Marketing funnel wars: Coles and Woolies new media units trigger "future of the funnel" debate
Australian marketers and agencies are two years behind the UK and US in using retail media - Amazon included - to "close the loop" between ad exposure and a purchase. Brad Moran, the man behind Coles' new e-commerce advertising platform, predicts a "lower funnel" ad boom for retailer media units and marketers. Nine's Pippa Leary, meanwhile, sees a grand "through-the-funnel" opportunity for media companies to link and share addressable audience data with retailer transactions. But right now, she argues Nine is "probably one of the few media companies in the world" that can do it. Either way, the funnel debate is back. Get across it.
"The key reporting aspect for a brand is they really can close the loop ... they can track an impression, to a click, to a purchase and see their ROI in real-time. It's why Amazon's advertising business is booming."
You need to know this:
- Coles has backed an Australian start-up, Citrus, already working with 22 retailers globally, to manage advertising and sponsored product listings via a self-service, Amazon-like ad platform for its online grocery site. It's claiming conversion-to-purchase rates of circa 60% after clickthrough.
- Australia is up to two years behind the US and UK in using retailer media assets - mostly because of the "Amazon effect" in those markets.
- Citrus CEO Brad Moran says there will be rapid growth in "lower-funnel" retail media for Woolworths, Coles and Amazon here in the next 12 months and that GroupM in the UK is leading media agency investment in this area.
- Puts renewed focus - and pressure - on the future of the marketing funnel and FMCG strategies for longer-term brand building activity.
- Nine says media companies with addressable audiences can sync their data with retailers to feed customers into top-of-funnel and prove ad effectiveness.
- Brad Moran says of 500 million customer searches on the Citrus platform across his online grocery partners here and abroad, 45 of the top 50 search categories were generic, like "bread", "shampoo" and "eggs", not specific brands.
- Brand Traction's Jon Bradshaw says most consumers are "brand agnostic" but a "huge percentage" of the grocery shop is still "brand choice driven".
- So WTF is a marketing funnel? At the top is marketing and media activity that creates awareness and consideration for a brand, product or service. At the bottom is marketing and media activity which converts someone to an action. For retail media and consumer goods marketers, a purchase is the ultimate result.
Lower funnel ad boom
The former professional Adelaide Crows ruckman and co-founder of Citrus knows his way around the global advertising game. He predicts in two years Australian retailer media will catch the growth of their peers abroad in selling high-margin ads and sponsored product listings on their commerce sites to brand suppliers. Media agencies and marketers, says Brad Moran, are just starting to quantify the impact that Amazon-like product listings can deliver for brands in online grocery sites.
- Moran says if overseas markets are indicative, about half of Australian retailer media revenues will come from agencies and half directly out of supplier trade marketing budgets.
- Coles' venture with Citrus is the online equivalent to physical store trade promotions and premium shelf space. Except Moran says it's more personalised, and democratised.
- The Citrus-Coles alliance will for the first time let much smaller brands bid for online promotional space and use more refined search terms - organic shampoo, for instance. It will also let smaller brands compete more aggressively with larger rivals to land immediately in the shopping cart. In physical stores, such promotional activity is dominated by bigger brands with substantial trade marketing budgets.
- Coles Online advertisers will see material improvements in reporting from the advertising delivered to a user purchase. "There's a new level of transparency and control," says Moran. "Suppliers get the level of reporting they want, which has often been held from them. Not due to retailers withholding, but just because it's hard to give them [the data] at scale."
- Unlike the hefty budgets required to own premium shelf space in a store, Coles's deployment of Citrus brings the mid-market into play. The returns, Moran says, can be upwards of 600%. It sounds fanciful but he cites a case study with competing vodka brands at similar price points. One used sponsored listings, the other didn't. "There was a 5% shift" in marketshare.
"Australia is possibly two years behind [the spending split] between agencies and trade marketing but we'll see that start to shift in the next 12 months. Everyone understands in-store shelf space. Online is just as valuable, possibly more so."
Citrus is a self-serve platform, much like Google or Facebook, where advertisers log in and compete with each other for relevancy and cost. "Amazon is lower down the funnel than a Facebook or Google, which heavily influence a sale but they're not right at the point-of-purchase, where the retailers are," says Moran. "There is an education piece we have to go through here. GroupM is definitely the most progressive in the UK market. They are investing heavily. When you see agency dollars shift into this space you know there is a big trend coming."
But what does Moran make of the role, or otherwise, of longer-term brand building activity versus his lower funnel channel in retail media?
"Yes, it's hard to build brands at the very lower end of the funnel," Moran says. "There is a finite time to make an impact. Very few industries and brands have that weighting. But we look at all the search data that comes out of these retailers. Of the 500 million searches we looked at, of the top 50 search terms, 45 are generic - milk, bread, eggs, shampoo. There's not a lot of brand loyalty there. That tells you people are not searching for a brand name. If you're a Coke customer, you are not going to change to be a Pepsi customer. But if you're an agnostic customer, you don't really care."
He says sometimes marketing can over complicate itself.
"If something is in front of you and something isn't, then you're going to click on something that is there."
"It's difficult for us to work with Google or Facebook. They tell everybody they are doing top-of-funnel brand building and push all the way down through to purchase. We know that's not right."
Media and retailer data alliances
Pippa Leary and Brad Moran don't entirely agree. Leary is vocal on the market's swing to short-term performance marketing at the expense of broader brand messaging that builds awareness and consideration among mostly promiscuous consumers.
Moran thinks that until five years ago, lower funnel tactics like in-store discounts were one of the very few levers that could drive immediate sales spikes - creating an entrenched "race to the bottom". But he claims retailers' online media promotion tools are less price sensitive.
Leary, though, begs to differ on the big picture. "If you go back to brand theory, one of the things they talk about is that you build your business is by having higher levels of brand recognition and consideration. That drives profitability," she says. "Otherwise you're just getting commoditised."
Where Moran and Leary find common ground is with the possibilities of sharing data to prove effectiveness, wherever you might be in the funnel.
"We've never had the technology nor a marketing solution to be able to prove an attribution modelling system," says Leary. "Now that we have addressability with BVOD [broadcast video on demand], we can actually link top of the funnel marketing campaigns right the way through. We've got the data on people down to a user level. If we can share the data, we can demonstrate how it goes from brand building the whole way through the funnel down to conversion and purchase. It's truly closing the loop. But instead of just closing it at the lower end, we can hook it up to the top end of the funnel."
Clearly, Leary is adamant that brand building in broadcast-style formats remains paramount.
For his part, Moran is open. "This is just the last piece of the puzzle; the sales data that shows what impact the lower funnel actually has on sales. Yes, I agree with joining data in a collaborative top-down approach. With a media channel like Nine, there is a lot of visibility we can offer to a brand as a collective."
"The ability for FMCG brands to do attribution modelling that goes, ideally, all the way through the funnel is an exciting development"
Nudge the brand agnostics
Jon Bradshaw only partly accepts Brad Moran's argument about people being more interested in a category over a brand. But he's definitely excited about where retailer media could head.
"Brad's is a narrow view of groceries. If you're talking eggs and bread and milk, yes it's proving very hard, especially with milk, to build brands in that environment. But I would say there is a huge percentage of that shop that's still brand-choice driven. Again, as we've seen with the IPA in the UK, unless you get the balance right between long-term brand recognition and short-term sales activation, that is bad. It includes Procter & Gamble's work out of the US with Tide. Laundry detergent is not a very interesting category - but Tide is smashing it."
Bradshaw says if retailer media takes FMCG money from Google and Facebook because "we're seeing less effective sales activation", then it's a great opportunity to move "the right bit" of the budget around.
"I'm excited by this opportunity," he says.
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