Tyler Durden vs the Status Quo - The 1st rule of Fight Club

#ecommerce Quoting Tyler Durden a number of times in an article related to ecommerce is kind of weird, so bare with me. Some of you maybe be too young to have seen Fight Club. Others didn’t fancy the idea. As a movie it created a narrative of the anti hero, the anti brand, the anti everything. But some interesting sign posts along the way. As I explore the role of Retail Media Networks, I will be quoting Brad Pitt, Fight Club, A.K.A Tyler Durden.

The report is an output of a questionnaire produced by the Association of National Advertisers - “Retail Media Networks: A Forced Marriage or Perfect Partnership?” .. It is interesting on a number of levels, least of all the facts. There are a number of stories in there. And I dug deep to find mine. Some not so subtleties - How many of you have a “Shopper Marketing” team? But the most telling and interesting point to me is “The importance of tactics for RMNs - paid search at 80% and social activations are classified without doubt as tactics - Paid search and Social are not your strategy - they are tactics within your brand/marketing/sales strategy. Let’s put that to bed. Finally.

#Duredenism 1  - Nothing is static, everything is evolving, everything is falling apart.

What is your purpose when looking to #RMN as an outlet for your brand. Is it awareness. Or is it sales? 

Outside of the #CPG category the notion of retail media networks may be new. But, we need to wake up to it and fast. We need to understand how to use them and when not to. We need to become more accomplished planners with more tactics in our playbook than Patrick Mahomes. As I dug through this survey, I felt like there are relatable stories to those in the know and those not there yet. (As of writing, I have worked on RMNs in the US and in the EU - Currently on Jumbo (Netherlands)).

I think time is on your side from a learning perspective. The networks are going to come under challenge in the next 3 months and will need to get to their next stage of evolution quicker than they would like. Right now, though time is on everyon's side. No one has all of the answers yet and it is those blessed with big budgets that are getting the "crys and smiles" while we watch and learn.

From the report -

A continued challenging economic outlook could also be playing to RMNs’ favor. One advertiser told us they “play defense as much as offense with retail media networks,”then added that in the face of “economic uncertainty and rising inflation, consumers can switch to private label, and the retailers own these. We use RMNs to protect our brands as much as build our brands.”

The next phase of growth for RMNs and value creation for brands will be through RMNsassuming shared responsibility with advertisers for driving brand growth and demonstrating the ability of their platforms to drive incrementality and positive ROAS for brands. The next stage of growth will be driven by results versus relationships.

Additional key findings:

• Brands are reluctant buyers and see RMNs as a “have to buy” versus a “want to buy.”
• Eighty-five percent of brands feel they are pressured by retailers to support RMNs
• RMNs are considered lower-funnel conversion and sales drivers. Three-quarters of respondents overwhelmingly ranked driving sales conversion as the most important goal for using RMNs. While accessing upper-funnel brand budgets is a goal for RMNs, brands do not see this as a priority.

Let's look at more of the outputs in detail.

1.Retail Media Networks Are Not for Everyone

While the ambition of retail media networks is to attract non-endemic business outside of CPG (e.g., travel, financial, services) this may be a challenge for them. Much of RMN consumer usage is shopper mission-based — actively searching and/or shopping for specific categories and/or brands. Interrupting that mission, as well as limited contextual relevance, may be barriers to usage for non-endemic brands.

#Durdenism 2  - I don’t want to die without any scars.

One advertiser told us, “As budgets get cut, RMN programs have remained largely intact. This is shifting the balance of our overall marketing budget from building brand equity to driving product sales.”

Conflicting views ? Interrupting the shopper journey because we want to force a different behaviour is the opposite of UX - will we have abandoned cart chasing emails on retail experiences? " Vinny, you never took your chick pea alternative - we can have it to you Friday with 10% off. If you were planning on using it tonight for dinner, we are sorry for convenience".

In general, the customer experience is poor. Partly because this is a sales led activity  - not brand.

When we consider the different platform types, this should inform the strategy. Taking CTV as a platform, it is (IMO) about mass market awareness, not initiating a sale - yet. Shoppable TV is \ way off because it is just too intrusive. But If I am own Fanatics and I want to sell merch, to me it makes sense to be advertising on media platforms where eSports take place and even more so on streaming platforms where gamers can be influencers with a captive audience already to hand. This is vastly different to the CPG challenge - rate of sale, unit sales and category share per week.

The retail land grab needs to mature quickly to get more brand $ spend. Brand owners are not yet convinced. 

This for smaller brands and growing brands - should be about the opposite of what it is being asked to do - grow awareness.

Brand Marketing was the least involved department responsible for actively managing RMN activity, suggesting that RMN programs remain heavily targeted to known, active, and/or current brand shoppers, and remain a lower-funnel tactic for advertisers. Based on the degree of involvement by Brand Marketing, RMNs still have a high hill to climb in attracting investment from brand budgets and upper-funnel marketing allocations.

The heavy involvement of Shopper Marketing, E-commerce, and Media in managing RMN programs suggests again the platform is still perceived and activated as a lower-funnel tactic in the consumer path to purchase.

Our team structures, roles and responsibilities need to change to maximise the potential in these channels. They will. Your global ecommerce team will look different in 3 years, if it does not, it should.

#Duredenism 3  - Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need. We're the middle children of history.

19.It’s All About the Shopper

No its not, we know as shoppers the more ads we see, the less we like a platform. We just need more shop windows. Physical media spaces are becoming part of this mix with Amazon and Google among the many platforms rolling out this network. Ride shares too are advertising panes. So to suggest, this is about customer experience is more than a little premature. Until I can select my preferences walking in the door, this is not true. It cannot be true. We cannot explain to consumers how the retail media experience is aligned to better personalisation - nonsense. More relevant, yes, I get it. 

Then there is the question -

21.Allocation or Investment?

It is not one or the other, it is both. This is attribution and accountability under a different guise. We cannot expect ROAS or ROI to be shining lights of this platform. We need a better metric set. MER has been pitched. It is not the be all or end all, but it is a step closer. If  I look at my performance over a medium to long term did I achieve my objectives. To understand this, we need to get better at setting them on the way in. 

Category % Share

• Trust metrics - how likely to recommend to a friend
• Time between purchases
• Frequency of purchase
• Loyalty initiatives % participation
• Brand awareness

There are better lists than this, but If i move the needle on all of these, my over performance will be in decent shape. It makes the investment discussion easier on the planning ahead side and makes the allocation more efficient. The more we learn over the course of time, the easier our decisions will be. 

The time factor is not to be lost either. Platforms need time and data to be useful. They need mistakes, luck and the outliers to give them the learning that they need - this does not happen quickly. 

The platform mantra below -

#Duredenism 4  - May I never be complete.

May I never be content.

May I never be perfect.

26.Holistic RMN Measurement Is a Shared Responsibility

The next phase of growth for RMNs and value creation for brands will be through RMNsassuming shared responsibility with advertisers for driving brand growth and demonstrating the ability of their platforms to drive profitable incremental growth and positive ROAS for brands.The next stage of growth will be driven by results versus relationships.

In my opinion, there will be alot of internal conflict in the platform teams. Responsibility will be shunned and fingers for non performance will be pointed. Team structure there too, will be a challenge. We have seen this in the US where the larger new platforms are hiring from existing ad networks - not ecommerce teams.

This is how it should be. 

• Be crystal clear on your business objectives and KPIs.
• And be sure to align with your RMN’s own measurement capabilities to ensure a robust evaluation of your investment.
• Be mindful while considering an RMN’s promise of brand building.
• Be ready to challenge it to prove its capabilities before investing. 
• While we’ve heard from marketers that RMNs are a largely established and measurable bottom-funnel tool, true mid- and upper-funnel capabilities remain to be proven.

RMN development is happening quicker than we imagine. In the words of Tyler Durden - the things you own end up owning you. All of this before our iPhones become advertising vehicles, then what?

Glossary of facts courtesy of the ever brilliant Don Brett (who shared the report also).

Fun Facts: (8)

💰Retail Media 🇺🇸 Spending:

2022 = $40B (53% growth)

2023 = $52B (31% growth)

2024 = $61B

💰Networks used by Brands:

Amazon = 82%

Walmart = 82%

Target = 65%

💰Biggest challenges for Brands:

Lack of standards across platforms = 57%

Walled garden environment = 44%

Retailer control = 32%

💰Department responsible for Retail Media:

Shopper marketing = 64%

Media = 44%

eCommerce = 44%

💰Funding Source of Retail Media:

Shopper marketing = 53%

Brand = 45%

Trade = 37%

💰Importance of Tactics in Retail Media:

Paid search = 80%

On-site advertising = 67%

Off-site advertising = 60%

💰Budget allocation Framework:

Percentage of sales = 45%

ROI = 45%

Trade Commitments = 38%

💰Most common KPI’s:

ROI = 58%

ROAS = 58%

Incremental sales = 56%

#ecommerce #digital #omnichannel #strategy  #retail #usretail #CX