Latest / Retail Media Breakfast Club / Best Buy Ads Showcase Recap
Transcript
- Best Buy Ads Showcase Recap === [00:00:00] Kiri Masters: Patrick Albano and I spoke on related panels at an Ad Club of New York event in September, making somewhat of a similar argument about brand building in commerce media. [00:00:15] I asked for a poll of the room to see how many people are actually using brand building elements of commerce media in their media plans. [00:00:26] And the response from the room was [00:00:29] There is [00:00:30] interest, there is eagerness, but not a lot of budget being allocated to brand-building campaigns inside of retail media networks and commerce media. And when I spoke with Patrick about a week [00:00:45] later ahead of Best Buy's showcase event We spoke a little bit about this, that brands really do want brand-building capabilities from retail media, but the follow-through from the people holding the budgets isn't really there yet. [00:00:58] Now, Patrick Albano, of course, [00:01:00] is the chief revenue officer at Best Buy Ads, and he said, "I think it's just something that will take a little time to change, but the mechanics of the offer and the opportunities are there." Now, that was just ahead of [00:01:15] Best Buy Ads' annual showcase event, sharing how they are integrating connected TV, creators, a production studio, a TikTok shop, new measurement capabilities. [00:01:29] And what I [00:01:30] found really interesting is that the sponsored product ad unit barely came up, except as one of the channels in a new multi-touch attribution tool. And that is not completely surprising, seeing how retail media has evolved [00:01:45] beyond the sponsored product ad unit. But I thought it was really interesting given that Best Buy was actually one of the first US retailers to ship sponsored product ads back in, way back in twenty eleven. [00:01:59] The retailer [00:02:00] that got us started with this ad format now puts its energy somewhere else. I'm gonna share a couple of highlights from the Best Buy Ads showcase, what I was thinking about as I learned what they're up to. [00:02:15] Let's jump in. [00:02:15] [00:02:17] Kiri Masters: Now, at last year's showcase event in twenty twenty-five, called We Got Next, Best Buy's big idea was becoming a platform. [00:02:27] Lisa Valentino, who is the [00:02:30] leader of Best Buy Ads, told me that the company was all in on working with other retailers to build shared customer datasets. The rest of the stage went to store takeovers, sports partnerships, [00:02:45] off-site expansion, and this gigantic new studio facility that they built. Now, this year, the stage went to CTV across Insignia televisions through an expanded agreement with Amazon [00:03:00] to deploy ads across their Fire TV network. [00:03:05] They also relaunched a creator program that brings in their blue-shirt store staff, broadening their production studio to more [00:03:15] brands, and a TikTok shop arriving in late October, and also some important Measurement capabilities like attribution for every advertiser and upgraded incrementality testing. [00:03:28] So the [00:03:30] emphasis kind of evolved and migrated, but in both years, the headline item sat outside of that search results page. On-site performance ads still run, still earn, still get sold [00:03:43] But a company [00:03:45] tells you where it's planning to go by what it puts up on the stage, and Best Buy has told the market that it doesn't plan to really grow there. Now, why has that growth moved? Well, two reasons stand out, [00:04:00] and there's probably an element of both of them. The first is money. On-site performance ads like sponsored products make up most of US retail media spend, um, and that figure is, uh, accounting for a, [00:04:15] a dominance of Amazon and Walmart in that calculation. [00:04:19] But you think of Best Buy, who is a retailer that has been running its ad auction now for fifteen years, and it has already launched and scaled a third-party [00:04:30] marketplace whose sellers are very reliant on performance advertising. They're not typically the ones taking out CTV ad slots and things like that. [00:04:41] So if they have maxed that out, which I'm not sure that they [00:04:45] have, but let's say if they had, there's fewer ways to grow that line item. you think about the ways to grow revenue. You can raise prices. You can bring in more advertisers, or you can get them to [00:05:00] s- spend longer over time [00:05:02] Now, if those options are exhausted or limited, then you look for growth somewhere else, which is, as a lot of retailers have been trying to do over the past year or [00:05:15] couple of years, is look into the national brand budgets. Now, the second reason is AI. And this is my read, but it is something that Patrick Albano, when I spoke with him, kind [00:05:30] of confirmed, that there is a change in how people are arriving at Best Buy. [00:05:34] He said, "You're seeing more people start with LLMs and go directly to Best Buy, so that means the funnel is condensing." Now, this is something that I have talked about and argued for a [00:05:45] long time now, is that if the research happens in a chat assistant, and the visit that follows lands straight on a product page, then that browse and compare moment on the retailer's site gets thinner. [00:05:59] There might be [00:06:00] less usage of the traditional search bar and less eyeballs on that search results page, which is where a lot of sponsored product ad inventory shows up. So someone who's already [00:06:15] decided may go ahead and buy that product without going back and searching and, and seeing all of these other ad units. [00:06:25] Compare that to what Best Buy and other retailers are building up [00:06:30] around connected TV, a TV spot in someone's living room, watching live sports, or a creative video on social media, or an event in a store. That doesn't depend on a shopper browsing a results page, and a, [00:06:45] a chat assistant can't skip over it by answering the question before the shopper reaches the site. [00:06:50] Now, to be clear, Best Buy hasn't ignored the assistants. It's actually been one of the earlier movers into putting its [00:07:00] catalog into ChatGPT, for example. It was one of the first retailers to actually launch ads in ChatGPT. So very active in this area, but I think that this is really a belt-and-britches approach that they're figuring out um, what [00:07:15] happens if our, you know, if our traffic journey meaningfully changes, then where do we make up the difference? Are manual processes slowing [00:07:30] down your RMN momentum? With GrowthLoop's composable commerce media solution, retail media and ad teams can build and launch precise audiences in minutes, activate across DSPs [00:07:45] and ad platforms, and deliver transparent ROI reporting that drives advertiser revenue. [00:07:53] learn how retail media leaders at Costco, Fanatics, and goPuff use GrowthLoop [00:08:00] to deliver stronger results for their brand partners fast. Visit go.growthloop.com/breakfast. That's [00:08:15] go.growthloop.com/breakfast [00:08:17] Now, I wanna also point out some research that Best Buy shared at their showcase event, which is they commissioned Circana to run a marketing mix model [00:08:30] across two years of its sales data across four major product categories and two point three billion dollars in ad spend measuring Best Buy ads against the largest national media platforms. [00:08:42] What they found is that Best Buy ads [00:08:45] returned a ROAS that was seventeen percent better than the national media average in the model. [00:08:50] Now, it made up seventeen percent of the media spend analyzed, but accounted for thirty-five percent of the measured media contribution to sales. Socana [00:09:00] also used YouGov brand data to measure brand equity, things like awareness, preference, consideration, and purchase intent, and Best Buy ads generated nine point nine percent of all the brand equity [00:09:15] measured in the study. [00:09:17] So Best Buy is presenting this research from a third party as evidence that retail media builds brand. Now, they also pointed out that Best Buy ads drove nearly [00:09:30] sixteen percent of media-driven sales at competing retailers close to its full share of spend. Now, this is really interesting because first of all, brands have known for a long time that this kind of halo effect [00:09:45] happens, but retailers rarely put it in their own research. [00:09:50] There is not so much of a direct incentive for them to do that to actually measure results at other retailers. ~But this is a really interesting pitch to the budget that... But this is a really interesting ~But this is a [00:10:00] really interesting pitch to the budget that is focused on delivering direct sales [00:10:09] And on our call, Patrick Albano pointed out that the study finished [00:10:15] before any of their new measurement products existed. So he said, "I suspect in the next wave of this we'll see an even better result from that." [00:10:24] And finally, media that looks like the retailer. Retail media gets criticized for [00:10:30] being kind of one note, and this came up in my podcast episode last week with that research from Ipsos. And I think, you know, the, the criticism is fair in some, to some [00:10:45] degree that, you know, there's slight variations on performance media. [00:10:49] Maybe in some situations it's really more of a tax to brands. That still happens today, and that is fair, a fair criticism when a retailer runs [00:11:00] the same playbook as everyone else and media buyers end up treating networks as in-interchangeable and really just comparing them based on performance metrics. [00:11:09] But what Best Buy is doing, and it's a continuation of, of a theme over the [00:11:15] last couple of years, is selling what makes it unusual as a retailer. Its pull with sports and gaming culture, its store footprint, which they are expanding rather than closing stores [00:11:30] on a net basis, and the trust that shoppers place in the blue shirt staff. [00:11:35] And so these are the retailer's own assets, the store, the employees, the cultural cachet. These are the retailer's own assets that's [00:11:45] being sold as media [00:11:47] And I think that Best Buy is doing a great job of making sure that its offering looks like its offer as a retailer, and Best Buy's increasingly does. The Networks with something distinctive to [00:12:00] sell will have an easier time moving beyond sponsored products than the ones whose main asset is just the search traffic [00:12:09] Well, that's it for today. Thank you for listening, and I'll catch you tomorrow [00:12:13]