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10 minutes of expert insights every weekday. Your morning ritual for staying ahead in retail media.
The Effort Heuristic in Retail Media
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[00:00:00] Kiri Masters: In a psychology study in 2004, participants were asked to rate the quality of various suits of armor. The armor that was described as being more difficult and [00:00:15] laborious to make got rated higher, And that effect got even stronger when the object's quality was harder to judge.
[00:00:24] People who couldn't evaluate the armor on its merits leaned harder on [00:00:30] another cue: effort. And just like most of us don't have the training to evaluate a suit of armor beyond some surface-level criteria, most media buyers cannot evaluate all the [00:00:45] technical aspects of a media network. Now, to be clear, I count myself among those people.
[00:00:53] I'm not an ad tech person or a measurement expert, but I have spent a lot [00:01:00] of time agency-side representing brand-side media buyers, and I can see this same phenomenon playing out. There is an overwhelming number of retail media networks [00:01:15] on offer, on one hand touting similar kind of USPs about their audience scale and uniqueness, and on the other hand, media buyers are also being [00:01:30] voluntold to spend a certain amount on media during a JBP.
[00:01:34] So when I do truly have a choice about where to spend my marketing dollars, I pick the one that looks like somebody [00:01:45] is really trying.
[00:01:47] Today we're talking about the effort heuristic in retail media. Let's jump in.
[00:01:53]
[00:01:54] Kiri Masters: So this psychology framework that I mentioned earlier is by a group of social [00:02:00] scientists, Kruger, Wertz, Van Boven, and Altematt, and it is called the effort heuristic
[00:02:07] And so here's how I see this playing out in the retail media world from the buyer's perspective.
[00:02:13] It ultimately comes down to a little bit of [00:02:15] skepticism from the buyer's side
[00:02:18] due to things like illegible cross-retailer benchmarking, doubts over the dates in the roadmap, skepticism on self-reported numbers, a [00:02:30] hunch that I might actually be able to reach that same buyer somewhere else for a little bit cheaper. And so with all of this blurriness, buyers judge on what is observable, [00:02:45] where a retailer is investing, who they are partnering with, whether they will say anything at all.
[00:02:53] Now, I ran a poll some time ago on LinkedIn asking my audience [00:03:00] if knowing what a retailer's tech stack looks like would have any bearing on their perception of that retail media network
[00:03:09] And the majority said that it would. Now, if and how that translates into [00:03:15] actually spending real media dollars in those places is another question
[00:03:19] But the point that I can confidently make is that a lot of retailer-side folks give brand-side media buyers a lot less credit [00:03:30] around their technical sophistication
[00:03:32] Now I wanna call out an example here of a media network I think is doing a really good job of this, which is Costco. And I called Costco the cool kid of retail media back in January when [00:03:45] its leader, Mark Williamson, got on stage with some charts of its retail media network tech stack
[00:03:52] And it was very newsworthy because naming tech partners and sharing the plumbing is [00:04:00] a completely radical concept among retailers. And in fact, that article was the article that got the most traffic on thedrum.com the week that they ran my post about that announcement [00:04:15] because it was so radical a concept.
[00:04:18] And the effect that it had From my seat Was to demonstrate the strategy, the change management, the internal dev work required [00:04:30] to build the Costco Velocity network. The effort showed up right there on a slide poor [00:04:45] audience targeting is frustrating, but for retail media teams it can be costly too. With Growth Loop's composable commerce media solution, you can turn your first-party data into hundreds of [00:05:00] high-value audience segments and launch campaigns faster. After partnering with Growth Loop, instant commerce pioneer Gopuff scaled from a hundred syndicated audience segments to more than six hundred, [00:05:15] and now it takes less than forty-eight hours to turn around a custom segment for one of their brand partners.
[00:05:23] Learn more about how Growth Loop is powering Gopuff's best-in-class retail [00:05:30] media operations at go.growthloop.com/breakfast. That is go.growthloop.com/breakfast
[00:05:43] But there is a tipping [00:05:45] point, and there is a hazard with showing effort a little bit too much. If you take things too far, suddenly you're announcing the opening of an envelope. Suddenly you are sharing a, quote-unquote, "new feature" that [00:06:00] actually shipped last year, but now's the right time to announce it with a new name.
[00:06:05] Now you're hyping something as an industry first when it's really not. And so this is the trap. When everything is an announcement, the [00:06:15] market stops being able to tell real development from just packaging, and they get suspicious. Ask me how I know. Now, there is a couple of players in our space who [00:06:30] can afford to opt out of all of this.
[00:06:33] Retail media ad spend, at least in the US, is wildly concentrated among a couple of big players, and they play a different game because their product is directly [00:06:45] observable. Media buyers already have data, benchmarks, and a history there. There's not many consumer Brands who don't have experience working with the top one, two, three
[00:06:59] [00:07:00] mega players. Now other RMNs outside of that top one, two, three who haven't yet won a permanent place on the media plan aren't being evaluated on evidence. They're first being evaluated on [00:07:15] cues, then on a test budget, and then finally on performance
[00:07:21] If you're interested in diving into more on this topic, I will pull together all of the pieces I've written in the past about [00:07:30] how RMNs are approaching go-to-market and some observations that I've had. I'll put them all together in the blog that accompanies this one. But just wrapping up here, there's so many interesting [00:07:45] things that are happening in retail media that people aren't allowed to talk about publicly.
[00:07:49] Many of the calls that I have during the week are with vendors who are doing amazing things but aren't allowed to say which retailers they're working with, and it's a [00:08:00] shame because I really think there is a win-win to be had there. The tech vendor wants to get the credit. The retailer should really want to get the credit of doing something new and interesting and improving things.
[00:08:13] And I understand, look, [00:08:15] uh, most RMNs are operating within public companies, and there's very strict rules about what they can share and when. And in some cases, playing your cards close to your vest is the correct move and perhaps the only legal [00:08:30] move at that time. But when there is room to play, I do think it is better to show your work, contribute to the group project, maybe even let a friend copy your notes sometimes.
[00:08:44] [00:08:45] Because that's the only thing that the star student at the front of the classroom isn't going to do. Thanks for listening, and I'll catch you on Monday
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