What you need to know:

• Nestlé Marketing and Communications Director Anneliese Douglass says Coles and Woolworths now subject to same microscope applied to other media companies on ROI.
• She says retailers need to step up on reporting, data and analysis.
• Across the board, increasing budget pressure means all media will be subject to greater rigour.

ROI hunter

Nestlé shifted ecom into the sales function 18 months ago. Marketing & Communications Director, Anneliese Douglass, is a “passionate believer” that’s its rightful place, given Australian retail market dynamics.

“Coles and Woolworths are very dominant. So [ecom] currently sits as an extension of sales, because you want the retailer to be having one or two conversations, not several,” she told Mi3.

So how does marketing feed into retailer media? “Technically it doesn’t,” said Douglass. But in terms of metrics, reporting and cost, “I’ve always had the conversations with Cartology to say ‘this is our expectation of what we receive and deliver from media, so we want that same standard when it comes to the retailer media they are selling’”.

Like Pepsico CMO Vandita Pandey, Douglass, who spent eight years leading media at Unilever prior to joining Nestlé, thinks supermarket media businesses have not yet cracked “true ROI”, though she’s been promised some “new reporting in the very near future”.

Functions aligning

For now, “[retailer media] is part of our sales and trade spend and our marketing spend remains separate.”

Is that likely to change?

“I don’t see it in the near future,” said Douglass. “What I do see is far greater working between marketing, commercial development and sales on the customer journey, full end-to end planning ...  So understanding what communications we are putting out there to drive brand saliency and brand awareness and then how that is planned and communicated to the consumer the closer they get to path to purchase and in-store,” said Douglass. “That is a fundamental difference and shift that we are making in our business.”

That shift has required “new tools and ways of working” rather than structural changes. “Teams aren't really moving, it just requires greater collaboration,” per Douglass. “But also using some of the tools and the rigour that we have from media and applying that to retailer media.”

Rigour will be a watchword for Nestlé in 2023.

“Across the board this year, it is challenging for many businesses. We’re looking at marketing return on investment (MROI) so we are investing in MMMs (market mix models) and more understanding of effectiveness,” said Douglass. “Our solution to the pressure that is coming down from a budget perspective is to have more rigour around choice.”

Inventory overload?

Retailers increasing media inventory likely indicates increasing demand from brands, per Douglass. Other observers suggest it could be viewed as chasing higher revenue targets.

“You can have that cynical view and some would agree with you. But retailers have a very sophisticated understanding of their user experience and their user journeys. So I don't think that they're just going to chuck in more inventory in order to increase yield,” said Douglass. “I think that if they are adding more inventory, they're doing it strategically to ensure that the consumer journey is not impacted. Because if they [get greedy] and it pisses the consumer off, then people are not going to shop online, are they?”

Any increase in inventory will lead brands to be pickier about where they play, Douglass suggested.

“That’s why we need to have greater rigour and understanding on what placements are effective and where we invest, because we do not have a bottomless pot of money. So it is about choice and it is about prioritisation around those placements.”

Robust post-analysis is therefore key to retailers expanding their media businesses, per Douglass. “They have not got over that hurdle yet – and they need to. So if I could ask for a focus on anything [by retailers] it would be post-campaign reporting, analysis and understanding of effectiveness. [Cartology and Coles] are listening to that and they are trying to adapt and get the model right,” she added. “I would hope they get that sorted by the end of the year.”

Agencies adapting

While agencies are grappling with their role in retailer media, Douglass, who spent part of her career with agencies including Mindshare, Initiative and UM, suggested agile players are already carving out opportunity.

“We have recently moved our e-retailer search to an agency. So agencies can add value to provide the skills and the capability to drive our e-retailer search,” said Douglass. (It’s now housed under Publicis.)

“I don't see that [retailer media] is detrimental to agencies. It's just that they need to adapt to change. Agencies are good at adapting and changing to clients’ needs. If they don't, then there are issues.”

A version of this article appeared in Mi3's Retailer Media Next report. Get the download below.