The predominance of the Amazon model and the explosion of retail media it has triggered represent the biggest marketing opportunity in two decades. How well advertisers capitalize on the new frontier will determine the category leaders of tomorrow. Yet most are set up to fail.
Put simply, the modern industrial advertising complex was not built with today’s retail juggernaut in mind. Clients and agencies are not yet organized to respond to the overwhelming retail media opportunity. So they undercount, underinvest, and underperform where it counts most.
Rather than a matter of strategy, it’s a failure of logistics. Because marketing organizations apply expertise, insight, and money independently, Amazon gets split across several teams and budgets -- typically brand, retail, and acquisition.
Each team brings its narrow view to a widening Amazon platform that requires distribution, product, media and operational expertise. The brand team thinks TV and video first, while the acquisitions people default to search and programmatic.
Retail has to fight them over allocation. Meanwhile, there can be different UX teams working on the consumer experience of the brand’s website and Amazon storefront. And the direction of analytics for the website is not charged with understanding, much less organizing, the retail media investment.
With 74% of business leaders revamping their e-commerce organizations this year, according to Profitero, these disconnections will only intensify.
Adding to the problem, the data systems advertisers use don’t account for retail media. Proprietary consumer panels proliferate, but the tens of thousands (sometimes over 100,000) of consumers aren’t asked enough of the right questions about retail. I’ve seen one that asks, “do you use retail media?” -- which means nothing to consumers -- among dozens of questions about people’s daily lives.
Following this kind of data, planners put their big money into TV and search. Agency management doesn’t complain because it’s so much easier to spend $2 million there than it is to spend $20,000 accurately on Amazon.
We have seen this movie before with cable, search, and social media.
For example, 20 years ago, every client had a search-marketing pioneer fighting for a sliver of the TV budget. Silos, systems, measurement bias, and organizational issues suppressed search spending for 15 years until search gained mainstream acceptance and adequate budgets.
Marketers can’t afford to wait anywhere near that long to get Amazon and retail media right. Here are three steps marketers need to take now.
Think distribution-first. Classic brand marketers think demographics first, so they ask why, then who, then what, and then where.
Amazon demands a new order: Where comes first. Amazon puts marketers at the purchase point in targetable, measurable, immediate ways the founders of shopper marketing never envisioned.
That’s worth a lot more than the 17% average investment in retail media; for many marketers, it’s worth spending more than half of their entire budgets.
Appoint a portfolio optimizer.The top 500 or so global advertisers have chief media officers, but most clients do not have someone who scrutinizes every media investment regardless of channel.
Everyone needs an internal portfolio optimizer with no turf except the truth. This person ensures that client dollars chase the best return, regardless of channel or silo. They need to monitor continuously and relentlessly, and update the mix every three months.
Crusade for commerce tools. Most marketers and agencies cannot afford to create their own consumer platforms to accurately identify and measure consumer behavior on retail media.
Industry-standard tools are needed that reveal precise activity in ways that allow retail media to be compared with other channels on brand and performance bases.
It’s time to rally the IAB, NRF and major research providers such as Kantar and Nielsen to close this vital gap now.
The tools that planners use to allocate money -- which were largely built before the retail media gold rush -- are undercounting the opportunity.
Amazon presents marketers with the point-of-purchase advertising opportunity they have dreamed about for decades.
It can fulfill the biggest promise of the Internet for marketing -- but only if we organize for it.