Podcast | Retail Media, with Julie Jeancolas and Catherine Bell

With Cat Bell, Julie Jeancolas,
3 April '23

Julie Jeancolas (00:11): Welcome everyone to a new edition of our dunnhumby Customer First Podcast. I’m Julie Jeancolas, Global Head of Product, Strategy and Partnerships at dunnhumby media, and I’m here today with Catherine Bell, our Head of Consulting. Welcome, Catherine.

Catherine Bell (00:31): Thank you. Good to be here.

Julie Jeancolas (00:31): So, today, we are going to discuss some of the key takeouts of a global report that dunnhumby has recently published, where we interviewed more than 300 marketing and media professionals looking to better understand retail media from a brand perspective. Retail media is talked about a lot from a retailer perspective, but not so much from CPGs. So, Catherine, retail media we’ve seen in the press is expected to reach 122 billion, which is representing around 12% of global media ad spends and 18% of global digital ad spends. So, huge number there. Can you tell us a bit more about who is actually buying retail media?

Catherine Bell (01:21): Sure. Those are some big numbers, aren’t they? Probably not surprising. We see in the press all the time that retail media investment is growing really rapidly. Often, the press attention is on digital channel growth, which we also see growing, but it’s really interesting in our report that we’ve seen store come out as the most bought channel even though digital channels aren’t that far behind, probably because store advertising is so close to the point of purchase that you can really impact decision-making right at that relevant moment. We also are seeing across most of our markets that dunnhumby work with the digital signage proposition growing. So that can be digital screens in store, but also digital out of home, probably because screen technology, things have got cheaper over time. It’s more economical for retailers to get this up and running, but also there’s really clear benefits of this proposition in terms of the targeting you can do, but also the measurement.

(02:17): I’d be really interested to see how this proposition develops over the course of this year and the next few years, so thinking about programmatic buying for digital signage in particular. It’s also interesting in our report, and there’s a bit around the split between agencies and then CPGs direct, so we know brands really see the importance of kind of multi-channel investment, i.e., buying media across lots of different channels, be it in-store or digital. When they do that, typically they will see higher results, but we also know that agencies are focusing more on digital. Again, that’s probably not surprising because you’d expect agencies to have the right skill sets and experience to look at managing and then optimizing those digital campaigns.

Julie Jeancolas (02:59): Yes, that point on store is really interesting to see that store remains really a key channel for retail media. If you look at the reports, we have 59% of respondents that say they invest in this channel, which is a huge number. I guess it seems quite logical, right? Because when you think about purchase, for groceries especially, you still have 85 to 90% of purchase still happening in store, especially in market outside the UK. Eastern Europe, for example, online is still not the main channel. If you think about it, there was also something that was released by marketer, but store providing incredible reach right at point of purchase. If you look at the US, for example, with store media and the proposition available there, you can reach 100 million shopper every month and that’s a scale that national TV can rarely achieve anymore and really far outpace these e-commerce agencies.

(03:54): Yeah. Indeed, if you combine this with the dynamic and interactive capability of digital screen, as you said, at the store, on the shelf, end caps or corridors or checkout aisles, I think store become really interesting and key pillar for retail media. Actually, Unilever I think said that their retail media spend could reach up to 25% of their total media spend over the next few years. So on that, could you tell us a bit more about how you see retail media investments is forecast to evolve when you see large brand like that talking about such percentages?

Catherine Bell (04:30): Yeah, sure. So as we’ve already touched on, I suppose, we see store and digital channels continuing to be really important. For digital channels, we’re thinking about both display but also sponsored products. The report also then touches on some of the areas where we could see a decline. One of those is print and particularly mailings, and that’s probably not a surprise if you think about how expensive it can be to deliver these things at scale. In some of our markets, we’re seeing a really pronounced trend here, so if you think of the traditional flyers that often have a load of promotions in them. In Germany, for instance, Rewe have announced they’re going to switch to digital channels like WhatsApp instead, which is obviously going to be much more economical.

(05:16): Coupon investment’s also an interesting one. Probably no surprises here that more and more retailers are transitioning from printed coupons to digital, although there’s definitely still a role for printed couponing. Overall, coupons still seem to be really important. Perhaps when we think of the current cost of living crisis and brands desire to deliver meaningful value to customers, they’re still an important mechanic for brands to have in their arsenal.

(05:46): And then, finally, in terms of digital channels then. At the moment, we are seeing that onsite display is becoming perhaps more important than online search. If we look at the retailers and brands we’re working with, both of those things are clearly very important. Perhaps we’ve seen such a focus on search in recent times that maybe brands now thinking, “Right. We still do want branded content online.” With retail media, it provides that brand-safe environment, which is so important for brands to be able to deliver their message at scale in a way that’s content-safe.

Julie Jeancolas (06:21): Yeah, I think the bread and butter of retail media has been search. We see brand really asking for upper funnel solutions to satisfy all of their marketing objective. Overall, I think talking to some suppliers in the market, retail media is still quite immature as a channel. Media opportunity, if you compare to search or social, for example, they have much more established standard. So on this, in general, looking at the interviews we conducted with CPGs and agency, how satisfied are they with the current retail media offering in the market?

Catherine Bell (06:59): Yeah, I think generally we see that respondents are quite satisfied. Perhaps that’s not surprising because we see that investment is growing and we know that retail media is brilliant from a targeting and also a measurement point of view. Measurement is so important for brands to really show the value of what their campaigns are driving. The areas where in part we see lower satisfaction, the innovation and measurement and execution, and these results are actually really polarizing. So some people are saying rating them really highly for satisfaction and some people rating them quite lowly. Maybe that’s because that actually retailer capability varies very widely across these three things. Particularly innovation, I think, is quite an interesting topic. What innovation means for different brands can be very different things, and retailers that are on very different places on their journey with delivering new innovative campaign styles and different types of targeting and different types of measurement.

Julie Jeancolas (07:59): Yes, that’s a really good high level overview of where we are. But if we go deeper into, for example, what are the key features that attract CPGs and push them to actually shift investments to this channel? We see that brand are actually shifting some of their brand spends or digital spends to retail media. So, what would be the two or three key features that they would mention?

Catherine Bell (08:26): Sure. So the most popular answers that have come back from the report were insights is number one, that is most important for retail media, followed by the inventory that’s available and then the data. So insights is so important for retail media and that’s much broader than just what we think of as campaign targeting. It’s that complete understanding of customer behavior across the total shopper journey, so both in-store behavior, as well as online. It’s really unique for retail media as a channel because you can use that so precisely to then link into execution.

(09:03): It’s interesting actually that we see insights as the most important thing that’s coming back in our survey, but actually we’re seeing some of the untargeted channels or comparatively untargeted channels being the most popular, such as store. So it is showing that insight is really important even for more fixed channels, like printed point of sale where you don’t have that flexibility around the targeting. So understanding who customers are, what messages resonate with them, when and where to deliver your campaign is clearly still really important for brands even if you don’t quite have the flexibility of targeting that you do with printed point of sale compared to digital.

Julie Jeancolas (09:46): Yeah, I think on the inside piece, it’s not surprising actually that they favor this as a feature because when you think about brands and consumer packaged good companies, typically they had little access to transactional data of their own, right? Now, they had the proxy of third-party cookies to try to get those insight, but these are going away and we know this area is evolving really fast. So we start seeing CPGs obviously starting collecting their own first-party data through promotion and sweepstakes, et cetera, but they are still missing key insights into the broader purchase behaviors that retailer have, right?

(10:25): So they will continue to heavily rely on retailer data, if we think about it, to really cross-reference. These data points are starting to collect with the retailer data and that’s why we’ve seen as all this conversation around clean room, where they can do this overlay of data against those amazing insight in a privacy safe way. So yeah, really interesting that that’s inside piece. So, now, Cat, can you tell us about the more less attractive aspect of retail media? I think 23% of respondents said that they face some barriers, whatever they are, but where do agencies and brands see that gap?

Catherine Bell (11:03): Sure. So one of the key things that’s come back from this survey is the lack of multi-retailer platforms and both CPG and agency respondents have said that. You can totally understand it, can’t you, that if you are working across multiple different retailer platforms, you have to learn lots of different platforms. It’s much more complex to learn and then manage. And then you are also optimizing across lots of different platforms as well, which is inevitably time-consuming and could be inefficient.

(11:35): One of the other things then that’s come back is a lack of self-serve. So particularly agencies are really keen to get that self-serve functionality. Really, for digital channels, it’s most important. You’ve got that sense of ownership and you’re able to manage your campaign and then optimize particularly in flight to drive improved results. And then the final thing that’s come out is the lack of standardization, particularly across retailers. So because retailers have such different ways of measuring performance, it’s really hard to compare, which in turn leads to inefficiency in your planning and their lack of a clear view across your different campaigns of what’s really driving the best performance for your brand.

Julie Jeancolas (12:18): Yeah. Yeah, I could see it in the report that 50% of respondent talked about this lack of cross-retailer portals. Now, there are companies out there like Sky or Parkview that are trying to enable that cross digital media buy. Obviously, there will be a cost attached to this and they mainly focus on search for now, but there are some effort in the industry to try to solve that problem and solve the efficiency issue that brands and agencies are facing. I guess on standards, there’s also the IB that is working on establishing some of these, but I guess it will take time, and especially if you want to establish a standard across channel because let’s remember that retailer are not just about digital, as you said, right? We also have store. So, how do you establish standard in term of store advertising measurements and digital screen? So that will definitely take time. But actually on measurement, which we know is one of the key attraction and benefit of retail media because it offers this closed loop attribution based on sales, how do CPG and agency measure the success of their retail media activity?

Catherine Bell (13:31): Sales-led metrics are unsurprisingly really important, so measuring number of new buyers a brand seeing, return on ad spend, conversion, probably some of those typical metrics we’d expect to see. We know that brands are seeing better results from retail media than other channels, so it’s no surprise that they want to keep tracking return on ad spend. We think we might see this evolving over time though. So across a number of our different retail partners at the moment, we’re seeing a growth in brand campaigns versus trade activations. Because of that, we think the range of KPIs that we’ll be measuring and brands will be interested in is going to evolve over time.

(14:12): It’s interesting for us that direct to customer, so thinking about some of those coupon mechanics, that that’s seeing the best returns. So although it might not be the channel that brands are planning on investing more in, actually it’s performing very well probably due to the precise targeting that you can deliver through that channel. Coupons are going to continue being important. Whether they’re transitioning to more digital coupons versus printed ones, they’re still a really great mechanic for delivering value to customers and seeing some great returns.

Julie Jeancolas (14:45): Yeah. I mean, sales-led metrics are really used across the board, that’s for sure. I’m not surprised to also see that new to brands, new to product is a key metrics prioritized by CPG. As you know, they’re really focused on acquisition tactics and growing their share. Also, looking at the respondents around repeat purchase, so certain percent of respondents says that they’re using repeat purchase as a KPI and sell uplift coming in eight position. So in a way it shows that there’s still a lot of education that’s needed in the industry. In my opinion, a solid retail media offering should really offer brands depths of measurements and even metrics like we have at dunnhumby, in dunnhumby here that are more long term looking at lifetime value of customers, so not really thinking about the tactical company timeline, but really these are the impact on the brand long-term.

(15:44): Another thing that for me that was interesting, that we don’t see any brand metrics listed there, but I think this might evolve. I don’t know what you think as we see new channels like digital screens becoming more mainstream. And then, lastly, I would add that the brands are asking for real-time measurement, but in order to offer that to brands, retail are going to have to really significantly evolve their IT capabilities. If you want to really understand the true impact of retail media, you need to take into account not just online sales but also in-store sales because 90% of purchases still happening in store. To offer real-time optimization, you really need to be able to stream that in-store style data into your ad tech tools. How many retailer are capable of doing this? I guess that’s something that I think will evolve over time. So, let’s switch to slightly different topic, fundings. Cat, could you tell us a bit more about where those retail media budget come from? Where do they sit and how they’re evolving?

Catherine Bell (16:58): Yeah, sure. We asked this question intentionally because we see that a lot of retailers find it really hard to know where all these different budgets are coming from. It’s definitely a complicated picture. So we know that some of these funds are tied up in JBP agreements. Some are more clearly coming from brand pots. To be honest, the answers from our survey just paint the picture that it is really complicated and there are a lot of different sources of budget for retail media. Whereas it’s trade, shopper marketing, e-commerce or brand, all of these budgets can flow through into retail media investment.

(17:39): So today we’re seeing most investment coming from trade and shopper, but actually we are seeing the growth of brand over time. For what we see across a lot of different markets, the brand budgets are a great opportunity for retail media and particularly with some of the new channels that are coming online that allow some of that more branded messaging to reach customers. So across the board, we do see retail media budgets growing. Both CPGs and agencies expect that to be the case. With the agencies, we’re seeing that a number are investing in building out the right capability to support retail media, so hiring, training and onboarding the right talent to really focus on retail media.

Julie Jeancolas (18:27): Yeah. I mean, this funding topic is really fascinating for me. I mean, I recently published an article in ExchangeWire, but I really believe that retail media in a way is disrupting the retail and marketing landscape. We really live in an environment where, I guess, a distinction between trade, brands, budget is becoming increasingly blurred. I mean, we even see CMOs that are increasingly starting to manage sales budget, like Unilever or Mondelez, for example. So this really lead retailer to really have to think about their engagement model with CPG in order to limit cannibalization.

(19:06): Anyway, I guess that’s another topic for another podcast, but I think we are running out of time, Cat. So thank you so much for your amazing insights and thanks everyone for listening today. I hope you found the discussion useful, whether you’re a retailer or you’re an ad tech company or CPG. If you’d like to get in touch with myself or Cat, please connect on LinkedIn and join us again soon for our next episode. Remember, you can access all our podcasts on a variety of different subjects impacting retail at Customer First Radio, on Spotify, or on dunnhumby.com website. Thanks everyone and have a great rest of the day.