's been good and yeah, we'd love to do it again sometime.
