Shopper mystery

Programmatic and biddable advertising has come under huge scrutiny over the last 10 years. And rightly so. Historically, costs were inflated as agencies and publishers clipped the ticket, unbeknown to the advertiser. Transparency of buying methods and delivery outcomes were intentionally shrouded in mystery. And reporting and measurement was flawed and complicated, despite there being an abundance of data and rich insight when the data was used properly. There have been many attempts at clean up, and with greater scrutiny comes better client outcomes.

Fast forward to 2022, and we pose the question, is trade retail the new programmatic 'black box'?

Advertisers invest millions of dollars in retail environments, both in-store and online – and this is growing exponentially year on year. But across the board, the understanding and analysis of this investment could be significantly more insightful. Advertisers are stuck between a rock and a hard place – their survival at shelf and online depends on strong relationships with the businesses that are selling them marketing solutions – solutions that are ultimately executed at the discretion of the retailer.  And this is not only limited to supermarket giants as it once was… we are seeing the same pressure in pet, pharma, alcoholic beverages, electronics, home goods and more.

There are frequent conversations in-market with advertisers who are at the mercy of the retailers, and it is happening across the board at all levels of seniority. It’s no longer a secret that most advertisers who sell products within retail environments are pleading for help on how they can make the most of their huge trade investment, because their marketing budgets are being squeezed and they need to make every dollar drive significant return on investment.

With the increased requirements to invest in trade marketing, we are being asked more and more how our clients can best optimise their trade marketing budgets. And it makes sense, because at the end of the day, it’s media too. Trade retail is one of the most cost-prohibitive mediums, with little transparency about placement, audience and value. There is limited reporting even though there is a clear opportunity for richness, given the wealth of buyer data the retailers possess. It's a step change, and probably a controversial opinion, but there is no doubt that your media agency should be there to help you navigate trade retail, as well as all of the other connection points.

“The final three feet” has always been a battleground for brands that live within retailers. Ensuring that consumers pick up and buy the product you have invested in is critical. However, proximity is full of potential pitfalls if the final steps of the path-to-purchase are not taken seriously and planned meticulously.  There has been enormous pressure to spend in trade marketing, deliver promotional pricing more and more often, and drive new product innovation to defend the shelf space that private label and other brands are encroaching on.

Advertisers often struggle with this disconnect between marketing message and trade media activity. This has been heightened during the pandemic where outdoor foot traffic has been down by double digits, whilst footfall in the grocery sector has grown consistently.

Grocery category spend is increasing, retail MAT is up, and there is exponential growth in Aussie consumers buying groceries online every month. Compounding this, according to Roy Morgan’s Trust Survey, our largest retailers are more trusted than ever before, giving private label an even greater advantage as brands battle it out on shelf for attention, with budgets squeezed more than ever.

Jen Davidson from Tumbleturn Media is a consultant who works with many brands within the retail space. She says she is “continually surprised that in an industry obsessed with consumer touchpoints on the path-to-purchase, how few advertisers apply scrutiny and strategy to how their trade media dollars are spent, and how it connects to their above-the-line spend. But it is not their fault, they are beholden to the big guys for their very existence on shelf”.

What's the fix?

What do we do to address this? It’s about applying the same rigour to trade channels as you would any other channel within the marketing mix. This means having deep insight into the consumer journey for each brand, ensuring the entire omni-channel strategy is considered, understanding the effectiveness of each format, applying comparable metrics, and planning how best to layer multiple channels to drive an effective campaign that delivers strong business outcomes. In our business, we have addressed this by developing a framework to evaluate trade investment, ensuring that the placement plays a meaningful role in a fully fledged communications strategy.

When optimised, and priced competitively, trade retail can be one of the most compelling environments within the consumer journey. But if not challenged, or given the time and thinking it deserves, it remains a black box.

One thing we know for sure is the importance of applying the same rigour to the trade allocation that we apply to the rest of our media choices. If it is not going to drive meaningful business outcomes, then it is not right.

If planned meticulously and held to account in terms of cost, performance, and outcomes, it’s a win–win situation for advertisers and retailers alike.  Greater sales volume for both parties, and more investment into retail channels that drive business growth. That’s what we should be aiming for. It’s a tough conversation to have, but one that will deliver huge rewards.