The State of CPG Brands and Retail Media
Part 1. Can we expect that CPG Marketers’ dreams will be fulfilled now that they’ve been able to optimize data from the Retailer? Potentially. We’re not there yet: while we can attribute marketing efforts to sales now that the retailers have developed sophisticated media networks, Brands are still hungry to understand whether the equity of their campaigns drives people to the store in the first place.
How we measure media needs to change. MMM, MTA, Retailer’s incrementally reporting, and Closed Loop analysis are not yet in the apples to apples arena that they could be. To do so, we must advocate for some fundamental changes. CPG’s role in these changes, broken down in five steps:
1. CPG’s are in their own way
The C-Suites overseeing Retail Media spend—rooted in decades-old structures—face coordination challenges. Shopper Marketing teams report to the Chief Customer Officer (CCO), while Brand teams align with the Chief Marketing Officer (CMO). These divisions have distinct business practices, success metrics, and career paths. The rise of Retail Media Networks (RMNs) offers advanced insights into advertising campaigns, but organizational disagreements over budget control hinder their full potential. Despite robust cross-functional efforts, differing goals and KPIs across departments complicate ownership and optimization of RMN initiatives as their scope expands.
2. Divisional silos inhibit full-funnel marketing decisions
Does the word “Omnichannel” also send a shiver down your spine? Whether you say full-funnel marketing, omnichannel, or “omni” - it matters not. These words cover up the fact that - because CPGs struggle with alignment internally, full-funnel marketing and optimization decisions simply do not exist.
We empathize with people in CPG organizations trying very hard to change this. The data from RMNs has potential to create a beautiful attribution story where branded media metrics and shopper metrics coalesce for the first time ever. Even though the “left hand” may talk to the “right hand”, the data does not. As such, Full-funnel marketing and media decisions are not integrated the way they could be. Don’t give up - there’s hope.
3. The metrics used to optimize media mix don’t jive
Retail media data is often siloed within shopper marketing teams, separate from other marketing channels. This separation complicates holistic data integration and cross-channel attribution. Brand marketers rely on different metrics like MMM, MTA, or Brand Health studies for ad optimization, while shopper teams use Retailer-specific reports to track ad spend effectiveness. These diverse data sources prevent uniform comparison and optimization across the media mix. Moreover, the lack of incentives for integration further compounds the issue, creating significant challenges in achieving a unified media strategy.
4. Difficulty in finding talent with fluency in both languages
Holding a Master's Degree in French with a minor in Spanish means you’re proficient in Spanish, not fluent like in French. This analogy describes the challenges in optimizing media between Brand and Shopper teams, who are experts in their respective areas but only moderately skilled in the other's domain.
Media Centers of Excellence (COEs) can exacerbate this problem by unconsciously favoring strategies they simply understand more. Even the strongest teams with the best collaboration cannot achieve the holy grail.
Finding professionals fluent in both domains is rare, but there’s optimism as we encounter such talent in the industry. Increased bilingual proficiency promises swifter change.
5. We know: Change is hard.
Changing entrenched organizational structures and processes is a challenge, even for advanced CPG companies. These firms can't achieve this transformation alone; industry-wide alignment is necessary.
We have more to unpack before we align. On that note.... dropping this week - the role of the Retailers!
