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10 minutes of expert insights every weekday. Your morning ritual for staying ahead in retail media.
Zalando produced file
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[00:00:00] Kiri: Good morning. I have a quick clip episode for you today, and this is a snippet from a conversation I did back in December with Zalando podcast called Inside Fashion Marketing, and it captures a big shift I've been [00:00:15] thinking about nonstop, which is how AI enabled commerce is becoming part of the shopping journey and how that changes retail media.
[00:00:22] In a pretty fundamental way, if consumers spend more time researching and [00:00:30] deciding with an AI companion before they ever hit a retailer site, that obviously affects sponsored products onsite display and offsite retail media
[00:00:41] revenue streams in this clip, from the [00:00:45] longer conversation I break down, what's changing, what surprised me most this year and why the funnel as we've known it is basically over.
[00:00:54] Thank you to Hiker from Zalando, partner Marketing Services for having me on her podcast. [00:01:00] And if you wanna listen to the whole episode, we'll link up to it in the show notes. Let's roll.
[00:01:04]
[00:01:06] Heike: So maybe we start with a little recap of this year when you look at all of your retail media. [00:01:15] First, what were the topics you spoke about the most, or were there any big trends that you saw evolving this year?
[00:01:24] Kiri: Yeah, well, the big one, and I've been talking about this a lot recently, is AgTech [00:01:30] commerce and AI enabled shopping.
[00:01:32] And that really, I wouldn't say it came out of nowhere, this. This year, but it really is the first year that we're seeing, I think, some meaningful engagement from consumers with [00:01:45] AI platforms, either at the start of their shopping journey to do research, to compare different options. And then we're also starting to see, especially in the last couple of months, AI platforms and retailers build out very [00:02:00] meaningful sort of mid funnel and purchase.
[00:02:03] Level AI capabilities as well. So just in the last couple of weeks before Black Friday, we saw a number of different platforms, release price, drop automations, and [00:02:15] price tracking. With Google, you can call stores and with roofers on, on Amazon as well. A lot more persistent memory about who I am as a customer and, and what kind of brands I prefer and what my lifestyle looks like.
[00:02:29] [00:02:30] So I think that is. A very meaningful development this year and how it relates to retail media is very interesting because if we're spending more time in the research stage as consumers with an AI [00:02:45] companion versus going to a retailer that has pretty profound implications for onsite sponsored product ads and display ads.
[00:02:55] It has implications for offsite retail media, and so I think [00:03:00] this has been a. Year to think about what does the future of retail media look like if consumers spend more time with AI companions rather than on a retailer.com in the early stages of their [00:03:15] buying journey.
[00:03:15] Heike: Yeah, absolutely. And obviously you're preaching to the choir here.
[00:03:19] Mm. Also with mentioning, yeah, this, this big news for this year and these trends, is there a recommendation you could make for anyone who decides [00:03:30] to, to offer their brands on, on a marketplace? How much focus would you advise them to give to advertising at the actual point of Yeah, virtual sales.
[00:03:41] Kiri: Uh, it's, it's a really good question.
[00:03:43] Could, and my, my answer. [00:03:45] Differs depending on whether we're talking about a, a brand or a retailer. So taking the perspective of a brand for a moment, there's really a, as it pertains to a gentech commerce that is actually buying [00:04:00] within an LLM or like letting an a agent buy for you. A lot of the optimization that can be done to get your products showing up when someone's making a specific.
[00:04:12] Search query. A lot of that is in the hands of a [00:04:15] retailer. And if the retailer is, um, doing all the right things from like an SEO perspective to get their products to show up in a product card on chat, GBT or Google AI mode, for example, or Microsoft [00:04:30] copilot. A lot of, a lot of what. It is possible to optimize is in the hands of a retailer.
[00:04:36] So that's my first recommendation to, to brands is to understand among their retail partners, [00:04:45] retailers and marketplaces, how they are thinking about agent commerce and AI enabled commerce. Because there's only so much that you can do as a brand, um, before it is in the hands of a retailer. These LLMs are [00:05:00] partnering with retailers.
[00:05:00] They do not wanna become retailers themselves, so they have to partner with them. And, and retailers have very different perspectives right now about whether, um, AI is a friend or a foe. [00:05:15] Miracle Ads is the only retail media solution designed for both one P and three P Marketplace brands. Why does that matter? [00:05:30] Marketplace sellers demand a seamless advertiser experience that still offers full funnel ad formats, and retailers need a flexible solution that allows you to scale your media business.
[00:05:42] Kiri Masters: Learn [00:05:45] more@miracle.com. That's M-I-R-A-K l.com.
[00:05:50] Kiri: And speaking about the big developments this year, what did surprise you the most? What surprised me the most actually is a number of [00:06:00] retailers.
[00:06:01] Announced or really dug into algorithmic. Sort of what, what we call a little bit cheekily black box algorithms for bidding on, on their, um, [00:06:15] retail media network. So Amazon and Unboxed announced an an algorithmic bidding platform. Um, this is. It's something that, you know, Google and Meta have had for a long time, but also other retailers that I've been speaking [00:06:30] with, uh, building towards this as well.
[00:06:32] Instacart has an algorithmic capability. Albertson's the grocer in the US they are working on this. Um, and. I'm surprised because to [00:06:45] me as a, as a former agency person, these black box algorithms are met with a lot of skepticism and in some cases, derision, especially when we look at Google P Max, that is a, that was not [00:07:00] a very well liked system bias from sophisticated media buyers because it was so locked down.
[00:07:09] Um, there was, it wasn't optional, and this has been, you know, there's been some developments, um, [00:07:15] you know, over, over the last couple of years to make it a little bit more open. But for a sophisticated media buyer that has a very clear idea of what they wanna do and what they wanna optimize for, they do not like the idea of giving a, a platform a [00:07:30] budget.
[00:07:31] An objective and letting the algorithm do its thing because it's, um, they wanna know how is my budget being spent? I wanna put some controls in. I want to make sure that this skew gets this much, and that skew [00:07:45] gets that much. And with within very large. Brands, um, that are publicly traded. You know, think about like big CPG multinationals.
[00:07:55] They have very, very, very specific guidance [00:08:00] on where they are, where they are supposed to be spending their ad budget at different. Stages and across different brands and products. So I, I was surprised at the number of black box algorithms being released because at [00:08:15] least within my context of like very large, sophisticated media buyers, they don't seem to be particularly well-liked.
[00:08:22] But for these, I think what I understand from these retailers is they want to provide easy access to. [00:08:30] All types of advertisers and quite possibly the types of advertisers that they are positioning these algorithmic models to are the more inexperienced advertisers who love the idea of giving, [00:08:45] giving the algorithm a budget and optimizing towards it.
[00:08:48] They. They don't have dedicated media buying teams or work with a, with a, with a fancy advertising agency. So yeah, that, that was my biggest surprise from the year. Yeah. It [00:09:00] sounds like a matter of control versus efficiency, right? Yeah. And I think, you know, that there, there could still be a, a good place for an algorithm in a sophisticated media buying a strategy.
[00:09:11] Much like, you know, back in my Amazon days we [00:09:15] would still run automatic campaigns and often they would find they would surface really interesting keywords that we hadn't thought of that hadn't come up in our research. So there can be a place for both. I just really believe that it should be optional [00:09:30] and there should be more sort of pathways.
[00:09:32] For independent, um, advertisers to, to manage campaigns independently of those, um, algorithms.
[00:09:41]