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Retailers Are Transforming Marketing and Brands Must Adapt

Three Ways CPG Brands Should Rethink Their Channel and Media Strategies

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Many in the marketing industry see Amazon's announcement of its new self-serve media buying tool and Walmart's leap into the media business with Walmart Exchange as signs of a major shift: Retailers are doing nothing less than transforming marketing.

This no doubt surprises those who think of retailers as lagging in marketing capability. But retailers do have a unique advantage with their ability to target and measure media. Consumers are much more digitally engaged and investment in digital marketing has grown accordingly.

While retailers are on the ascent, there are two issues packaged-goods marketers continue to face with their digital plans.

First, typical measurement of digital relies on the wrong key performance indicators (impressions, views, clicks, likes, shares, etc.), which don't actually correlate to building the brand or driving business results. It's difficult if not impossible to close the loop and measure true marketing effectiveness. Second, most data used for digital targeting isn't much better than the data used for mass media targeting. Buying demographic segments, targeting based on website content, retargeting product ads -- none of these standard tactics really cut it.

Targeting methods which prioritize getting in front of the consumer at the expense of being relevant will either not be seen or will be seen as annoying.

To meet this challenge, brands need to focus on accessing "first-party" data, the information gathered directly from one's own consumers and website visitors, so they can build marketing plans that are focused on extremely relevant, personalized connections with every shopper. This approach will unlock the ability to progress from marketing to building the brand. With the growing ability to target, deliver and measure media, brands should rethink their strategies with a focus on three transformational approaches:

1. Invest in loyalty. Contrary to popular belief, loyalty marketing doesn't amount to subsidizing purchases that would happen anyway. I have yet to find a single brand whose consumers are 100% loyal. Every brand is constantly challenged to acquire new customers to offset those they lose. There's always an opportunity to engage with consumers at the right place, right time, and with the right message -- or to foster brand loyalty. Imagine the potential growth if a brand could get every current customer to buy one more product, one more time.

Those who pessimistically obsess about how much loyalty marketing will cost never seem to put the same thought into analyzing how much their brand is losing by not investing in loyalty.

2. Develop one-to-one marketing plans with individual consumers at the center. Some brands believe that multi-channel marketing is needed to surround every consumer with your brand message. But if the message isn't right for a specific person, delivering one media impression is just as ineffective as delivering ten. Leveraging big data, brands should create marketing plans that use the appropriate channels, based on the ability to target and deliver one-to-one, highly personalized communications. The right strategy delineates consumer-centric media from mass media, not just digital vs. traditional, and makes use of personalized content. This leaves room for non-targeted channels like TV to drive new trial awareness, while avoiding wasted media spend on delivering irrelevant messages to the wrong consumers.

3. Rethink the role of retailers and partner with them. Retailers are no longer just a sales channel where brands execute shopper marketing. With the rapid shift in digital consumer habits and e-commerce, the role of the retailer is much more strategic. Amazon is both a retail partner to CPG brands and a media property for brand marketing investment. Traditional retailers may lag behind Amazon in digital audience, but that gap will close.

Traditional retailers also bring something pure-play e-retailers don't have: huge physical audiences that can experience brands both in-store and out-of-store. Retailer transaction data across many categories can be used to target relevant, personalized messages to consumers and measure the effectiveness of that messaging at growing sales.

Brand marketers that act on the potential to transform their marketing strategies into brand-building strategies with big data will secure long-term competitive advantage and, more importantly, build long-term loyalty with their consumers. Those that don't will lose, despite having access to a volume and quality of actionable data that is unprecedented in packaged-goods history.

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