Will retailers drive the next phase in digital marketing?

Discussion
Source: Amazon.com
Sep 20, 2017
Joel Rubinson

Through a special arrangement, presented here for discussion is an excerpt from a current article from the Joel Rubinson on the Marketing Research blog.

What are the ingredients of success for an important advertising platform? Reach? Of course. Unified IDs across devices? in a programmatic age, yes. Proven impact? Definitely.

So who offers all of this in spades? Amazon. Walmart too. Yes, the folks who redefined retailing are about to redefine marketing as well.

Here some reasons why:

  • Marketing shifts toward purchase journeys: Traditionally, marketers have been obsessed with the funnel without knowing if building brand consideration today has any impact on sales a year from now when consumers need a new smart phone, TV, mortgage, etc. In a digital age, marketers can selectively target those who are actively shopping where 90 percent of short-term sales actually come from.
  • Unified IDs will become cost of entry. All marketers want to practice integrated marketing, but many still have cookie based DMPs (digital marketing platforms) that inhibit this because advertising and conversions across devices cannot be connected via cookies that are browser specific. With Google, Facebook and Amazon (and Walmart, and so on) offering deterministic unified data, why settle for less?
  • Performance advertising will mean more advertising. As the connection between advertising and outcomes is contained in the same ecosystem, the ROI of advertising will become clear. Proof of performance caused a massive shift once before. In the early eighties, when marketers began seeing weekly sales data from store scanners, $40 billion shifted from advertising to trade promotion.

To wrap all these changes up in a theme, some of you will remember that in 2009 Procter & Gamble announced its initiative called “store back” marketing. If it doesn’t work on the shelf, it’s a #fail. Well “retailers as publishers and ad networks” is the final piece to making that approach for product marketers a reality. Now brand building and activation can occur within single platforms. Marketers will waste fewer ad dollars against dormant consumers who are not interested until they want to buy something. Shopper marketing will become just marketing, rivaling digital, programmatic and mobile in growth rates enabled by Amazon and the other big retailers who follow suit. Marketers will respond and marketing will change forever.

DISCUSSION QUESTIONS: Do you see retailers rivaling major ad networks like Facebook and Google to transform digital marketing? What do you think of retailers’ potential to target messages to active shoppers?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I do envision some nimble software players building compelling ad networks on top of retailers."
"...retailers are becoming both inventory owners (sellers of digital space) as well as buyers of digital space in their desire to reach consumers."
"There is an opportunity here, but it’s only available to a select few mega-retailers who lead a category."

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16 Comments on "Will retailers drive the next phase in digital marketing?"


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Phil Chang
BrainTrust
Phil Chang
Retail Influencer, Speaker and Consultant
1 year 11 months ago

I think that retailers should drive the next level of marketing. Brands (most of them) lack the big picture required to drive fundamental change. The ones that have driven the most change (e.g. Patagonia) are brands and retailers — which gives them a big market perspective.

The challenge to retailers is to provide leadership. It’s been difficult to get the articulation required from a retailer so brands can activate. Some of this will require new age thinking — sharing of data (not charging for it) and sharing of insights so the entire market moves forward together.

Having said all this, to come back to the question at hand, I don’t see a retailer rivaling Facebook or Google in this regard. I see strong partnerships where Google or Facebook will enable retailers to be able to deliver key messages to active shoppers.

Jon Polin
BrainTrust

It’s hard to see retailers themselves rivaling major ad networks, but I do envision some nimble software players building compelling ad networks on top of retailers. To the extent that a brand can “enter the conversation” with a consumer just as that consumer is in the midst of expressing their purchase interests, it is a bullseye for the brands.

Frank Ramirez
Guest
1 year 11 months ago

Ads are about awareness and conversion. With the ecommerce oligopoly scale and awareness is relatively assured with the frequency of visitation opportunities. Conversion is also much more likely due to the exponentially greater data insights. Net, when Walmart and Amazon finally realize the full potential of smart Ads to drive their retail sales then two thirds of the ad networks revenue is put at risk to migrate to shopper marketing systems where they will drive much more value for sellers.

Adrian Weidmann
BrainTrust

I believe brands will be more apt to drive, and certainly fund, digital marketing strategies. Google owns DoubleClick and there isn’t a media buyer in the world that isn’t conversant in DoubleClick. Other than Walmart, it’s hard to imagine a retailer that will compete successfully with Google, Amazon or Facebook.

Frank Ramirez
Guest
1 year 11 months ago

Walmart, Amazon and the consumers are best positioned for success at this time.

Art Suriano
BrainTrust
Considering how fast technology is changing this is hard to predict. I look at this another way. Today what many marketers have forgotten are the basics and as a result, they find themselves scrambling attempting to generate business. Question number one for stores to ask themselves: “Who am I and why should customers shop me?” How many retailers do a good job of that? Number two: “Why am I a better choice than my competitors?” Today it’s all short-term thinking with short-term sales based solely on price and product and speed of delivery. That’s fine, but that’s not how you build a brand. When the customer has a memorable and pleasurable experience shopping you, that customer typically visits your store or website first the next time they need to make a purchase. If you can provide a great experience every time, you’ll have more business than you can probably handle. So it’s great to have all the analytics we have today, customers’ profiles, buying patterns and so on but without implementing some robust and creative… Read more »
Larry Negrich
BrainTrust

Brands have some room to investigate whether the investment in creating platforms is worth it. I think these types of endeavors can be more distracting to the retailer. Most retailers should strive to fully leverage existing platforms.

Frank Ramirez
Guest
1 year 11 months ago

Most do not have the resources to do anything else.

Mohamed Amer
BrainTrust
Mohamed Amer
Independent Board Member, Investor and Startup Advisor
1 year 11 months ago
I don’t think it’s fruitful to think of retailers as an ad network. While Google and Facebook represent the duopoly in online advertising, they not only lack transparency but have less than adequate proof of performance and value per click, and questionable ad placement practices. What retailers represent is a large set of digital inventory sites, outside of the walled gardens, for publishers and brands to access and gain higher quality placement and more transparent ad performance. On the downside, today’s programmatic advertising world is divided between sellers (digital inventory owners) and buyers (brands wanting to reach the right customer with the appropriate message) with ad agencies and ad tech companies playing an important intermediary role. Retailers can definitely benefit by exploring the opportunity around programmatic advertising as long as they have a clear vision and strategy about how digital marketing fits in their core customer strategy. Keep in mind that retailers are becoming both inventory owners (sellers of digital space) as well as buyers of digital space in their desire to reach consumers.
Frank Ramirez
Guest
1 year 11 months ago

This POV appears to not fully respect the opportunities for retailers to add value to a near captured audience. Retailers have a virtually insurmountable set of quality consumer data/insights and inventory packaging opportunities to deliver ads that drive easily measurable conversion. They also have a business model that allows for nearly full ad subsidization to undercut ad network pricing. Current ad networks of publishers and app channels are IMHO in for a world of hurt. As in they will see most their revenue disappear.

Ralph Jacobson
BrainTrust

I do think retailers have huge opportunity to drive marketing ROI in general. However, another aspect was brought up in the article about trade promotions. The retail and CPG industries have a long way to go before traditional trade promotion practices can change significantly. It’s possible, but all ecosystem partners need to agree on mutually beneficial actions.

Ricardo Belmar
BrainTrust

This still seems a bit outside the core competency of most retailers. Plus, you really need scale to rival Facebook or Google in any way and the only retailers who could pull this off are Amazon and Walmart. Would Walmart do this? It’s hard to say if they would really see a benefit. Amazon? Yes, but then again Amazon isn’t a retailer — they’re a technology company and if advertising and digital marketing drive revenue that helps in another product category, sure, they’ll do it!

Now, when it comes to better targeting of shoppers, there is definitely potential for retailers to get much better at it to drive store traffic at the right time in the shopping journey. We’re seeing the early stages of this approach and retailers will continue to get better at it as they better understand the data they have on their customers.

Frank Ramirez
Guest
1 year 11 months ago

Despite what the adtech networks would like people to believe, this is not rocket science. The technology is easily within the domain of competency and budget of any large/mid sized retailer. The benefits are huge in seller and shopper satisfaction as well as driving a lift in sales. I’d actually say it is irresponsible for retailers of any decent size not to invest in building/buying a shopper marketing platform.

Martin Mehalchin
BrainTrust

There is an opportunity here, but it’s only available to a select few mega-retailers who lead a category. The unified ID is really the key piece, it give you visibility into the whole purchase journey. Walmart, Target, Best Buy et al should be investing heavily in apps and other digital experiences that encourage their shoppers to always be logged in. Walmart is the one to watch here; they appear to be teaming with Google to build an anti-Amazon coalition, and their acquisitions of Bonobos, Moosejaw, Jet and others make more sense if they can corral the shopper data from all of those banners under a single log-in ID.

Frank Ramirez
Guest
1 year 11 months ago

Once you log into the service the device is relatively moot. More important is the fact that it is estimated two thirds of the U.S. GDP comes from retail sector. Total retail sales in US are about $5T per year, while total advertising expenditures (TV + Internet) is about $190B per year (approx. 4% of retail sales).

Net, retailers best leverage data to increase their retail sales not to profit from advertising. Advertising revenue is a rounding error opportunity for a large fully integrated retailer. Companies like Walmart and Amazon can/should provide nearly free ads to partners/resellers on their platforms to drive retail LTV based KPIs. Meanwhile, ad tech companies like Facebook and Google, whose primary source of revenue is advertising, potentially have up to two thirds of their revenue at risk because turnkey D2C shopper marketing is inevitable. The shift in advertising revenue will impact many current high flier adtech/app based marketing firms. The question now is what is the best shopper based marketing strategy and how do you implement it?

Hilie Bloch
Guest

Not all ecommerce stores have the computing power and amounts of data Amazon, Facebook and the likes have. Tech companies offering deterministic unified data that enables the true capture of purchasing journeys and allow for omnichannel marketing will be the leading force in helping retailers make the ultimate leap of truly understanding and knowing their customers. It could be that Facebook re-targeting campaigns are popular today, but what happens if most of your shoppers are NOT ON FACEBOOK? By truly understanding your customer, and having the insights relating to their browsing behaviors (not using cookies), retailers will not only identify the user across different platforms, they will be able to target the users with the right products for them, at the best distribution channel per user.

wpDiscuz
Braintrust
"I do envision some nimble software players building compelling ad networks on top of retailers."
"...retailers are becoming both inventory owners (sellers of digital space) as well as buyers of digital space in their desire to reach consumers."
"There is an opportunity here, but it’s only available to a select few mega-retailers who lead a category."

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