Finally, the once-steadfast world of retail marketing is changing. One by one, retailers are finding that their marketing models — which are collaboration-led, lack transparency, and largely traditional in form — are secondary choices when compared to those of self-service and data-driven digital marketplaces. In the face of rising acquisition costs, these markets have replaced DTC as the platform for efficient media spending, burying retailers at the bottom of the list.
Fortunately, retailers are responding, albeit slowly, to bring holistic omnichannel strategies into the hands of brands and media buyers themselves, and they do so with three goals in mind. The first is customer relations, which consists of more concise and transparent communications. Second, an integrated growth strategy, which will lead to consistency in positioning, increased brand awareness and reputation protection. Finally, the internal alignment that will help create strategic flexibility across marketing investment, inventory decisions and international logistics.
With all this in mind, how do retailers make change at scale — and most importantly, do so in a way that leads to ease of adoption?
Digital innovation drives retailers need to pivot
This transformation is not entirely driven by technological developments from retailers, but rather, retailers have been enabled to position themselves differently thanks to innovations by third parties. As the future of retail is driven by digital platforms – Skai, CitrusAd, Orca and others – they are building and innovating technology that integrates seamlessly with retailer sites. Once traditional and traditional retailers engage in such a partnership, and the list grows on a daily basis, that retailer is instantly available to the brand within the tool they already use. The change is instant.
While we see it coming from the tech side, there are some unique retailers who are creating these kinds of innovative tools and platforms themselves. The most advanced retailers are building technology that integrates such platforms and tools within their branded applications. As a result, even store visits and transactions are digitized. Take Walgreens: The large-scale retailer recommends a large digital approach to in-store sales because its app and loyalty program enables direct in-store targeting of its own and partner brands. Walmart does the same.
Ultimately, these converging realities will accelerate this digital-first transition for both stores and online, as it is no longer the retailers themselves who have to develop – and then sell to brands – stand-alone tools. Platforms like Skai and CitrusAd are doing this to their advantage, transforming the industry in real time, especially for retailers who don’t have the technological capabilities to build such tools in-house at the speed or scale required to be competitive.
How marketers can approach spending strategically
For digital marketers, strategic decisions regarding marketing spend allocated to specific retailers are now shaped largely by these factors; Retailers unwilling to allow the brand to run its own media, and the inability to operate off-platform strategies for specific retailers.
A retailer that doesn’t want to let the brand manage their media or access referral data is now likely to lose their personalization. The reason for this is clear: marketers who are put in a position to choose between transparent and scalable tactics or the ambiguous and often ineffective option of traditional collaboration.
Operating off-platform strategies, such as paid social search and paid search for some retailers, largely negates the awareness benefits of the direct-to-consumer model. Until this year, direct-to-consumer contact was unique in that it provided marketers with the ability to expand awareness through these strategies outside of the platform while still providing referral data. In the new retail landscape, brands can use these specific methods to direct traffic to places where consumers are already shopping. Surprisingly, retailers now have an advantage over DTC.
Ultimately, these transformations will be very beneficial for brands and agencies that have the scale and capabilities to implement multi-channel campaigns, especially those that can sell to major retailers, which still represent the lion’s share of the market. Within an end-to-end channel structure, each touch point – Amazon, DTC, and retail – can be seamlessly managed and optimized by a single team, in one place, on a daily basis, with a level of agility largely invisible until recent months.
As we test as more and more brands change their strategies and adopt new capabilities, there will be additional pressure on retailers. For the first time, retailers are providing complete referral data to brands in exchange for their digital marketing spend, such as paid social networks, paid search and even influencers, making them more responsible for the brands they partner with.
However, this is not just for retailers but for native digital platforms as well. We are seeing that digital only platforms like Amazon are only now shifting to this structure. In an effort to win over marketing spend from traditional players and legacy retailers, Amazon has begun subsidizing brand spending if brands agree to ditch Amazon’s tactics, paid social search, and other methods, in place of retailers.
As the digital market continues to advance, brands, retailers, DTCs, and even digital e-commerce platforms must improve their workflows and tactics to evolve and keep up with each other, especially as everyone struggles with limited marketing.
Brady Donnelly is the managing director at sila, a PCA . group company. A marketing and brand building specialist, he believes that success in today’s market requires the ability to project the intrinsic value of a brand and build the structure – creative and technical – to facilitate a seamless relationship with the primary consumer. This perspective gave shape to Hungry, a full-service creative agency he founded in 2014. Hungry specializes in building comprehensive marketing and e-commerce solutions for beauty and wellness brands, including Sephora, Dr. Jart+, Indie Lee, WelleCo, FaceGym and Organic Doctor, as well as household names like Bacardi, Carnival Cruises, MassMutual and Motorola. In 2017, Hungry was acquired by FIG, a three-time Ad Age A-List agency where Donnelly, as Executive Director of Consumer Experience, has focused on building cohesion between online and offline touch points for global brands. Among its clients are Casper, Virgin Atlantic, Spotify, Vimeo, and CNN.