EP29 – The Incrementality Myth and Winning With Media Agencies

[Music] Retail Media Therapy Hello, I'm Viv. And I'm Colour. Your personal therapist in the world of retail media. Retail Media Therapy is brought to you by Grace and Co. Marketing and Commerce at Consultancy. And in this episode, I know we're going to talk about agencies later and how to partner with agencies as a retail media network. But we have got possibly the most controversial topic ever. The topic is going to break down the entire internet. No Colin, it's not your top 10 favorite Brad Pitt movies of all time. It is incrementality. What do you think? We're going to really annoy half of our listeners with this topic. No, no, it's going to be scintillating. I think when they're here in incrementality like me, maybe their eyes roll around their head. Because it's the key topic discussed that almost measurement and incrementality discussed that almost every conference. You spotted the new IAB EU and US report about incrementality, right? Yeah, now it's really excellent to recommend all our listeners to go out there and find it. Because it's a truly excellent. But we're going to add our take on, not even our take, our only experience on about incrementality. And we're going to touch a little bit on the IAB document. But let's just start with some definitions. The measuring the causal impact of marketing by identifying the additional business outcomes directly driven by a campaign or tactic compared to what would have occurred in the absence of marketing activity. Basically it boils down to this. Advertisers prefer to pay for outcomes. How are you going to measure these outcomes? That's really what incrementality is about. But there's a lot more to it than that, Viv, as well. The problem that we often talk about is that every conference we go to, everyone talks about incrementality, particularly the supplier brands. But somehow incrementality has got intertwined and become a synonym for the product. A synonym for measurement full stop. So how has that happened? If we look back over the last 15 years, history lesson here, but if we look at the rise of Google and Facebook, what they did was actually introduce concepts such as return of investment, row assets, and so on, and those individual channels could be measured. But somehow or other, we've cut and pasted many of those ideas into the world of retamedia that if we could do it in that channel, well, maybe we could do it in this channel. And also, there was a certain extent to somebody pointed out to me recently, that you asked me to allocate budget to this new thing, you better justify it. And the words used end up being measurement and incrementality, though as we shall discuss, I don't think that's. I remember this. I remember that point in the graph when people started saying that digital media was becoming more popular than TV. I can't remember when that was. But I remember around that period of time, people were also saying, "Okay, sure, digital media generally is big, but does it work?" And I think this is where that start to happen with digital media, and now let's turn into retel media that just because in theory you can measure something, that means that the most important thing we should do with any former digital media and our retel media is measure it to death. And I'm not convinced because, as you and I often talk about, in the good old days, a TV and radio and print and out of home, you knew there was a lot wastage, but you would generally look at, did the media I spend, result in the sales that I wanted to do, has that done it in such a way that I can afford to keep doing that, and does it work, which very, very blunt, you know, I appreciate, but it feels like with retel media, we've said, "Well, everything now must be measured and it must be incremental." But why is it important that my retel media must be incremental? You were talking about marketing and sales investment to drive sales through. Can you tell us a little bit about that? It's not enough, as, hey, anybody would have been a common sense, well, no. That putting my product on a shelf is not enough for somebody to pick it up and take it up. The concept of sell through, in other words, I put the product into the thing. One of the things, one of the levers we're going to pull to get that person to lift that product and put it into their basket and bring it home. And, you know, so we've had this for years, you know, you can call it trademark, you can call it shop remark, we have all these individual things that we do to sell through. And yet, we never really talked in terms of saying, that has to be absolutely measured down to its individual skew, if you will. I think it's like a subset of everything that happened for Google and Facebook. And people said, "Oh, you're looking for more of this budget, this existing budget now has to change and so on." But, you know what we should do, if I think what we should do is tell people what the options are. And we're going to get a little technical for a second because if we tell them what the options are and then get into the challenges, they might be able to make up their own mind. Obviously, we're going to kind of give you a direction of travel because we got our old strong views. But, let's look at the options. So, the typical broad options in incrementality are, what I call geo-holded, so geographically. You've got to run a campaign of some region and keeping others as a control one and they just compare the two. Then there's A/B testing, which I'm sure everybody's familiar with where you split audiences around the way into test groups that are exposed to the ad and control groups that are not exposed to the ad. You can do that in sponsored search, you can do that in sponsored products. You can do that in sponsored display, very straightforward. Then you do much more closer to my heart, personally, pre- and post-analysis. What happened before the campaign? What happened after the campaign? Ideally, adjusting for seasonality and weather and what have you. Then there's match market testing, which is kind of very similar to geo-holded. You just run things in different countries and different regions. Then there's the what I call the gold standard, called Media Mix Modeling or Econometric Modeling, which is statistical modeling, to quantify the impact of that media using lots of fancy data science and they can do for lots of other factors as well. That's the top line there. The key thing is there is a bunch of challenges about all that. These are kind of, well, it's going to say easy to say, they're not even that easy to say. They're not even that easy to say, but the challenges are even harder to address. Because there's the challenges around the technical bit, which is, do we have data? Do we have access to this resources? Do we agree how we're going to measure things? And, you know, simple fact is different categories of products have different tons. As a purchase, different cookie windows. So, what do we actually try and measure? Now, I have a great story on this, which is back in the day. We are working with a telcom. And we were doing very large campaigns. And my TV budgety year was $20 million across five markets. So it was pretty chunky. And the company was in love with Econometric Modeling. And we spent a lot of money, and I can tell you the number, because it was a long time ago. It was £300,000 to do an Econometric Study just in one market at the time. And the biggest barrier, guess what was, access to the right data, and agreeing what was called the base rate. What would we have got if we didn't do any marketing activity? And I could distinctly remember sitting in these meetings and discussing what the base rate was. And kind of at the back of my head, this little voice saying, "But hold on a second, this base rate is kind of hokey, because we kind of pulled it up and we made it up, and it wasn't really true." And then the whole thing was based on that. And then here we have layer upon layer of sort of, layer upon layer of bullshit, basically, on how we measured our success. And then we ended up writing a report, and that was kind of the thing. So very, very difficult to get the right data. And then, a little more kind of less abstract, a little more concrete is like, if we've got all these results, like we did, and you know, some analysis, how are we going to do with it? There was just so much there, to the day, to the hour. Did it change any of our reviews? Did it change what we did? There are times when incrementalities useful. Like, if I've got my Amazon sales really highly dialed in, and I want to know, if I spend more on advertising, is it going to drive incremental sales, or not, and what's the right balance? And if I move that across to a brown working with a retail media network, where they've done lots of testing, and they want to drive more sales from a specific set of sponsored products, I can see the value of incrementality. But, do you know what I think has happened? I think we've conflated retail media with performance media, and we've conflated measurement with incrementality. So we're now in a position where we're saying, all retail media looks like performance media, which is not true, and therefore, all performance media must be optimized to the absolute death, and only focus on incrementality. But what, for example, if you want to drive new people into the category, incrementality is not very useful. And I know you always talk about incremental to what. What's your take on when you say incremental to what? What's the challenge there? Like, incremental to that level of base sales. But then, how do we know what the base sales were? What if it's raining? What if it's not? So, incremental to what? Because you actually have to decide what your overall task is, what your job to be done is with the brand for the year as well. And is it incremental to the skew? Incremental to the. to. disagree, incremental to that store, incremental, which bit? Yeah, and you just end up disappearing up your own bum, if you get into this sort of stuff. So it's very, very challenging to think to do. Now, I want to talk about Related to the somebody we were discussing this, recently, guess what, on a panel. And this very great phrase came from the lady on the panel. She said, you know what? I just look at my sales numbers and then I know if it worked. Why would I get involved in all this detail? Did it work or did it not work? And it kind of reminds me, you know, back again, when I was a marketing director, though you get a sense, I think they call it a spidey sense, by looking at the numbers yourself and going, hey, that looks very different to what I would have expected. I can use a rule of thumb because marketers are busy. And, you know, you cannot be expected to go into media mix modeling right across things and get the results four months later. You've got four days in many respects, enough four months to make decisions. So it's again, incrementality of what, based on what all the web times. I think what we're saying is that the ability to measure digital media, retail media, is it extremely powerful? So can be used to really laser in and identify a really clear result. But it doesn't mean we want to be only focusing on that aspect all the time for every campaign. That's not the only thing that's important. Okay, well, I think we probably upset half of our listeners, especially all by now. So it might be time to do a runner, as they say, in England and move on. Retail media therapy. Media therapy. What are we talking about with our net stopper? This is our on the couch topic. I'm packing the world of agencies, right? Yes, well, one of the things that we know about over, another thing just like incrementality, is discussion about brand budgets. Now, what does that mean? We're saying, hey, as retail media networks, we want to not just do get performance budgets, sponsored search boards, but we want to actually tap into these brand budgets. Okay. Now, a recent report from work around commerce media said that, you know, sure, we've done a lot of growth in retail media over the last number of years. But that actually may flatten over the next while. But what does this mean? In reality, all businesses eventually the growth potential if flattened out, that's that's perfectly normal. And then you have to start kind of getting into an optimization, getting into a sort of a, where are we going to get new different forms of growth or sources of growth. And it always comes back to these brand budgets. And the key point to note, as we all know, brands rely on their agencies. And their agencies are the people who they trust, and trust their recommendations and insights. And so, a retail media network needs to have a strategy for how they're going to engage with the agencies. Now, as it happens, lucky enough, you bit of an expert in that topic. So, if a retail media network wants to go after brand budgets through agencies, whether that's not-- That will tell you what not to do from, you know, having worked a few clients on this area. Definitely don't make it a side of the desk project and make it someone's just trying start selling to a few agencies or talk to a few of your tier one clients. And I'll see if they'll put you on the agency plan, because that just doesn't work. You know, these giant holding companies, you know, the big five out there are the big important people in the room. And I think the problem for retail media networks is they used to be in the top dog in any conversation. And then all of a sudden, when they're talking to holding company agencies, they're really like, oh, hang on a minute, we need a proper plan. So, for me, a plan for a retail media network to start to work with agencies properly is three things-- identifying what an agency wants and what they don't want, making sure that they have a proper engagement strategy and staffing. So, let's talk about each of those in turn. So, in terms of what they want, I think obviously retail media is a very hot topic for the holding companies, but still a lot of what's been bought is things like Amazon ads, sponsor search, sponsor products, easy stuff that will start to appear on plans. And they're really starting to wake up to, well, retail media networks have got some incredible audiences. So, maybe I want that data piped into our programmatic platforms as well. So, I think the big opportunity for retail media networks is they have to identify an agency proposition that's different to their standard retail media proposition. The USB. Yeah, we had an example from one of our clients where they said an agency they were talking to came to them and said, we don't have a way of targeting pregnant people and our client wants us to do that. And the retailer could turn around and say, well, we have a very clear segment of pregnant people in its large and we can we can access that. So, that was a really good example of identifying a gap on the media plans. I think that's what the USP, the proposition, needs to do. You need to meet all the holding companies and their operating companies and find out what can't you do currently. Is it around the certain geographical locations that aren't well covered by JCD code screens or clear channel screens and that you have the retail media screens? You know, what is the secret source that you have that is not the stuff that you as a retail media network want to push but the stuff that the agency can't do. So, it's listening first and then building a proposition. One thing I've had to speak about there is what's it like to be a marketing director on the other side of the table and the agencies are responding to briefs. For the most part, the weight of engagement is to write a brief. I'd be wanting to do this over Christmas. We want to achieve this when I'll brag over the year. The agencies in theory should be looking dispassionately at all the options that are out there to reply to that brief. So, if you look at the world through the lens of the brief, then you can see, "Right, okay, I can reply to this. I would always have written a brief for my agencies, then I would meet them and they would say, here's what our options are within that budget." I would accept that. That's the key point. I wouldn't go and say, "I think you're wrong." I would go and accept that because they're the experts. They're the people, as you pointed out, going to have these views right across and you can see right across what's available and they understand our audiences and they have a programmatic and all the rest of it. So, you've got to see it from the agency's perspective responding to a brief. Now, with that in mind, with the, what should I do? I'm the agency, sorry, I'm the return media network. I got my ideas around the proposition. Yeah, I think we've got something here. I think we've got some cool audiences here. What do I do next? So, you want a three-step plan. First off, you want to talk to the retail media lead at the big holding companies. You can talk to all five of them. You can talk to independents, but you need to talk to them and have this conversation around what kind of pain points are the operating companies looking for? How do you want to access my data? What do you think about us being able to access brand budgets? Do they also want to come and steal some of your trade budgets and how are you going to manage that? All that kind of good stuff. So, they're the advisor and your guide for the world of the operating companies. Stage two is then to meet the retail media leads at all of the operating companies and these are your agency and gatekeepers. So, this is where you start to sell that proposition and hone that proposition and find out what they want. Also, you need to get your data cleaned and clear audiences and be able to start to answer questions around your audiences and spend some time feeding insights back to those agency gatekeepers. Then the final thing is you need to make friends with all the operating company account leads and planners and this stuff takes time. In the good old days, it was liquid lunches, several hours spent meeting people and building relationships, but this is really a sort of six to nine month project minimum of building all these relationships. You might need to give some freebies away or discount of media. You might need to respond to what are trying to be a briefing or a bit of pitch. Yeah, I mean, after the stuff. Are you going to help the agency win a speculative tip-itch that might take you a lot of time or might not get anywhere, but you're the built the relationship with the agency. So, you know, you really do need this clear engagement strategy of proper detail plan and you know, the biggest problem with all this, who's going to do this job? So, you know, we've seen when it happens side of desk, right? What does that look like? Colin? It's your half pregnant. But actually, what's not important, as long as for me, my pregnant and doing it at the side of the desk? What's a lot important to these, to these whole cause and individual operating companies? What's a lot of important to them? What's not important is going to them and saying we've got 50% of the 18 to 34-year-olds in our country, which is what most retail media pitches say to advertisers. And if you take the exact same pitch debt to agencies, they won't, they won't think that's very smart because obviously, what agencies can do is they've got the big numbers for any demographic. They're really looking for holes in their plan. So, they're looking for interesting, clean audience data with a willingness to get that data into whichever system that they want. to access your data in, they're not interested in you talking about large volumes of demographics and they're also not interested in you gatekeeping. So if you say, oh you can access our meta accounts or we already have a relationship with a connected TV provider, they want to manage the pipes and the relationships with media partners. They just want your data and your audiences and your understanding of your shop is. There's something going on here as well, there's a level of complexity creepy in there and you know for any business in general making it easy to buy is important, but particularly for Retime because it's one of the accusations that's out there. And the fact one of the things I kind of hear when I hear the word self-serve what I'm actually hearing is really can you make this easy to buy because really what has to happen is your piece of ad adventure from your Retime Media Network has to appear on a media plan and your goal the whole time is that that piece of ad unit you have what you got to sponsor product to sponsor to let say you know whatever whatever it is it's going to appear on a media plan that a marketing person will look at and go sounds pretty good to me let's go for it that's what you got to get to and hence the whole idea of like self-serve that speaks to that particular point except we call it self-serve and that's really not what it is that's a bit of a variety. So you know you need to have good clean data with clear audience limitations you need to have it in the right pipes and that to flow through into the right ways that agency account managers and planners want to use it but even if you did that and nothing else you're going to get a trickle of media it really is still about building the relationships and responding to briefs the other way I've seen it done is a Retime Media Network will persuade some of its tier one brands to you know say you know can you help us talk to your agency and get on the plan and imagine being on the agency side of that conversation well why why should I you know we can respond to this brief without the need to include a third party so you can't sure cut it you need to do the legwork you need like if you're a small Retime Media Network you need to dedicate a person if you're a slightly bigger Retime Media Network you need a number of people covering each of the whole codes and independent agencies that you want to talk to so there is a lot of money out there in the brand marketing budgets but to get it you've got to put in the work. Yeah it speaks to that point if you just want to you know have a takeaway you've got to invest ahead of time because you know that money is potentially there what you've got to do the legwork and you got to remember that in the Retime Media game at the moment for a preferable work said and we touched at the outset is that some of this growth will slow because that's the natural way markets grow so now is actually when you've got to be you got to be a HESP investing ahead of that that revenue. I think we've covered a lot on this particular fact it's been a masterclass for a retail media networks and brands I would say hey and even for agencies who want to grow their business. Well yeah and there's so much more we could talk to but you know you sent me through your top 10 list of Brad Pitt movies so you know I better start looking through that now so you know that's about all there is time for this episode so please follow us for more retail media therapy and check out what we do at Retime Media Therapy.com and make sure to listen to the next episode of Retime Media Therapy where you can lie in the couch and we can solve all of your retail media problems. [Music] Retail Media Therapy. Media Therapy.