What you need to know:

• Pepsico increasing US retailer media spend, which is controlled by marketing rather than trade teams.
• But took years to benchmark retailers’ closed loop data against its own.
• Australia’s retailers – and big brands – must now go through same process before major budget starts to move.
• Pandey thinks big digital platforms – Meta and Google – probably have less to fear from retailers than other publishers.
• But said mass brand channels also always required, because personalisation and audience data are not always beneficial.
• Industry faces retailer disruption, agencies must evolve – but “there will still be quite a big role for our media agencies”.

Pepsico Snacks & Beverages CMO Vandita Pandey spent eleven years in the US with the FMCG giant before taking the top ANZ marketing role in late 2020.

Working adjacent to the US retailer media teams, she saw the early rise of retailer media – now a circa $50bn-plus market – and is working closely with US counterparts as Australia’s retailers push harder into media.

Pepsico has increased retailer media investment in the US. But it took significant time to prove ROI and benchmark retailers’ closed-loop data against Pepsico’s own media mix modelling (MMM) said Pandey. To start with the ROI “wasn’t the best.”

But there are other factors beyond ROI. “If you look at broader digital investment, there are a lot of other metrics we care about: fraud, viewability, completion rates, placements, reach, cost et cetera. So in the US we have developed [over time] a really robust scorecard and partnered with customers [retailers] to say ‘how do we measure and track the right KPIs over time so that we can continue to improve the [media] capabilities?’”

Australia has a long road ahead to get to that point, according to Pandey.

“We’ve had quite a bit of engagement from Coles and Woolworths in terms of how we start to test, how we drive some of the capability development and demonstrate the closed-loop measurement,” she told Mi3. “But we’re still early stages here to be honest. We’ve got quite a bit more runway and learning before we would see a significant increase in investment. But there is a lot of opportunity here, so we’re quite engaged and eager.”

Marketing vs. trade

Pandey couldn’t confirm whether the US retailer media spend is incremental, but said  “most of it is coming from brand [rather than trade] and we’ve seen increases [in investment].”

While retailer media has the potential to cause conflict between trade and marketing teams, that’s not the case at Pepsico. “We don’t have a tension internally … between who owns what,” said Pandey.

“We [the marketing function] ultimately own media … So there's quite a bit of interaction between sales and us, particularly as we have these conversations.”

Publisher-agency disruption?

Pandey does not yet see Big Tech platforms competing with retailers, given retailers are also running media off network, i.e. not just ads across their owned channels such as websites, apps, email, but now using shopper and loyalty data to target customers across the web, including BVOD.

“A Meta, or a YouTube or a Google… call it those publishers … ultimately the dollars are going to go [where we can] target the right consumer in the right place at the right time. Ultimately, that is where the dollars will still be.”

By implication, that may signal further disruption for traditional publishers, though Pandey said Pepsico will always need broad, big-burst brand reach.

“There are a lot of big brands in our portfolio that are highly penetrated where you need to reach a mass audience – and where that level of personalisation and audience insight aren’t as beneficial for us. So there will always be quite a big role for our [traditional] media partnerships.”

But she suggests agencies must adapt.

“As retail media gets up to speed, an evolution in the media agency offering will be required. That's a disruption that industry is facing, and I think will ultimately come through,” said Pandey.

“Everyone is focused on how do you build the right data strategy internally so that you can reach the right customers at the right time, in the right place and drive loyalty … from multiple different data sets. So there will still be quite a big role for our media agencies.”

A version of this article appears in Mi3’s new Retailer Media Next report. It includes insight from brands including Nestlé, Pepsico, Moccona, Baida Poultry, Lion, v2food and Mars Petcare; retailer media operators Coles 360, Cartology, Endeavour Group and Winning Group; platforms and tech providers including Citrus Ad, Zitcha, Criteo, Yahoo, The Trade Desk and Mutinex; agencies and groups including Resolution Digital, Zenith, OMG, GroupM, WPP and Hatched; and analysts and consultants including Sonder, Media Village and Ellipsis.

An Mi3 report supported by Coles 360 and Resolution Digital.

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