Podcast | Customer Data and Technology in Retail Media

Dave Clements (00:08): Hello everyone, and welcome to our next episode of the dunnhumby Customer First Podcast. Today’s episode is all about retail media and the new opportunities for retailers and brands, with the evolving use of customer data and technology in this space. My name’s Dave Clements, I’m the Retail Director at dunnhumby, and today, I’m delighted to be joined by Julie Jeancolas, our Head of Media and Customer Engagement Solutions at dunnhumby. Welcome, Julie.

Julie Jeancolas (00:41): So, Julie, let’s start talking about retail media because it’s a very hot topic at the moment in retail. Why do you think it’s risen so much in importance for retailers, and what are the key factors of success as you see it, as businesses, I guess, are trying to emulate some of the successes, businesses like Amazon, have had in this space?

Building a sustainable media business: 3 Considerations

Julie Jeancolas (01:04): Sure. I mean, we know right? Retailers’ margins are under increased pressure, especially with the pandemic, with the acceleration of eCommerce, where the fulfillment models like Click and Collect or home delivery, are margin dilutive by around 5 to 15% respectively, according to Bain. There’s also pressure on household budgets, which is driving a focus on value, leading to further retailer investment in price and promotions or other discounts. Retailers have increasingly looked at retail media to drive new profit, new revenue streams to boost these margins, and we know that this margin in media, around 40%, which is much higher than the usual 2 to 4% in grocery. Equally, on the CPG sites, they have also been under pressure with inflation and disruption of the value chain and therefore looking for marketing opportunities that are going to really maximize the return on ad spend.

To build a sustainable media business, I think there are three things to think about. First one for retailer, is to really gain that internal alignment and C-level sponsorship, right? Regardless of the size of the retailer, to successfully set up and grow a media business, you need a leadership committed to making media a strategic priority with clear KPIs and ensuring that the rest of the organisation is aligned to this priority for merchandising, marketing, tech team, eCommerce, stores, managers, et cetera. They have to work together to make it work. For example, if store owners are not wanting brand imagery in store, that’s a problem.

The second thing is from a tech and data point of view, so a retailer media network is built on top of a very complex ecosystem of partners, with onsite and offsite and stores, et cetera. That’s the only way to support multichannel execution, so retailers need to think about that tech platform and infrastructure that’s going to allow them to be efficient when planning omnichannel campaigns, and solve for inefficient and error prone workflows. The retail media network should also be built on a robust data infrastructure that gives them the 360 view of the customer, not only to offer brands customer segments that are going to maximise roles, but also to enable the retailer to steer customer satisfaction.

I think the third element I would say is people and skillset. Retailers are not media owners, they’re not publisher, and beyond the tech expertise, they need to bring the right media expertise across digital onsite, programmatics, search marketing, store and CRM to make it work.

Dave Clements (03:46): Yeah, I couldn’t agree more, Julie. I think that the way you describe the competitive pressures on retailers in recent years, with new competition from the likes of Amazon, the discounters, pressure on the margins and the inflation pressures and post-COVID, really making it necessary for retailers to find those new revenue streams. As you say, one of the keys to success around retail media has been, you can’t do it side of desk. You really need to think of it strategically. You really need to think about setting your organisation up for success, as a true business unit in its own right, so the right tech, the right people. Because as you say, I think in the past, when we’ve had chats with some retailers, they might say, “Oh, well, we do retail media. We sell some space in store, or we target a few offers,” but if you really want to set yourself up for major success and as a major channel for consumer goods, it needs a lot more dedication.

The exciting thing about retail media is just the extent of the different channels that our retail partners that we work actually have at their disposal, so you’ve got in store, you’ve got out of store in the car parks, whether it’s digital screens. You’ve got sampling in the store, you’ve got onsite on the website, you’ve got the opportunity to do offsite. There’s many different channels. Are there any of those channels which are most effective, or is it actually about getting them all together? The other thing I was going to ask you was, there’s a lot of change in legislation, so is that going to change some of the use of different channels as well? What’s your view on all of these channels and which are the best ones?

How to align your retail media channels – digital and instore

Julie Jeancolas (05:27): Yeah, it’s interesting because when you read around retail media, the people talk about digital channel mainly, right? They talk about onsite, so when you put advertising on the retailer website or app and offsite, so when you target the retailer customer on walled gardens like YouTube or Facebook and the open web, but retail media, really, is much larger than that and it goes into store.

Let’s remember 90% of people still shop in-store, so you have, in-store, huge, amazing media assets as well. The other element is CRM, when a retailer has a loyalty base, how do you interact through app or through direct mail with those customers. So I think let’s make sure that we think about retail media more broadly beyond digital channel. I think all channel, if you are building a proposition that is really customer first and enhance a customer experience can be really impactful. That’s something to understand. We can’t say one is more effective than the other.

I think the channel that is being really scrutinized at the moment and where everyone is really wondering what’s going to happen, I think is, offsite. Just to make clear offsite is when you target the retailer customer on the open web or walled gardens. This business heavily relies on the size and addressability of the retailer customer database. But most importantly, on the match rate achieved during the onboarding of those customer data into the online world. So to date, a key enabler of this onboarding process has been the third party cookie, but we all know that the day of the third party cookie are counted with companies like Apple, Microsoft, Mozilla, already blocking or severely restricting third party cookie’s capabilities in their browsers and we know that Google is following suit in 2023.

Now we see that those alternatives emerging in the marketplace with initiative like The Trade Desk and LiveRamp EUID or Clean Room, like Info Zone that we are all really excited about. So new identity-based solutions with persistent ID fire, as well as Clean Room, are two areas that we are looking at to see if offsite is going to be a sustainable revenue stream going forwards for retailers.

Dave Clements (07:50): Yeah, so having that mix of channels, using all of the channels, and I guess that’s another way of making sure you’re touching consumers at different types of the purchase. From when they’re planning it at home, looking at websites, or being on the open web to when they’re in the store. By almost having that mix of advertising across the solutions probably gets the best results, rather than just focusing on any one area.

This also reminds me of this fantastic notion, with our retailer partners, they’ve got the closed loop measurement as well. So across all those channels, they can really understand the mix, but also how those channels together can result in optimising the return on investment for brands.

Julie Jeancolas (08:38): Yeah. I think we have loads of case studies, which show that, not only in retail media, this is the role of media, the more channels you are exposed to, the better return, the more effective, as the companies on customers. I think you’re right, retail media has this amazing, ability to measure its closed-loop, right? And so CPG, for the first time, really understands how each channel contribute to the return that they are getting from their campaign.

A seamless retail media experience for all

Dave Clements (09:05): I think, historically, retailers and consumer goods have often mainly discussed campaigns and activities in media, which is much more, what I call, trade fund related. It’s related to the teams that are really thinking about their own direct sales with that particular retailer. But increasingly, we’ve started seeing the wider CPG brand teams and the agencies really see retail media as a very powerful channel, just like all the other traditional and digital channels that exist. Is that driving a change and how do retailers need to engage, if you like, the brand and agency teams differently? What learnings do we have there?

Julie Jeancolas (09:45): Yeah, so this is a very interesting topic, and if you think about it, there’s a lot of people talking about retail media today, but in a sense, retail media is in existence for many years. If you look at eMarketer or BCG, I think they did some research, and they said, “Look, around 28, 30% of budget come from trade and shopper marketing budget. The rest come from other traditional and digital budgets that are often handled by agency.” So I think it’s really important for retailer to think about building proposition that appeal to the needs of brand marketers and agency and covers the full funnel, right?

It’s not just about covering the lower funnel, with sponsored product ad, for example, which are the bread and butter of retail media, but also, the open funnel proposition brand led offering like video, brand pages, as well as providing access to self-service platform, that enables CPGs to manage this retail media campaign at scale. At dunnhumby, we already partner with platforms like Sky Art Smarts, for example, to power CPG TV campaigns, leveraging Tesco customer segmentation. And you will see more and more CPGs powering the video campaign, based on retailer data, and we see connected TV as a channel that is going to grow in importance over the next months and years as brands start tapping into retail media as a brand opportunity as well.

Dave Clements (11:13): Yeah. So it sounds like as retailers plan building their retail media business and connecting with brands, it’s really important they think about how can you integrate some of these other agency and media planning systems, so it’s really easy and seamless for the agencies and the brands to plan their media with a retailer, just as they plan across all the other traditional ways they’ve done in the past. Those types of integrations sound really important.

Julie Jeancolas (11:40): Yeah. I think it’s really limiting the friction to accessing retail media, retailer inventory and data media is a very complex ecosystem with many intermediaries, and retailers need to think about their tech strategy to ensure that they maximise the opportunity.

Dave Clements (11:58): You mentioned then video and video content that the brands are starting to use. Do you see a lot of innovation coming in the retail media space in the future? What do you see as some of the big developments you expect to see more in the space?

Customer data = the bedrock of retail media

Julie Jeancolas (12:14): Yeah, so I think in essence, innovation will be driven by, I would say, an increase in using customer data, which is really the bedrock of retail media. So for example, I mean, I already mentioned this in the previous question, but I think Clean Rooms are going to really enable a deeper collaboration between retailers and CPG, especially as CPGs start building their own first-party dataset. This collaboration will translate into targeting case studies or measurement use cases.

Dave Clements (12:46): When you say Clean Rooms, can you just explain a little bit more to listeners what that actually involves?

Julie Jeancolas (12:51): Yeah, it’s a privacy first environment that enables retailers and CPGs and publishers, different parties, to bring their data, to enable targeting use cases or measurement use cases, or even insight. As third-party cookies is going to disappear, Clean Rooms are solving that. They are privacy safe and there’s no exchange of data. We are seeing more and more that our CPGs want to also bring their first-party data. We’re seeing an increased usage of those Clean Rooms, like Info Zone, Snowflake, et cetera. So I think we need to really look at how this is going to evolve.

Something completely different that I think is a huge opportunity, how retailers start shifting their mass promotion to personalised offers. That can be monetised, again with CPGs. Especially in this inflationary period where shoppers are looking for value and retail needs to maximise the return of their promotions. I think there’s something really interesting there, and we already see Amazon starting to monetise offers. I don’t think they’re personalised yet, but that’s an element that retailers should think about, in terms of their retail media offering.

I think the other innovation is this notion of going beyond retail media. In the platform, when you have retail media, it’s very much focused on activation, right? So a brand comes to a retail media platform and it’s all about activation use cases. I want to target those people. I want to put this banner on the website, but I think we’re going to see retailers bringing new monetisation opportunities, like insight, for example, giving brands more granular insight into their customers to help them better plan and buy media on those platform. But look at Instacart, they’re also bringing inside media fulfillment in their platform, so it is going to go beyond retail media as we know it today.

Dave Clements (14:52): Yeah. I think you bring up some good points around promotions and really being able to target particular consumers that you find in the data. As we think about some of the inflationary times we’re up against now with lots of retailers and brands really wanting to make sure they can support consumers and shoppers in the right way with the right brand. I can imagine how being able to access the right granular audiences and specific price sensitive customers with the right personalised messages, and shift some of that mass promotion into some of that more targeted promotion, will be very timely at the moment. I’m sure some of our retail partners are starting to think that way.

You mentioned that we’re supporting a number of retailers like Tesco with our own insight and media platform. How is that evolving? Can you explain a little bit more what dunnhumby’s doing in that space and what’s exciting you about how that will evolve in the coming months?

Retail media should enhance the core business of the retailer

Julie Jeancolas (15:49): Yeah, so last year we launched dunnhumby Sphere, which is truly, really, the world’s first retail media and personalisation platform. It covers really all channels and enables retailers and brands to connect with their most relevant shoppers, where I think that relevance and personalisation element is key. So we enhance the customer experience with media. We don’t disrupt it, and that enabled retailers and brands to drive sustainable business growth. Right? I think this is really important to emphasize. We need to make sure that media doesn’t interrupt or negatively impact the core business of the retailer. And so that platform has got in mind three things.

One is to provide those efficient workflows that we talked about. We think that could save up to 40% of time for company managers. The second thing is to give the brand access to predictive audiences, not rule-based, and so those science-based audiences will deliver based on our case studies. They can drive double the ROIs that brands will get these rule-based audiences that are much simpler, so people who have bought this product over the past six months, rather than, please give me the people who are very likely to buy this product next week. Then the third element is this omni-channel measurements that we talked about earlier, that really allow the retailer to capture an unfair share of marketing budget.

And we launched the platform in November last year with the Offsite module, which enabled brands to reach predictive agencies on Facebook and measure the impact of their campaigns on actual sales. We will be releasing the Onsite and Store channel later this summer. What I’m really excited about is the depth of measurement and attribution capabilities that we are going to bring to market across, not only online, but also offline sales.

I think it’s something to remind ourselves that 90% of people still shop in-store. A lot of retail media networks only measure impact on online sales, not offline sales, and we are also going to bring metrics such as customer lifetime value, as well as multi-channel attribution and that’s what CPGs are really asking for. Most of the campaigns are around acquisition for CPG, but when you acquire customers, you never think about the long-term value that they bring to the brand, right? You think about the short-term goal of your campaign, but that long-term element is never taken into account, so that’s something that we are really excited about.

Building great customer experiences and superior return on investments

Dave Clements (18:15): Oh, well, I’m really excited to hear how our clients respond to that, how they find the platform, how they find being able to target, as you said, more predictive audiences that can really help them target their campaigns and get that measurement of, how are all the different media using, in a much easier way. So it’d be great to see those new innovations and developments come through for clients. I’m sure we’re going to see retail media continue to evolve and become an important thing for the retailers in the future.

Julie Jeancolas (18:46): Yeah, it looks, as you said, a very exciting space to be in, and we are looking forward to partnering with our clients, to have them build sustainable media businesses that deliver great customer experiences and superior return on ad spend for brands. That’s really what our goal is.

Dave Clements (19:05): Yeah. If I think about Amazon as a business, who’ve built a very significant media business, I think it’s a great opportunity for many of our retail partners to build their own businesses very similar and get a similar return on investment as well.

Julie Jeancolas (19:20): Definitely. I think, beyond grocery, you see other sectors coming in, because, with the demise of the third-party cookies, it really makes companies think about how they can leverage their first-party data, because that’s the only way you’re going to be able to activate your campaigns in the future. We see other sectors coming in like travel and entertainment etc., and I think the one thing is really think about when you set up your media business, remember that the customer is at the core of this and you need to preserve that experience and ensure that media doesn’t damage your core business, so do it in a Customer First way, if you want it to be sustainable.

Dave Clements (19:57): Yeah. Couldn’t agree more. Customer First right at the center of that retail media in the future. Well look, thank you very much, Julie, for sharing some of those learnings. Maybe you can come on again in the future and we can share some more of the results we’ve been having with Sphere and working with our clients.

Julie Jeancolas (20:14): Thank you, Dave. I really enjoyed this conversation.

Dave Clements (20:16): Thanks everyone for listening today. I hope you found the discussion useful, whether you are a retailer who’s building your retail media capabilities, or brands who are looking to invest more in retail media in the future. We always love to hear your thoughts on this subject, so feel free to email myself or Julie @dunnhumby.com and join us again very soon for our next Customer First Podcast. Remember you can access all our podcasts on a variety of different subjects on retail at Customer First Radio, on Spotify, or on dunnhumby.com website. Thanks everyone.