Retail media is just one of the ways to activate a brand presence on digital retail. You still need to work on the content. You need to work on the product. You need to work on all that. And what Amazon has done is to show that there is value in that, and that has created a reference point for brands in that they’re changing the operating system as a whole. So retail media shows that there is this activation, but it’s really the tip of the iceberg. There’s so many other things that you need to do. For all the reasons that we said: you can identify exactly what type of products consumers are after. So you really have the pulse on the consumer, much more than you would have in a traditional environment. You can optimize your content and then you can activate that retail media once you’ve done all the previous stages in the right way.
Our job is really to help brands create that operating model to activate digital advertising. So we work with the people within the organization that are going to be in charge of this retail activation: e-commerce and marketing. The companies that leverage the retail marketing opportunity to its best potential, are those that can bridge the gap between traditional e-commerce teams and marketing teams. And that’s where we come in. Sometimes we’ve just had to bridge that gap. And once it’s done all our job is done.
There are five steps to success. The first is organizational: having the right people, the right technology, and KPIs. The second is a question of the way you distribute your product, and the logistics. Amazon is a very peculiar way of working in terms of logistics. But also, when you’re activating a retail marketing, if you think of the French example of “drive”, you need to make sure that your distribution is adapted to a national coverage. Then there’s the type of products that you want to sell so basically all the category management that you need to do in terms of product positioning, pricing and promotion. So that’s the third step, then there’s everything that has to do with content visuals or the SEO part. And then there’s the advertising. These are the five steps that you need to master, and that’s why the media part is really the last step of the of that rocket ship.
The two key metrics are going to be your sell-in and your sell-out. How much of an impact does your retail media activation have on your sell-out, and how does that help to increase your sell-in? Because at the end of the day, that’s what people are after, they’re after revenue. And then you’re going to have secondary performance indicators which will have to do with the revenue that you’re generating, the level of margin that you’re generating, but also the value that you’re creating. We like to measure TACoS, which is your total revenue compared to your advertising costs. It is important and quite different from a direct ROAS because, contrary to the Google environment, on Amazon in particular, but also in other retail market places, what you are generating in terms of sponsored sales, has a positive impact on your authentic sales. So you really want to look at everything that you’re generating and not just the advertising sale.
Not for the moment. That’s going to be one of the challenges that retailers are experiencing. I think that it’s a new world out there. And as you mentioned when talking about “organizations”, there’s not a lot of job specs out there focusing on media: so head of marketplaces, or head of digital retail, that’s a new job. And the same thing is true for measurements. But you’re very right, at one point or another, if you are TESCO or Carrefour, you really want to show how much revenue you’re generating for brands online, but that’s a small percentage of your revenue. So you really want to see how much that is impacting your offline sales as well.
And I think in the future, you are not going to have an online sales and offline sales, but a single point of sale, which is not going to be the shopping mall or the website. That’s going to be the, the shopper in itself. And that’s a massive change that we’re seeing for brands in the future, whereas “shopper marketing”, which was really isolated within your point of sale is going to be across the full customer journey. So we’re really going to enter new age of customer journey of shopper marketing, which is going to be applied at each step of the funnel: from your sofa watching TV, to the actual experience of the product itself. So after the actual purchase of the product.
I think in terms of value and in terms of the impact that it’s going to have on the bottom line you’ve seen the article from the Boston Consulting Group that states that retail media is a $100 bn opportunity. A third of that is captured by Amazon as it is, but it will only grow, and COVID has had a real booster effect on those sales. I’d say that retailers need to set a new value proposition. And in that light, Amazon is helping quite a lot because it’s setting the blueprints of the expectations in terms of brand. They want transparency, they want return on investment, and they want to have access to data. So that really needs to be part of your blueprint. You really need to have those three elements because that’s what brands are getting from Amazon.
And all the other retailers are jumping on that boat: Walmart in the US, Tesco or Ocado in the UK, Carrefour in France or Leclerc… So any market really is seeing the same. The reason why I’m talking about the US and the UK is that for grocery they’re the most advanced market in terms of e-commerce. I’m putting China on the side because it’s such a complicated market, but for Germany, Italy, Spain, grocery e-commerce shopping is still in its infancy.
At first you really need to be super robust on your own channel, make sure that you’re answering the expectations of your brand partners. Once you’ve done that you can work on your external channels, your offsite, leveraging data. So you need to make sure that you’re able to use your consumers data. What Apple is doing is creating complexity to join this data, to offline activity. But it’s super important that once you’ve established a baseline onsite for those retailers, and that it’s driving value and it’s driving return on investment, then you start working upwards on the customer journey and that’s when external traffic becomes really interesting.
It’s really a go big or go niche kind of approach that you need to take middle of the road is not going to work. Brands are not going to be on every single website. So you really need to think: “Am I able to be big enough?” or “I’m not niche enough” to be important within this category. So imagine you’re in DIY, you want to have the top sites for DIY. If you’re doing exclusive coffee makers, those coffee makers have specialized websites, and that’s where brands really want to be in. If you’re middle of the road, it will be hard to keep the promise that you can generate 10% of additional revenue. The reason being is if you are Mondelez, and you’re already operating on 10 sites, maybe you don’t have time to operate on the 11th or 12th sites. On the other hand, if you are an important part of the retail mix, then you can pretend to be an important part of the media mix.
I think for those retailers need to unite, in terms of their forces so that they have an offer, which is big enough to be interesting for brands to activate on those platforms. And together they will be stronger than being isolated.
60, 70% of what we do is successful. 20% is not very successful. And very often we’ve warned ahead because it’s not the right product. They haven’t fitted all those steps in the rocket ship that we mentioned. 10% are super successful and we are even more surprised of the success than we could imagine.
We started to activate, and reshuffled the content, improved the content, improved what type of products we were selling and that started to generate growth. And we multiplied the revenue of the brand by x10 in about three to six months. And to be perfectly honest, at first, the client was eager to launch everything but gave us the go ahead, mid/beginning of December, which is the worst period. You can imagine if you want us to be ready for Christmas, it’s too late already.
So the retail media part of the activation, the first one that we did not go well at all. It was one of the first times that you gave us 10,000 euros to spend, we’re going to stop because we’re not creating value at the moment. Let’s come back in a couple of months when we’ve cleaned up some of the things and we’ve improved the value proposition of the brand, and we’ll be able to generate more revenue, which we did in the end. So it was a success because we identified that if we went further, it would it could be a failure all together.
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