How Marketers Are Riding the Wave of Disruption to Shape the Future
Decades of disruption for brands, marketers and consumers are cresting in the most challenging environment in years, with the rapid shifts in ad-supported TV and the phenomenal rise of retail media as just some of the most striking results. What strategic role will marketers play in harnessing these changes to succeed in 2023 and beyond?
For insights and answers to these and many more burning questions, the Simulmedia Salon Series turned to special guests Karna Crawford, senior marketing leader for Ford, Verizon and Chase, and Lauren Wiener, Managing Director & Partner at BCG (Boston Consulting Group). Simulmedia CEO Dave Morgan served as host and moderator for this special night heralding the return of the premiere speaking and networking event for leaders from media, marketing, technology and more. Below are highlights from the stimulating and timely discussion:
Morgan: Karna, during your time with MillerCoors, Coca-Cola, Miller, JPMorgan Chase, Verizon and Ford, you've witnessed some pretty extraordinary changes in the marketing suite inside companies and the role of marketing inside companies. Give us a little perspective on what you’ve seen from the beginning of data-driven online ad targeting on the brand side to, most recently, running brand marketing for one of the world’s top 10 most well-known brands.
Crawford: There's this interesting dynamic where there are things that have massively changed, and then there are some things that, frankly, are the same. When Dave and I first met, the biggest thing I learned from him was data-targeted media. He owned this little ad network called TACODA and I was building something called My Coke Rewards. And as we were doing the digital media, we were trying to figure out, how I can identify which customer this was, which household this was, and therefore, where they were in their purchase funnel for my product, what their loyalty was for the brand and which other brands they were most loyal to, so I could then deliver different messages to them based on that information. That was a long time ago, and we're all still having very similar conversations today.
I think one of the biggest things that has changed between then and now, however, is that used to be a very digital conversation. Now it is a media conversation, and it's about every channel's addressability and your ability to find, reach, identify and adapt a message to them. That aspect may not be very different, but where I really see a big opportunity is what’s happening right now with the Metaverse. People my age are looking at the Metaverse and saying, "So, why do people do this? Why are the kids into this?" But at the same time, it is completely transforming how kids think about their identity, how they think about their connection to society, and how they think about their connections to brands and products. And as a result of that, the way we start going about finding, identifying and then engaging with the right message has to transform because the channels, the platforms and the customer expectations associated with those are transforming.
Morgan: Lauren, the same question for you: Over the course of your time with companies like Star Media, Meredith, Tremor Video and now BCG, what’s changed and what hasn’t when it comes to marketing and advertising?
Wiener: I think that the fundamental change in digital advertising is that when it first came about, it was very lower funnel and it was very much about getting a consumer's attention via disruption -- and it was mass. So if there was targeting, it was sort of content targeting at best. What's changed is this journey, this sort of nirvana, to become both more personalized and more of a value exchange. Now, I'm not so Pollyanna to say we're totally there. Even if you pull up an Amazon, which is one of the leaders in advertising, there's way too many slots. But the advertising over the course of my tenure has definitely gotten more relevant. The aspiration now is to be more of a guidance service to the products that consumers actually want versus just something that's in their face. So I'd say that that journey towards targeting, personalization and earning a customer's attention has been a positive development.
But one thing that has stayed consistent despite the personalization is the transition from one sort of a walled garden to another walled garden to another walled garden to what I hope the future is, which is more of an open ecosystem.
Crawford: I would love a world where we have more of an open ecosystem, but right now, I'm not seeing anything that's indicating that's actually what's going to happen. For instance, with the elimination of the [third-party] cookie, you've got advertisers stuck trying to figure out different ways that they are going to identify their audience across platforms. I don't think that there's as much advantage to platforms and technology companies unifying and having the standardization needed for a unified ecosystem – unless something comes from a governmental oversight perspective -- because there currently is so much inherent value in the data and the individual customer, and the minute that you democratize it, they believe they will start to see erosion of that value. As an advertiser, I want the open ecosystem that you're describing but I worry that we are getting further from it versus closer to it.
Wiener: I think that's fair. When I first started at Tremor Video, the vision really was an anti-walled garden: You had the fragmentation of all these other sites and then you had the behemoth of YouTube, so Tremor was about unifying this whole beautiful, very diversified, open ecosystem alternative as the future of TV. And the reality is, if you look at market share, YouTube's pretty big, Netflix is pretty big, Disney+ is pretty big. So it is diversified, but not because someone's unifying the smaller publishers. It’s become more diversified in terms of the number of walled gardens, but it is still, to your point, not an open ecosystem.
Morgan: I'd love to dive into the notion of the open web or who really are going to be the media partners in the long term for the brands and for the agencies. Amazon is using ads basically totally subsidized for free shipping, Apple is delivering media totally subsidized by selling phones and Google is totally subsidized by search. And those are, without question, the three largest sellers of advertising probably five years out. So when you think of an open ecosystem or the partners that you want to work with, how do you think of companies like those three as maybe the most essential partners for brands?
Crawford: If you think about it, that’s kind of been the case forever, right? What's shifted is what those companies are because we are in a world where we're still trying to deliver our message at scale. Whether it was the ad networks back in the day, the major platforms like Yahoo and AOL, the social platforms, the Google platforms – it’s all about where advertisers can go to be able to deliver their message at scale. And I don't think that that is going to change in the future. It’s just that we may be having conversations with, for instance, platforms like Fortnite or Roblox. So to get back to the conversation about an open ecosystem, I still don’t think it’s advantageous for them to create one because of the fact that we’re still in a place where we need them and they want to own our customer, our data, our value system.
The Rise and Implications of Retail Media Networks
Morgan: Lauren, I'd like you to follow that, but particularly with a view towards retail media because as we are talking about these massive digital disruptors, we're also looking at companies like Walmart, Walgreens, Krogers, PetSmart and Chewy. They may be the new stewards of the brands.
Wiener: It’s a great point. At BCG, we've forecast that retail media is going to be $100 billion by 2026, and that is going to come, partly, from the growth of digital. But as we all know, advertising is a zero-sum game; spoils go to the top four in 70% to 80% proportion and the top 10 get most of the rest, and then everybody fights it out for the remaining tail. So the question is, if it's going to be $100 billion and it's going to go from 7% of trade and advertising spend to 15%, who are those retail media winners, and then who are the losers that are going to get displaced by it?
Certainly, Amazon's already in that top four. Walmart is front and center -- they've already hit $2.1 billion (that's a public number for last year) and they've made really marquee hires of top talent coming from Amazon, Snapchat and elsewhere. So they're definitely gunning for at least the top 10, if not higher. Target's already at $1 billion. Kroger's right behind. So I definitely expect to see many of the largest retailers in that top 10.
And It's not quite a closed ecosystem for them. You're going to see them open up the ecosystem because brands are going to them basically saying, "I want a full-funnel approach. I want a full customer journey approach. Yes, I want to close the loop and convert a sponsored search on your site, but I also want video. And I want, on Pinterest, for brands to discover me from that inspiration and awareness." So you're seeing retailers like Amazon get really creative and talk about a journey, like Walmart and like all the others are following.
That means that these retailers are not only on their own sites, but they're going to take their first-party data and they're going to play ball with Google and maybe with Facebook (let's see how well Facebook behaves). They're partnering with TikTok. They're out there with partners on the programmatic open web and with CTV partners. So I think that they have to be very smart and strategic and journey-oriented stewards and partners with the brands because their approach to it isn't just like a media platform’s; they're also retailers who are responsible for the entire brand health of a brand. It is my hope that this really shepherds a whole next level of full-funnel planning, as well as advertising, that is a valuable service for consumers, which to me has always been the North Star. We're closer, but we're definitely not there.
Morgan: Advertising and media can be a really high-margin business -- the most important person may no longer be the one who negotiates with P&G. What culturally needs to happen in these companies in order for them to become advertising platforms?
Wiener: There needs to be a mindset change (several, really) because almost all retailers are merchant product-centric – for example, what the kitchen and bath merchant wants to push is what gets pushed, or what the head of baby products wants to push is the email that goes out. The fundamental change that has to happen at all these retailers is to become customer-centric. Retail media isn't actually a shift on its own, but it's part of a flywheel where the retailers need to put the customer at the center. They need to get personalized across their paid, their owned, their earned and their sold media, and think about it as a flywheel that both fuels the health of their site, their traffic and their customer relationships in a much deeper way.
Secondly, they have to think about becoming both a media agency and a tech platform at the same time, which is very complicated and requires divergent skill sets -- sometimes at war even within the same company. From a media agency perspective, it's about customer service. It’s also about what the vendor wants. How do they become solution-oriented and optimized to the vendor? That's the media mindset. The tech and the platform mindset is to go from thinking my store is my only asset to thinking my tech platform is my asset and my channel. My store is one channel, but my app is another channel, and emails another channel, and all my partnerships across the web are other kinds of channels.
And then I’d say the last shift is the growth mindset shift because the retailers are now competing against big tech. Jeff Bezos at Amazon doesn't say, "I'm only going to do X this year." He says, "I'm going to set up six team rooms of two pizzas, and we're going to let lots of things go at the same time. We're going to do lots of things in parallel. We're not going to have a waterfall process to improving the company and developing new things." Instacart is from that same page. So the new competition has that mindset of, I can do multiple things at once, not only one thing. I can do things in parallel. I can move fast, and I can innovate before all the money comes in. So, these are fundamental mindset shifts that need to happen at retailers.
Retail Media: Friend or Foe to Brands and Marketers?
Morgan: Karna, in a similar vein, what kinds of changes do you think are going to have to happen at the marketing suites of these large brands? After all, an auto manufacturer has to work with a legacy dealer group and dealer laws that were put in place 100 years ago. A beverage brand is selling very, very little product directly to a consumer -- it's going to a bottler to a wholesaler to a distributor to a retailer. Do you see similar kinds of cultural shifts needed in this new environment?
Crawford: I think some of the culture shifts that Lauren described are actually very similar: For one thing, shifting from focusing on the product, the manufacturing process, etc. to focusing on the customer, the customer need, experience and journey, and then how you're enabling that with your products and your services. I think the mindset of shifting from individual sales to subscriptions and ongoing revenue sits underneath a customer-centric mindset shift that a lot of the legacy companies are going through. Ford is a really great example of that.
I think another major thing that is shifting is the idea of having to do everything in a one at a time waterfall way, and therefore, it takes too long to drive business outcomes or to identify what's going to rise to the top or what's going to fall to the bottom. They have to be be willing to shift their operational processes in order to allow for more things to happen faster simultaneously, and then shift the decision-making matrices that allow them to decide what to keep pushing versus what to pull back on as a result of rapid development, rapid ideation, etc.
Morgan: As we open it up to audience questions, I’m going to first call on Bill Duggan of The Association of National Advertisers, who’s been leading a lot of amazing ANA events. Bill, what’s one of the topics that you’d love hear about from these leaders?
Bill Duggan (ANA): You guys talked a little bit about it already: retail media networks. Are they a friend or foe of brands? Are they like what slotting allowances were 20 years ago -- give me this money so I can give you shelfing? Is it all about sparking sales today or long-term growth? I think brands are kind of caught in the middle and it feels like bribery to some extent. I'm curious about your perspective on that.
Wiener: In the early days, there was a little bit of strong-arming, and that's part of the mindset shift on the retailer side -- they have to act more like a media agency and think of the brand as their customer. I think, net net, it is a positive for the brands, but it does require a couple of things:
First, it requires making sure the measurement that they're getting from the retailers is sound. Second, on the BCG side, we're advising brands to make sure that [retail media] is a big part of their upfront joint-vendor planning conversations, not something they’re doing just in a tactical way. Thirdly, we've heard [retailers’] problems with brands where they don't know where the money's coming from. Is it the shopper marketing? Is it the digital? Is it the TV? CPGs – or any other kind of vendor -- need to get together in their own house and unify their goals and their brands [so there’s] the aggregate budget to make sure that it’s a full-funnel approach.
With the death of cookies, it is really hard for brands to find their customers anywhere. So this is a first-party, data-privacy-compliant way that they can find customers, engage them in a value-exchange way, get their attention and prove it out through ROAS (Return on Advertising Spend). So I think it has a lot of potential.
Duggan: Is retail media another walled garden, or let's say 20 more walled gardens because there's that many retail media networks?
Crawford: Ultimately, something like a Walmart has the ability to scale to be yet another major platform that I want to make sure that I'm on because it's going to help me drive customers through my funnel, and it is also yet another fragmentation that I am trying to figure out how to manage my customer across. And so it's a real challenge for us as an advertiser.
One thing that you mentioned that I wanted to build upon is that I'm also finding that it depends on the strategy of their media business inside of the company. So, without naming specific names, there are some who truly have a pay-to-play type of approach -- not necessarily pay-to-play for shelf space, but it might be pay-to-play for some partnership deal, or for some integration that they're trying to get that has to do with the business side of things.
In other instances, they're truly thinking about it as a full-funnel business and are demonstrating to me that they are seeing X amount more conversion when I am touching their (the retailer’s) customers in this place, this place, this place and this place. And therefore, they are going to sell me that.
Wiener: I think that's right. I don't think any retailer is going to get very far or very large by treating it as a sales tax, because there's a lot of competition out there. It’s about -- You touched on this, Karna -- the whole idea of business intelligence. How can the retailer give data back to the brand that helps them make good decisions about anything, from inventory management to what products to promote to different strategies on targeting their customers, that they can then apply elsewhere? These are all value-added services. That’s an ask that we heard from CPGs: What's a deeper level of insights that you can do for me, as my business partner, to promote my overall health? … There's definitely room to go in terms of what needs to happen in retail and what retailers need to do, but I think it definitely has potential to be a very viable solution.
Driving Performance and Interaction with Streaming TV
Fred Godfrey (Origin): What expectations might brands have with CTV going into or facing these potentially economic headwinds over the next year or so? Our understanding is that many agencies and brands see CTV as being upper funnel only, like an awareness-only play rather than being a performance destination. Are we misunderstanding and misinterpreting what we're hearing from our clients, or is that still pretty much how it's being considered?
Crawford: I think it's probably going to depend on which client you're talking about. Those same traditional clients that have treated television as mass historically are probably looking at CTV as an upper-funnel thing. I've worked in businesses where we looked at addressable video (whatever device it's coming through) as a performance channel, but not necessarily going and doing a performance ad. I might be doing a brand ad, but I can quantify the sales return that I'm going to get over some horizon by using that addressable channel and then marrying that back to my sales data. And so I think that some of the brands that are a little bit more sophisticated and advanced in the way that they're thinking about audiences, addressability, etc. are not going to just think about CTV as an upper-funnel channel.
The expectation and requirement for marketing to demonstrate quantifiable return for the dollars that we're spending has gotten much more aggressive. So I think you'll start to see, particularly next year, a lot of brands that are continuing to push their dollars into places that they can quantify. And I have found that addressable television in multiple forms is among those, if you've got the right partnerships.
David Sidman (VideoStorm): Since the dawn of TV, the commercial has been a passive user experience. What, if anything, are you seeing on the market in terms of TV ad units that are interactive? And I don't just mean throwing a QR code into a TV commercial; I'm talking about the actual video ad unit being fully interactive.
Crawford: I can speak to some examples. First of all, I don't think that we are advanced there yet, even though we've been trying to do it and attempting to do it for the past decade. Since I was with Verizon, and even back when I was with Coca-Cola, we've been testing interactive units in television, and it's just increased, particularly when you've talking about platforms like a Roku or a Hulu. I know it's not technically television, but when you're talking about these interactive video platforms, I don't think that I've seen anybody or any product at a platform really achieve a scaled sophistication to be able to start to make this into a commonplace thing.
I've also struggled with the balance of return -- the cost of the creativity to be able to create that experience -- versus the incremental return on whatever that investment is going to be. It just hasn't reached a point of scalability yet.
Wiener: At Tremor Video, we experimented a lot with interactive overlays on top of video. I think it was a good start for the time and the creative that people had. For example, a political ad could have links to [somewhere you could] type in your zip code and find your polling place, or at Ford, you could have an interactive overlay where you could spin the car around, look in the trunk, color it a different color, customize it and then type in your zip code and find a dealer. I think those are sort of toe-in-the-water starts.
There's a lot of excitement around shoppable video. I haven't seen a lot of numbers of actual conversions yet, but I do think shoppable video will continue to be a trend. And the most interesting development I actually think is what's happening in China, with the live shopping and live auctions that are actually resulting in big numbers. So, we can expect to potentially see more of that type of format come over here.
Career Advice for Wherever You Are In Your Journey
Morgan: You've had extraordinarily successful careers, you're young and you both have lots ahead of you. What kind of counsel would you give to someone, whether they're early in their career or later in their career, that you either wish you had been given or that you wish you had followed?
Wiener: The best advice I got was make sure you're doing something that scares you every day. Take risks. If you're ever too comfortable at a place, it doesn't mean quit your job necessarily, but take a risk. Do something bigger. Find out the next step. Never get complacent. That’s something that I've generally tried to follow in my career. That would be my top advice.
Crawford: That's great. I would say two things: One, always remember that there is more going on in the world and more to the world than what you might see in front of you. You need to be constantly looking, learning, being curious, talking to people around you and, particularly, building your network outside of your immediate relationships in order for you to start to learn and have perspective. But it also means that what you're capable of doing and what you might experience could be very different than what you see in front of you. And it's so easy to get down about a job or frustrated because you see this. It's really important to lift your head up and look around. Not necessarily go jump for a new job, but just be conscious of what's around you and have that perspective.
The other really important thing that I will say, just based on where I am in my life right now, is there's more to the world. I grew up really ambitious. I've had the privilege of having a lot of great mentors and a lot of great experiences, but I have always been on the grind. I am a hustler. And now I'm at a place where there's more to the world than the hustle and the grind, and I'm really, really focused on my health and my joy -- not in lieu of my hustle, because I am who I am, but not in spite of the hustle anymore either.
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