Latest / Retail Media Breakfast Club / How Retailers Can Evolve To Compete With Agentic Shopping ['Snips' from Commerce Media Matters & Mind the Model]
Transcript
- SNIPS: commerce media matters & mind the model === [00:00:00] Kiri Masters: I am a huge podcast junkie, and so I've started this series sharing snips of other podcasts with you. These are my personal highlights from episodes that I found particularly valuable, plus a little bit of commentary of my [00:00:15] own. And today's episode comes from a crossover podcast between commerce media matters, where I was a guest, a couple of. [00:00:23] Months back and a new podcast called Mind The Model, which I'll definitely be subscribing to. The conversation [00:00:30] got deep into the weeds of retail media and traditional publishing and the effect that AI is going to have on both, which I'd really enjoyed the latter as an outsider to that area. But the snips I'm gonna share with you today [00:00:45] tackle one of the most critical questions as we look ahead to an AI enabled shopping future. [00:00:51] Which is what happens to a retailer's data advantage when AI platforms like Chatt PT start [00:01:00] processing transactions. Maybe the answer isn't as bleak as you might think, let's jump in. [00:01:06] [00:01:07] Kiri Masters: So the first snip that I'm gonna share with you is about who really owns transaction data, the ai, [00:01:15] or retailers. So when Open AI announced, you could buy stuff through chat GBT, instant checkout retailers, no doubt started worrying about this. If people shop and check out without ever touching a website, [00:01:28] what happens to all that [00:01:30] precious first party data that they're using to fuel their offsite retail media, as well as the eyeballs visiting for their onsite retail media? [00:01:39] Emily Crone: Well, I'm just thinking about a feature where, and bear with me on this one. So let's say for [00:01:45] example, retailers in Australia start to integrate within chat GPT, and you can click to buy within that user interface. I'm a bit of a data gig myself. The transaction data and the first party data would be held by both OpenAI because it was done within their [00:02:00] platform and the retailer. [00:02:01] 'cause they would recognize the revenue at the end of the day. So now you have two distinct companies holding the thing that is so valuable, which is first party data. What does that do to the future of retail media networks? Does it dilute the value [00:02:15] of retailers who do decide to integrate within, um, platforms by Chatha, BT. [00:02:20] Paul: It's an interesting question. It certainly rebalances the power. Absolutely. Um, if you think about, even with those announcements we talked about before, so you've got Etsy, Shopify, and [00:02:30] Walmart, and now OpenAI has a view across all of those, uh, things. That's, that's a pretty powerful proposition. So I think it sort of rebalances the game, um, back in the power of these big LLM models and so forth 'cause they have that data set. [00:02:43] Uh, but I don't think it limits the retail [00:02:45] media guys with their powerful data sets to do stuff as well. So you think they're [00:02:49] Nathan Guerra: getting all the first party data [00:02:50] Paul: without trying to talk about, uh, the product that, uh, uh, that we, we sell at Voo. Yeah. But to use it as an example, the retailer is still seeing the transaction data too. [00:02:59] Emily Crone: Yeah. So [00:02:59] Paul: what [00:03:00] they're not seeing at the moment, so they've got an advantage here too. So Walmart will see the transactions that happen inside the GPT. So they, right now, that's a blind spot for them. Mm. They're not seeing anything. They, they're just seeing, uh, referrals coming from there and [00:03:15] that's it. Yeah. [00:03:15] They're not seeing what's happening in there. So they're gonna get some new data points as well. They're gonna get the prompt engineering that then triggered the, the, okay. The, the transaction and other bits and pieces. So they, I think there's data in it for. For the retail media networks as well. [00:03:27] [00:03:28] Kiri Masters: So Paul [00:03:30] has a more optimistic take on this than me. He's arguing that retailers are gaining valuable new data that they never had before. Right now, Chatt PT traffic is really a black box. There's just referrals coming to your [00:03:45] website with no context, but with instant checkout integration, retailers might now see those prompts, the AI's reasoning and more of the actual decision path, [00:03:58] and that gives them richer [00:04:00] insight into consumer intent, perhaps even more than what they got from a regular keyword search. [00:04:06] Retailers aren't losing power. They're gaining new signals to strengthen their position. Now my argument is a little bit different. I [00:04:15] shared it last week, and that is that retailers are potentially going to lose their most valuable asset when it comes to offsite retail media, at least, which is their data exclusivity. [00:04:28] I argue that [00:04:30] even if they see transaction data from chat, GPT checkouts. The damage is done. Now, there is another party that has access to these purchase signals that used to belong exclusively to an individual retailer. [00:04:45] Now, because there's now two parties that have that visibility, it erodes the moat that these retailers had and that they were able to use to justify some pretty healthy margins on their audience extension capabilities that they [00:05:00] were. [00:05:00] Sharing through parties like the trade desk, [00:05:03] While retailers might see more of that prompt activity, I don't think it will necessarily compensate for losing their exclusive competitive advantage. [00:05:12] Now, to be fair, my argument [00:05:15] presupposes that chat, GPT will enter the audience extension game, which I think is pretty likely in the medium term, but it's no means of certainty. [00:05:25] but without that assumption, Paul's optimism does make sense. [00:05:30] If open AI just processes transaction, but doesn't monetize the cross retailer data through advertising or audience extension, then retailers are gaining new signals through prompts and additional context. [00:05:45] Did you know that 60% of shoppers abandoned carts when product info is wrong? Before you ramp up your ad spend, fix the [00:06:00] shelf Acosta group's. Award-winning connected commerce crew is trusted by brands like Coca-Cola and Sanofi to deliver critical content updates. [00:06:11] Acosta Group handles it all. Then layers on media [00:06:15] buying. Learn about Acosta group's connected commerce capability at Acosta Group and tell them Retail Media Breakfast Club sent you. That's A-C-O-S-T-A group [00:06:30] [00:06:30] Kiri Masters: And moving on to my final highlight from this conversation, how retailers can compete with a content play. [00:06:38] Now, this is a really interesting and tactical example of how retailers can differentiate [00:06:45] themselves in an AI dominated landscape, and it is a case study of a large retailer in Australia called Chemist Warehouse, which has a thriving retail media business and an interesting content play. [00:06:57] Let's listen. [00:06:58] Speaker 2: And I think retail media [00:07:00] could learn a lot from the publishing world around how to allow the endemic and non-endemic brands to up and actually scream their brand values. And that's with great content. [00:07:10] Speaker 3: And is anybody doing it well? [00:07:12] It's early days. I mean, uh, most of [00:07:15] the, uh, big, uh, retail media networks have just got to the point where they've got the infrastructure to actually behave like a publisher. [00:07:22] Yeah. There's a lot of great people. Uh, I think Qantas, uh, does well. I think, uh, chemist Warehouse does well. [00:07:30] The House of Wellness is a brand the Chemist Warehouse publishes, where they actually publish great consumer content. Uh, it's also sits within Body and Soul, which is a NewsCorp website. So their content sits as consumer content there, and they do a very good job. [00:07:44] [00:07:45] They rely on a business called Medium Rare who are. You know, ex journals, ex magazine, ex digital content producers to do it because retailers don't do lifestyle content very well. They think like a retailer. Um, so yeah, I'd say Chemist Warehouse would be one of the [00:08:00] ones that are doing it quite well. Okay. [00:08:01] We talked a little bit about brand, but the, when I think about Gentech shopping right now, it feels very much like from an advertising perspective, you're talking about performance media. I mean, it's, is this taking money from Meta and Google, or is it gonna be [00:08:15] raising the entire ecosystem, or what, what's your thought in terms of where the money's gonna flow? [00:08:19] Speaker 2: Initially they're going down the performance route because it's about, uh, getting to that transaction and that's how they're gonna, uh, attribute where the money flows. Yeah. Um, I think what we are learning, uh, [00:08:30] is that there's a lot of value outside of just the transaction. So when you are, uh, not. Ready to purchase. [00:08:37] You're just starting out your journey and you're able to, to click on a piece of content and, and, and go through the catalog, look at the colors, look at the availability. They're all [00:08:45] great data points to then use to, to retarget and they've slightly further up the funnel. So, yeah, initially it's always about performance 'cause no market has ever been fired for being able to go. [00:08:54] I spent that dollar and I got $50 back. Yeah. But yeah, brand is harder to [00:09:00] justify. [00:09:00] [00:09:01] Kiri Masters: I love this example from the Chemist Warehouse. Instead of just competing on price, they've built a proper content brand with print magazines, digital content, and syndicating it out through premium [00:09:15] publishers like News Corps, body and Soul. I think this is a great concept for retailers to be thinking about. [00:09:21] Because AI can recommend products all day long, but it can't necessarily build the kind of trusted relationship that comes from real [00:09:30] journalism and real experts. And this is one way for a retailer to own the content, own the audience, and own the data. And when you partner with brands, you've got something real to offer beyond just another ad slot. [00:09:44] [00:09:45] So wrapping up here, what I liked about this conversation is it wasn't all doom and gloom. Retailers aren't helpless here. They're getting new data that they didn't have before. They have a chance to help shape what advertising looks like in AI, and they [00:10:00] can build real differentiation through content and physical presence. [00:10:04]