Latest / Retail Media Breakfast Club / Why Retail Media’s Metrics Are Failing — And What Actually Drives Brand Growth
Transcript
- The ‘How Brands Grow’ Dogma vs Retail Media === [00:00:00] Kiri Masters: A post on LinkedIn a few weeks ago caught my attention. It was from Steve Gray, a retail media consultant based in the UK and a former executive at Dunhumby who has worked with several large CPG brands and [00:00:15] retailers. And he articulated what he sees as retail media's foundational problem, that networks are justifying their premium pricing with the wrong metrics. [00:00:25] Here's what he said, retail media networks shouldn't sell awareness or impressions or [00:00:30] conversions. They should sell, reach, context, salience, and physical availability, because these are the things that deliver brand growth. Now, this post really ignited something, dozens of [00:00:45] responses poured in from retail media leaders, agency executives, measurement specialists, and brand marketers. [00:00:52] Many agreed vigorously. Others pushed back. What became clear wasn't that one side was right and the other wrong. [00:01:00] It's that retail media has reached a crossroads where theoretical ideals about how brands grow are colliding with operational realities about how marketing budgets actually get allocated. [00:01:14] Let's dive [00:01:15] in. [00:01:15] [00:01:16] Kiri Masters: In case you haven't heard of it, there is a Bible, if you will, amongst brand marketers called How Brands Grow. Uh, and that was the title of a book written by [00:01:30] Dr. Byron Sharp from the Berg Bass Institute. And it is based on a ton of research, particularly in the consumer product. Ecosystem about how brands actually [00:01:45] grow. [00:01:45] And one of the core principles is that brands grow through penetration. That is reaching more buyers, not necessarily by increasing loyalty amongst existing customers. Mental [00:02:00] availability, which is being easy to think of, and physical availability, which is being easy to buy. Matter more than persuasion or conversion optimization. [00:02:13] And so this dogma [00:02:15] of how brands grow is what Steve Gray was referring to in his post when he said, when shoppers need or want something within a particular category, they buy something that does. The job is easy to think of and easy to buy. Brands compete on [00:02:30] mental and physical availability, not impressions and clicks. [00:02:34] He says that retail media is uniquely positioned to deliver both a mental and physical availability at the moment that shoppers enter a category. Now, here's the thing. When [00:02:45] I asked Steve what metrics he proposed instead of roas and clicks, ~he pointed me towards penetration and new user growth, both metrics that brands are able to.~ [00:02:50] ~Uh, sorry. ~He pointed me towards penetration and new user growth measures that brands should track, not just at a market level, but within retailers. [00:03:00] And he acknowledged that these measures will take some time. To become mainstream. But despite the many endorsements of this concept, when I press for examples of retailers or solution providers leading this charge, I wasn't given any [00:03:15] specifics. [00:03:15] And so it leads me to wonder if, you know, why is there such a huge gap between theory and execution? ~Is it~ [00:03:25] ~this? ~This line of thinking about how brands grow isn't new. That book came out in [00:03:30] 2010. I believe that the issue of translating philosophy into actionable measurement frameworks that brands can actually use is where things actually really get murky. [00:03:41] So I don't know many people who believe that the current state of [00:03:45] retail media measurement and analytics is a gold standard. We've won the race. Everything is perfect. There's no one that really believes that. But what I find interesting is for a medium that has [00:04:00] the ability to provide closed loop measurement, provide real information on how a campaign actually performed in terms of driving sales. [00:04:11] It did kind of surprise me how many people push back [00:04:15] on retail media being a performance medium. Given that this is really the whole calling card of retail media to begin with. So one comment, from friend of the show and someone whose opinion I deeply [00:04:30] respect, Jordan Whitmer, managing Director of the Media Agency, salt. [00:04:34] He laid out how the current systems. That we have distort retail media's value. Here's what Jordan said. Retail media gets [00:04:45] crushed in impression based modeling approaches because retail media network budgets are usually steady week to week. [00:04:51] ~And because the, ~and because retail media generates fewer impressions when it performs better media, mixed models often [00:05:00] read retail media as under-delivering compared to social or open web display. And that's because these models like variation and they like having more impressions too. Analyze retail media doesn't really [00:05:15] provide much, so the channels that pump out impressions cheaply like social and open web display, they look better on paper even when retail media is quietly driving more conversions. [00:05:30] Did you know that leading retail media networks drive 85% of their ads through mid and long tail advertisers? [00:05:42] Miracle Ads provides full [00:05:45] funnel ad formats tailored to both one P and three P advertisers leveraging unique AI capabilities that provide unprecedented levels of relevance and engagement. Retailers who want to capture ad spend from [00:06:00] the long tail of three P Marketplace sellers use miracle ads in their tech stack. [00:06:05] Learn more@miracle.com. That's M-I-R-A-K l.com. [00:06:12] [00:06:13] Kiri Masters: I got another perspective [00:06:15] from Uni Baker Sto, who is the chief executive of ad tech company, chicory, who said marketing has moved too far towards data-driven decision making. Intuition and context have to matter again. Here's uni's [00:06:30] thesis. Marketers have become so dependent on measurement that they've lost sight of context and human behavior. [00:06:36] Most measurement systems like medium mix modeling, closed loop attribution, programmatic models, these all have inherent [00:06:45] distortions that over reward, impression, volume, and scale decision making has become driven by what is legible rather than what is meaningful. [00:06:54] Anne Hallick, who's the Vice President of Sales at Miracle Ads. The sponsor of this podcast [00:07:00] offers a reframe that bridges Steve Gray's philosophy with maybe a bit more operational reality. She said that the purchase funnel isn't dead. [00:07:10] Awareness has to come before consideration, and consideration [00:07:15] still drives preference. What's dead is the manner in which brands used to be able to control the customer journey, and and she describes what agency executive Brett Stark calls in his book a Chaos Pendulum. I love this concept, a chaos [00:07:30] pendulum where shoppers ping pong between social proof. [00:07:34] Search reviews, retailer sites and physical shelves. So a shopper might discover a product through word of mouth, encounter it via sponsored search, and then convert [00:07:45] only after comparing options on a message board like Reddit. So which part of that journey did the brand actually influence? This chaos doesn't mean that awareness and consideration [00:08:00] don't exist. [00:08:01] It means that brands can't dictate the sequence or measure it cleanly. Retail media's appeal in Anne's view, comes from high intent. She says, if I show you an Apple ad in the New York Times, [00:08:15] you may or may not register it. But if I show you an Apple ad when you're shopping for a laptop on Best buy.com, you'll absolutely have added Apple to your consideration set. [00:08:25] So I think this framing helps to bridge both sides of the debate. Yes, [00:08:30] mental availability proceeds purchase. Yes, context matters, but shoppers are chaotic. Journeys are fragmented, and brands need metrics that account for all of that chaos. Finally, a got another perspective from Eleena Hayden, who is founder [00:08:45] of the agency, Verity. [00:08:46] Who agrees with Steve that mental and physical availability matter, but only up to a point in her view, reach and salience are necessary, but they're not sufficient in categories where shoppers increasingly buy it based on values, [00:09:00] provenance, or quality cues. [00:09:03] finally, my friend and principal consultant at Catalyst Media Consulting, Michelle Dooley, shared a simple truth with me. at the end of the day, everyone in retail is looking to [00:09:15] sell something and the investments made in advertising are in service of driving more sales. She also says, while ROAS has its limitations, different media buyers will care about different things. So from the perspective of an [00:09:30] advertiser, if they're looking for performance, we need to talk their language. [00:09:34] If they're looking to build their brand and consideration, we need to speak their language, which retail media doesn't do a great job of today. [00:09:44] The current [00:09:45] reality is that for better or worse, retail media networks have positioned themselves as media channels. They sold roas. They pitch closed loop measurement and conversion attribution. These are unique attributes that only retailers can promise. So [00:10:00] brands hired performance buyers to manage these relationships, to set the quarterly targets and justify spend in budget reviews. [00:10:08] The shoe dragging in our industry over common retail media measurement standards shows that the [00:10:15] industry doesn't truly believe in perfect measurement. Brands are allocating budgets right now using the flawed metrics available. Retail media networks are building businesses right now, selling what buyers understand how to buy, and [00:10:30] consultants are correctly pointing out that the frameworks guiding these decisions are fundamentally broken. [00:10:36] Steve Gray's provocation on LinkedIn was a hit because it forces the industry to admit what everyone already knows. ROIs [00:10:45] optimization isn't building brands and last click attribution isn't always telling the truth about what's working, but until someone builds measurement infrastructure, that captures salience penetration and mental availability [00:11:00] in ways that CFOs will approve. [00:11:02] And media bias connection brands will need to keep using the metrics that we have right now. [00:11:07]