What you need to know:

• GroupM has spent the last 18 months building out a new proposition for its Commerce unit, spearheaded by ex-Amazon advertising and agency executive, Marc Lomas, and now supported by former Goodman Fielder marketing effectiveness leader, Leah Jackson.
• With the aim of connecting media investments in total and to business outcomes, the unit sits adjacent to the holdco’s agencies, providing bespoke services to clients to better connect these investments to sales and incremental outcomes.
• It’s an especially important task given the rise of retail media, the early measurement of which is based on ROAS instead of more substantive commercial results, says Lomas.
• Clients want to balance brand and trade, efficiency and effectiveness, per Jackson: “When you start looking at your investments in totality, you’re looking at things like sales metrics, media and marketing metrics. It’s no longer silos in terms of new to brand, new to SKU, new to category, which might have traditionally sat with the sale team, versus what are my CPMs and have I hit my forecasts, which might have been a media metric. These things are coming together. Being able to bring that brand lens to the way measurement is framed up has been advantageous.”
• One large-scale test GroupM Commerce is working on is closing the loop on retail media investment, measurement and optimisation, using a combination of real-time programmatic planning tools, postcode-level data insights mapping transactions to stores, plus optimisation activity.

Having spent the best part of 10 years working client-side, Leah Jackson knows a thing or two about the challenge of connecting media and brand investment to business outcomes. It was a journey she directly experienced at FMCG giant, Goodman Fielder, as head of digital, media and marketing effectiveness for the Australian portfolio. Working with agency partner Initiative, she strived to implement a market-leading integrated planning model aligning brand and trade budgets so as to plan them holistically.

So much so that Goodman Fielder last year handed its trade marketing budget to Initiative to manage, as well as the more traditional media budget – a move very few brands have taken. Jackson will be hoping to make it less of an outlier.

“I’ve seen brands feeling the pinch of a tough operating environment, and many are looking for ways to create greater effectiveness and efficiency in overall investments across the board,” Jackson tells Mi3. In joining the GroupM Commerce team in September, she says she’s able “to apply the passion I have for brands to look at their investments as one single whole, and be able to work with some of the best, incredible brands in the country to do that.”

Jackson gets brands are at different points in the journey, but see the retail media explosion triggering a reset of media investments and priorities. Broad consensus has retailer media growing 10-20 per cent at present and exceeding forecasts of a $1.6bn to $1.9bn pool by 2025. Morgan & Stanley expects retail media to reach $2.8 billion in Australia by 2027.

“What I do think is universal is brands wanting to challenge the status quo, whether it be industry or the way they’ve done things themselves in the past, and to think about things in different ways,” Jackson comments.

The other commonality is the persistent gap around KPIs demonstrating marketing’s commerciality.

“When you start looking at your investments in totality, you’re looking at things like sales metrics, media and marketing metrics. It’s no longer silos in terms of new to brand, new to SKU, new to category, which might have traditionally sat with the sale team, versus what are my CPMs and have I hit my forecasts, which might have been a media metric,” Jackson says. “These things are coming together. Being able to bring that brand lens to the way measurement is framed up has been advantageous.

“Certainly what I notice talking to clients is they want to lean into that space. We’ve worked on a couple of sizeable pieces where we’re pulling in category-level data and business performance data to help inform the media strategy in a way I don’t think everyone has always done. Most media businesses don’t have someone sitting in their media business who’s able to go away and cut through that data, because it’s never been a responsibility of media in the past. To be able to bring that skillset into the team and on behalf of clients is making surmountable difference.”

The Commerce proposition

With tough trading conditions, greater scrutiny of marketing budgets, a board trained to expect short-term digital and performance metrics, and hot new formats like retail media in the mix, GroupM’s Commerce investment is a timely one – especially as rivals such as Publicis and Omnicom have also made some big commerce bets of late. The question is how it’s going to deliver on the promise of connected media buying and planning and measurements that show genuine impact through the funnel.

Mindshare CEO, Maria Grivas, is one of the executives who took on the steering committee challenge last year alongside Nexus CEO Ryan Menezes to build out what ‘Commerce’ needed to be.

“I felt this was our moment – if we didn’t get it right now, we were going to get left behind,” Grivas tells Mi3. “We hadn’t got it right in the past.”

To help, GroupM recruited Marc Lomas to consult on the business case and strategy, then lead delivery. Lomas commenced his career in agencies, specialising in performance media before launching and running Mediabrands' programmatic unit Cadreon locally and then globally out of New York. He then joined Amazon for a seven year stint, including as global head of performance for Amazon DSP out of New York and then head of agency sales in ANZ.

In fleshing out GroupM's new business unit, the first part was picking a path through an increasingly bloated digital landscape.

“Commerce starts from media acquisition, goes all the way through to email, CRM, onsite experience, communities, logistics, customer service and loyalty. It encompasses almost everything. So the first bit for us was narrowing down which elements of commerce to focus on and why it makes sense,” Lomas says.

“This is about how we customise technology, process and capability around a brand to solve their particular objectives. It’s really difficult to give a definition because commerce is an evolution of what we call performance marketing. Technology has become a lot better and it allows us to connect impressions to media outcomes more effectively than we have been.

“But in its most simple definition, commerce is the connection of investment to an outcome.”

Agnostic approach?

New media formats and partners entering the space makes it confusing for brands to figure this out, Jackson agrees. “It’s not as linear as it might have been in the past. Agencies can take a more pivotal role in presenting a very agnostic view of the right way to apply spend to the outcomes relevant to each client,” she says.

Nice in theory. But in practice, this industry knows how many behind-the-scenes deals are in place between agencies and media companies influencing what media they’re actually buying for clients. Take principal-based trading models, or arbitrage – something Madison and Wall founder, Brian Wieser, told Mi3 recently was gaining more acceptance after years of negative connotations as marketers look to bundle non-working spend into working spend. Or there’s the perks, cashbacks and incentives for media recommendations – look at Mi3’s report on Seven’s latest rumoured aggressive incentives. Then there's the fact some holdcos simply won’t recommend news to clients due to ‘brand suitability’: GroupM’s outgoing CEO recently told US senators the group only allocates 1.28 per cent of spend to online news sites based on the argument brands prefer to avoid news.

“I’ve been very fortunate to have very good relationships with agencies I’ve worked with in the past and not had those dealings. But I also come in with a clean slate – I’m a client-side marketer who’s joining an agency,” Jackson responds. “I feel I hold role as an ambassador and can be the +1 on our client’s teams, and I can be their advocate, to make sure we are really thinking about their businesses as at the heart of what we solve for or respond to a brief.

“What I have felt coming into the team is people are really willing and wanting to think about their clients’ businesses in different ways and shift thinking to being in line with what matters most to their clients.”

For Grivas, it comes down to how people who are leading clients’ business operate, and what KPIs are put against their roles. “Our client partners, strategy leads, people designing these programs in partnership with clients are incentivised on driving client outcomes and delivering client growth. That’s ultimately what our effectiveness as an agency is judged against by clients,” she says.

Dumb ROAS and Amazon lessons

Realising business-grade measurement is especially critical as brands upend internal organisations to better understand the connection between trade and brand and gain a better level of visibility across both. Retail media is firmly on the up, with 60 per cent of retail media spend being diverted from other advertising budgets including traditional media channels and social media, per the IAB Retail Media State of the Nation 2024 report.

“Agencies are now responding to look at how we can pull retail media, commerce and a lot more of the wider breath of capability into our traditional planning tools,” Lomas says. “There is pretty much no retailer in this country we’re not working with at some level in terms of how we solve the measurement challenges for them, and how do we connect what’s happening in-store to what’s happening within our different media frameworks and making those different connections.”

Unfortunately, clients have become obsessed in the retail media landscape in looking for ROAS, according to Lomas. The IAB Retail Media State of the Nation 2024 reported 69 per cent of retail media investors citing ROAS as one of their top priorities to support continued and increased investment. Yet 45 per cent see measurement and reporting as a barrier and 34 per cent have attribution capability challenges.

“It [ROAS] is a very dumb metric, for want of a better word, that allows you to just optimise on existing, repeat purchases. You need to flip that on its head and look at incremental ROAS, then what channels drive actual incrementality,” he explains. “We did a lot of work on this at Amazon, looking at sponsored products, where most brands get 4-5 ROAS. On sponsored brands, you’re maybe getting 1.5 ROAS. But when you look at the incrementality of those channels, they almost flip and sponsored brands get a 2 or more ROAS and sponsored products will give 1.5. So it’s about focusing on the channels that will actually drive category growth and share of voice increases versus just looking at ROAS.”

Closing digital-physical loop

To demonstrate what GroupM Commerce is looking to do, Lomas points to a new product in incubation set to close the loop between retail media spend, in-store outcomes, and planning and optimisation using data and real-time tech.

“Most of our media effectiveness looks at what happens within the digital realms because it’s more trackable. But what matters most to our clients is what’s actually happening in-store and how many units they ship on shelf. We have built this capability internally, working with number of different partners, allowing us to directly connect our media investment to in-store sales and unit sales happening in different stores, then feed that back into our programmatic platform so we can optimise and shift the way we’re buying, reflective of what’s happening in-store,” Lomas explains.

“It’s shifting that mindset from not just looking at the digital, the ecommerce, but looking at the true business outcome the clients are looking for in-store, and finding a way to connect that into programmatic platforms.”

Lomas says GroupM is using its own internal tooling, one of which is called Copilot, to optimise programmatically based on postcode-level data. Every store is mapped to a postcode, which means it can measure the sales units within each of those postcodes, then feed that into a proprietary Copilot algorithm, through a few measurement partners sitting in the middle. This Copilot algorithm then optimises in the DSP based on the subtle changes at the postcode level, shifting media buy and investment by postcode to make that happen.

Not just retail media

Of course it’s not just 'retail' media that drives in-store sales, and connecting audio and TV is also in Lomas’ sights. “We’re working with retailers now on how we evaluate the way Maria’s team are buying TV, with impact on how they’re shifting retailer category share of voice. That’s the wider goal – how to get that wider subset through measurement metrics that matter most to clients,” he says.

“Investments will probably shift around to different partners and where you see best uptick. But if you still can deliver incremental gain or incrementality, the budget is going to stay.

“We have moved from a period of almost effortless growth to one that’s requiring more fluidity. I think we can solve that through measurement. Everyone still has investment as long as it’s driving incrementality and growth.”

Grivas has seen “super rare” instances where the operating model of clients has evolved to connect the ecommerce component within their organisation together with their marketing and brand teams – a "fundamental shift" Nestlé marketing boss Anneliese Douglass last year told Mi3 the FMCG giant was underway.

“The appetite and experience of clients right now is collaboration has been good to this point but it’s not going to get them to where they need to get to. We’re bringing this together operationally, not just from a resource and talent perspective, but a strategy perspective,” Grivas says.

“Additionally, it’s from a data perspective – how clients unify their data sets is probably the biggest next frontier. Forrester states in 2025, brands’ investment in unifying data for loyalty and marketing tech stacks will triple. And I buy it. That’s the conversations happening and where they see the biggest gaps and where the impact on customer experience is happening. That’s part of the conversation we too often forget about or don’t have front and centre: What is a consuming experiencing in this through the line, full funnel ecosystem, and how are we aligning what we’re doing in comms – whether it’s paid, owned or earned channels – to better that experience.

“That’s what I’m most excited about in 2025 when we talk about commerce.”

Future-proofing CMOs?

Grivas, Lomas and Jackson suggest nailing the outcomes challenge presents a greater opportunity for CMOs to deepen their value within an organisation.

“I see the role evolving to also be a chief commercial officer – bringing into consideration the role of trade, sales, the commercial outcomes of that and how it combines into all their marketing efforts,” adds Grivas.

“I think it’s going to ensure CMOs in this new world have a seat at the boardroom table and have their perspectives valued, because they’ll be able to demonstrate their contribution to growth and the dynamics of shareholder value.”