Tag Archives: Amazon

Clean Up in Aisle 12. Sponsored by…

28 May

Asian grocery noodle aisleSome of the world’s largest retailers have their sights set on garnering a larger share of the ad market. And why not. Amazon is expected to generate $11 billion in advertising revenue this year, growing to $15 billion in 2020 (source: eMarketer).

So it comes as no surprise to learn that other retailers have taken steps to shore up their ad platforms. In April, Walmart acquired Silicon Valley-based Polymorph Labs and their content sensitive digital ad serving and analytical capabilities to help strengthen its Walmart Media Group and Target is rumored to be interested in acquiring WPP’s Triad Retail Media unit to support its Roundel media division. All three retailers are actively courting advertisers and their agency partners to pitch the media and product sales benefits of their data driven advertising offerings.

On one hand, one might question why is this even newsworthy? Traditional retailers have long been in the ad business, selling advertising to the brands that they carry on in-store media, in weekly ad circulars, in price-item television and radio spots and in OOH. Thus the expanded focus on sophisticated, data-driven digital advertising solutions should come as no surprise.

That said, the potential to integrate target audience information with web browsing data, shopper data and location data to serve up relevant ads in an environment where consumers can immediately click-to-buy and receive their merchandise in a day or two has the potential to revolutionize the retail ad industry.

As retailers refine their offering and simplify platform use, they will quickly cannibalize traditional search and digital display advertising activity. Factor in the ability to tap retailers omnichannel databases, with the goal of refining ad targeting to drive digital media efficiency and the appeal of retailer digital ad platforms increases exponentially.

Consider Walmart Media Group’s pitch to advertisers; with “90% of Americans shopping at Walmart every year” and “160 million visitors” in-store and online every week, Walmart Media Group helps brands to “reach more customers at scale and measure advertising effectiveness across the entire shopping journey.” 

On the surface this evolution of retail advertising certainly appears to be a win-win for the industry. Retailers benefit from a new, high margin revenue stream that is largely technology driven, relying on automated platforms. For the agency community, specialist agencies are already coming to the fore that focus exclusively on assisting brands in assessing and realizing opportunities associated with these retailer digital ad platforms. And, from a brand perspective, serving up targeted ads in a brand safe, fraud free environment with the potential to immediately convert consumer interest to sales is a compelling value proposition.

Perhaps the greatest challenge for manufacturers as more retailers join the fray, will be to balance the ongoing need to strengthen their brands and for some, to build their own direct-to-consumer offerings, while funding their participation in retailer digital ad platforms. Make no mistake, while a brand may be able to build a solid business case for investing with their retail partners, retailer leverage over brands to influence whether or not they buy-in and at what level will be real as the balance of power pendulum continues to swing in favor of omnichannel retailers.

 

 

 

 

Agencies vs. Consultants: What Does the Future Hold for Marketers?

24 Nov

pro vs conHave you formed an opinion yet on the battle between traditional advertising agencies and management consulting firms for marketing and advertising supremacy?

Many have, citing profound differences between these two types of professional services providers. The basis for the beliefs are centered on a range of characteristics attributed to each type of firm, including; company culture, strategic focus, business processes, talent pools, breadth of capabilities and ability to provide integrated solutions.

The question to be asked, as management consultants continue to push into ad agency territory (largely through acquisition) is; “Are the differences between these entities meaningful?” Or will the blending of these two types of firms ultimately result in a level playing field among the large agency holding companies and international consultancies?

Most pundits suggest that the differences are very real, with consultants largely grounded in a strategic focus on how to boost a company’s performance, and agency services centered on building brands by leveraging traditional media channels and touchpoints. Clearly both perspectives are valuable in their own right. Along with these differences, other complicating factors are at play that will determine the ultimate outcome.

  1. Marketers seem to be increasingly focused on improving in-market performance, which is becoming the principal means of validating the efficacy of their advertising programs. Metrics such as awareness, consideration and brand purchase intent are all well-and-good, but at the end of the day organizations are more interested in topline growth, market share expansion and bottom-line profits.
  2. There have been profound shifts in consumer purchase behavior and questions raised about the validity of the traditional purchase funnel used by marketers to map a consumer’s progression from awareness to action. In today’s digital-centric world of transacting business the path to purchase is not as linear as it once was.
  3. Research among younger shoppers suggests that marketers can no longer pre-suppose that brands matter. Certainly not to the extent that they once did. In an industry where it is projected that companies will spend in excess of $1.0 trillion on marketing services in 2017 (source: GroupM, 2016 “Global Ad Expenditures Forecast”) this is quite alarming. According to Havas Worldwide’s 2015 annual index of “Meaningful Brands” it was determined that “only 5% of brands would truly be missed by consumers U.S. consumers.” Driving this trend has been the emergence of the 75 million plus U.S. millennial target segment, whose trust in brands has been eroded as have their perceptions of genuineness and brand authenticity.

These trends may point to a larger shift, where consumer purchase behavior is more readily shaped by relationships, peer input and social influences rather than by branding. Thus the ad industry’s model of pushing brand messaging through a variety of media channels as a way of creating awareness and consideration in the hope of driving purchase intent may not yield the results it once did. It is likely that this traditional approach will be supplanted by social engagement and social selling as consumers take control of the pre-purchase learning and competitive evaluation portion of the purchase decision making process.

This could allow management consultancies to curry favor among marketers under pressure to drive performance in the short-term. The consultancies ability to offer integrated end-to-end solutions including; organizational design, transformational strategy development, user experience design, data analytics, technology support and increasingly branding and marketing expertise is considered to be quite compelling to many Chief Marketing Officers.

With so much at stake, it is certain that the agency holding companies and global consulting organizations will continue to invest in transforming their businesses to better serve marketers seeking to evolve their approach to achieving in-market success. In the words of Jeff Bezos, Founder of Amazon:

“We expect all our businesses to have a positive impact on our top and bottom lines, Profitability is very important to us or we wouldn’t be in this business.”

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