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10 minutes of expert insights every weekday. Your morning ritual for staying ahead in retail media.
Are Audiences The Golden Ticket For RMNs?
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[00:00:00] Kiri Masters: Good morning and welcome back to Retail Media Breakfast Club. On Tuesday, I did an episode about Brian Spencer, the marketing director at Kroger Precision Marketing, and his claim that only 10 or 20 retail media networks really matter. [00:00:15] You can go back and listen to that episode if you missed it. Now, Brian joined in the comments on LinkedIn to defend his test about scale and how scale is important with an analogy.
[00:00:29] He said, [00:00:30] "A farm near a busy road can monetize the property with a billboard. The farm makes some extra profit and the billboard works, but is the farmer a retail media network?" And I told him, "Hey, Brian, that's hitting a little bit [00:00:45] too close to home, given I was about to announce my nail salon media network."
[00:00:51] Anyway, consider the pot stirred. Lots of comments on LinkedIn, some, uh, [00:01:00] anonymous follow-ups that we'll get to. And, um, the reality is, you know, Brian had a bit more of a nuanced claim to make. It wasn't just all about scale. He also mentioned a couple of other important factors [00:01:15] in his original post, being addressability and technology.
[00:01:19] And today we'll turn to addressability, which in practice means audiences. And this is great timing because the sponsor of this podcast through to [00:01:30] the end of the year is Growth Loop, and they just released some new research into this very topic.
[00:01:38] It's called the Commerce Media Investment Index And to be clear, Growth Loop [00:01:45] sells audience segment tools to retail media networks. So I read it with that in mind, and I'll show you a couple places where I pushed on it, But the findings are very instructive for commerce media [00:02:00] networks You really need to understand what brands are looking for when it comes to audiences and addressability.
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[00:02:09] Kiri Masters: So let's get started with, you know, what is this concept of an, an audience? It means a couple [00:02:15] of different things. One is who shops at that retailer, or in the case of a commerce media network, who engages with that financial services provider, booking platform, mobility [00:02:30] platform, whatever. And that customer base that that commerce media network has is either full of the people that a brand wants to reach or it isn't.
[00:02:41] And then the second aspect of audience is what [00:02:45] can an advertiser do with these shoppers? Can they target a segment? Can they screen out their existing known customers? Can they upload their own customer lists? Can they get a campaign live quickly? So let's dig into each [00:03:00] of those. One, who shops there?
[00:03:03] After I posted my piece on Tuesday about the need for scale, a leader at a specialty retail media network messaged me to say that I had missed the [00:03:15] difference between specialty and mass market retail Retailers like Lowe's, Ulta, Chewy don't have the scale of Amazon or Walmart or Kroger, but my source argues that [00:03:30] they are just as important and likely have better audiences for national dollars from brands like Cola For, you know, taps and mixers or Neutrogena or Purina.
[00:03:44] [00:03:45] Those examples are my own to preserve anonymity. but what the point here is that what's more important than counting the number of people is counting the right people. Mass retailers might have more shoppers in total, but [00:04:00] if you count only the people that are actually in the market for a category, and specialty retailers are often therefore considered on that basis equals or even ahead relative to their size [00:04:15] of a relevant audience.
[00:04:18] So my source put it as a question, if you're selling couches, are there more active couch buyers at Wayfair or at Walmart? And that's a good, really [00:04:30] great pushback that I appreciated. And advertisers weigh in on this too. In this Growth Loop survey, thirty-four percent of media buyers rank the relevance of a retailer's customer [00:04:45] base to their target audience among the factors that most influence which networks they choose to invest with.
[00:04:54] But specialty retailers still do need the audience tools and ease of use [00:05:00] that the big players have in order to win and retain those dollars. And so that is the second part of the puzzle, which is what advertisers can do with these audience segments. So a little bit about [00:05:15] this research. Growth Loop and research firm Ascend2 surveyed two hundred and ninety-one US and Canadian advertisers who actively spend with retail and commerce media networks, and that survey was done in August of this year.
[00:05:29] So [00:05:30] in terms of what the primary objective of using RMNs and CMNs was for these media buyers, the top reason is acquiring new customers. That was the answer. That's the [00:05:45] top promise of retail media audiences, is paying only to reach the customers that you want new customers. screening out loyal buyers, going after lapsed ones, timing [00:06:00] your ad investments to replenishment cycles.
[00:06:04] And here's what else advertisers want to do with this audience data per the report. One is augment retailer audiences with [00:06:15] their own. 86% of media buyers say that their networks let them upload a customer list to exclude existing customers, and 75% of those advertisers actively use that feature
[00:06:29] So [00:06:30] that's an important criteria. Secondly is unlock a long tail of discrete and unique audiences. Advertisers that have access to more than 100 active audience segments are over five times more likely to [00:06:45] plan a 25% or more increase in their commerce media spend than those that have access to fewer than 25 segments.
[00:06:56] That's sort of a lot to read out and try and grok [00:07:00] in audio form. But the, the crux of it is well, the, the, the explanation from Growth Loop is that advertisers expect the availability of more audience segments to [00:07:15] improve campaign execution, in particular campaign execution meaning speed as well as actual results.
[00:07:24] Now this is to be fair, a correlation assessment, [00:07:30] but I think
[00:07:31] This still passes the sniff test because of course it sort of stands to reason, it's logical that if I can access more diverse segments of discrete types of [00:07:45] audiences, I can test different messaging, I can test different strategies and approaches
[00:07:51] and use my creativity and tools as a media planner to actually find some gold in those piles of audience [00:08:00] segments. Now, GrowthLoop's prescription for all of this is faster audience fulfillment, meaning that advertisers would, in theory, spend more with a network that could deploy audiences [00:08:15] and report results back faster.
[00:08:17] And so from this research, 92% of advertisers say that faster audience fulfillment would make them more li- likely to increase spend, and [00:08:30] even 85% said they'd pay more for same-day fulfillment. Now, sure, that reads like a self-serving finding from a company that sells that very capability, and my question when I was reading it was like, "Sure, I'd like a [00:08:45] Porsche, but I'm not willing to pay for one."
[00:08:48] And that's the rub. Across all of those responses, pricing and fees is the top factor in choosing a network, with audience targeting capabilities [00:09:00] coming just a hair behind that factor. It was literally 1%. So pricing and fees was the top reported factor driving partner selection at 47%, but then right after that at 46% [00:09:15] was audience targeting capabilities.
[00:09:17] But here's where it got more interesting because the split by buyer type, uh, actually found there was some delta there. The most aggressive buyers of retail media, [00:09:30] that's, my term for the media buyers that allocate 30% or more of their budgets to commerce media networks, actually put audience targeting and strategic retailer relationships ahead of cost.
[00:09:44] So while on the [00:09:45] surface cost matters the most, it's among the most prevalent users of retail media, they care about that less relative to some other strategic, factors like measurement [00:10:00] and attribution, self-service control over audiences and campaigns, ability to incorporate my own first-party data.
[00:10:08] So when you segment it from the most aggressive buyers of, of retail media, they care less about [00:10:15] fees than the overall cohort. So they're the ones that are willing to pay for the Porsche, right? They're the ones that are spending the most and juggling the most networks, And they're the ones worth competing for.
[00:10:28] Now, here is a cautionary [00:10:30] tale. an audience wasn't enough for United. So you may have seen this news item from a couple of days ago from Adweek, who reported this week that United has folded Connective's media [00:10:45] sales and operations team into the partnerships team for its MileagePlus loyalty program after a string of leadership departures this year.
[00:10:53] Now, the chief commercial officer at United wrote that Connective is profitable, [00:11:00] it's not going away. But by his account, it's still missing what it needs to be, quote, unquote, "success at scale."~ "success at scale." He pointed out seat back screens and Starlink Wi-Fi across the fleet, plus its own software for a customer da- just, sorry, just scrap that and end with ~So until a few things are in place, including software for a customer database, ad delivery, measuring what [00:11:15] pas- passengers see, until that, those technology elements are in place, he wrote that the higher returns are closer to home in United's own products and in MileagePlus. And, you know, reading between the [00:11:30] lines here, United has very rich data on its travelers.
[00:11:34] It has that audience piece in place, but what it doesn't yet have is the ability to reach them across lots of different touch points or the [00:11:45] tools to show advertisers exactly what those ads actually did. And another anonymous, uh, piece of feedback that I received after Tuesday from a leader at a non-retail commerce media [00:12:00] network, and they said the core of the business is endemic advertisers buying on-site inventory, typically on outcomes.
[00:12:10] That is the core of retail media and the core of commerce [00:12:15] media. And they said, "If you can't play in that game, you're probably gonna struggle to grow your business. Otherwise, you should consider yourself a digital out of home or linear TV advertising [00:12:30] player." I'm picking that argument up for, for sure.
[00:12:33] It is, the time of reckoning in retail media and commerce media as to who we are and what we do. Now, coming back to Brian from Kroger Precision Marketing, he [00:12:45] again had three tests around what- is required for a, quote-unquote, "successful retail media network." He said it's scale, it's audiences or addressability, and technology.
[00:12:58] Now, [00:13:00] audiences is one where a smaller network can beat a bigger one, at least for certain shopping missions or for certain category buyers. United's reorg shows that the audience [00:13:15] alone isn't enough. Having technology to reach and measure those outcomes is another prerequisite. So we're seeing multiple pieces be required here.
[00:13:25] It can't just be one of those three elements in [00:13:30] place. Well, that's it for today. I do really recommend checking out that report from Growth Loop if you are a retail media network or commerce media network. It's called the Commerce Media Investment Index. I'll link it to it in the show [00:13:45] notes. Thank you for listening, and I'll catch you next week.
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