AD Retail Media’s Transition In-House
In 2022, Ahold Delhaize USA’s Peapod Digital Labs announced plans to grow and transition its media network, AD Retail Media, to a fully in-house, end-to-end agency. The move included plans to more than triple its team to 70-plus individuals and launch a unified on-site and offsite advertising platform, enabling a single dashboard for measuring campaign performance. P2PI recently caught up with Bobby Watts, senior vice president, executive lead of AD Retail Media at Peapod Digital Labs, to see how the transition has been going and explore the retailer’s future in the space.
P2PI: How long was expanding AD Retail Media to an in-house digital media agency and growing its retail media team in the works?
Watts: We had talked about it for a couple of years. “When’s the right time?” was always the question. When are we ready to make the investments as an organization? Because it takes not only the people-resource investment, but also capital investments in technology and ensuring that you have the right organizational alignment in the areas of investment that you need to be sure that your offering can be on par, if not better, than the others that have been at this for many years. ... So, for us, it was a question of when’s the right time for us based on the investment profile we want to put in the business to ensure that we can do it in a successful way and learn from others’ mistakes. I think that’s one of the other things that we’ve been able to benefit from — to learn from some of the mistakes we’ve seen others make.
I think one of the primary reasons [we choose to do this] is just our omnichannel ambition. We believe that not only is retail media one of the keys of unlocking our omnichannel ambition — it’s a must-have. You can’t be omnichannel and not bring digital media marketing to the table in a joint business plan. It can no longer be just about the in-store activation and what we’re doing inside of print circular and in-store display, but it’s about how do you bring all the components of the suite of offerings and consumer touchpoints together. So, for us, it was the ability to do that in a seamless way and own that end-to-end ... and [have] just more transparency and control over our destiny. We’ve always been an organization that stands behind results, driving growth, and retail media is just another lever to drive growth and gain share in the market.
P2PI: How has the transition been going?
Watts: I think the transition is going really well. We have really good momentum going into Q4. The business has really smoothed out. We’ve learned a lot in how we partner with agencies and some of our CPG partners differently from the previous managed service model we had to, now, more of this in-house, full-service model.
Much like any time you’re standing up a new business, there’s some bumps and key learnings along the way. We expected some of those. I think the number one thing that we expected is just the desire for talent in this space is extremely high, so growing our team … came with challenges just to ensure that we had the best talent that we could find in market. We chose to partner with Publicis Groupe to help us in that search as well, but still doesn’t come without [challenges]. You think you got the right person, but sometimes it’s not the right fit, or they’re just not exactly what you were looking for. ... We’re going to continue to look for talent in a highly competitive space, so that’ll be something that we’ll obviously continue to wrestle with.
P2PI: How does bringing AD Retail Media in-house benefit the retailer and its CPG partners?
Watts: By bringing it in house, it gives us the ability to bring a multitude of channels together under one business plan. If you think about it, in the old days, you would have media buyers doing the social buy, you’d have somebody else doing the off-site buy, you’d have someone doing a digital out of home buy, [and] you’d have someone else doing the on-site buy working on a sponsored search campaign. By bringing it all in house and having all of those channels in our purview, that’s the benefit to our CPGs and to our customers because then you have the ability to sit down and say, “How do I develop a full path to purchase campaign, event or program, and do that in a way where I can then see measurement cleanly?”
You’ll also hear us talk about the integration of shopper marketing and loyalty as well as. Outside of core merchandising planning that we know we have to be a part of, it’s also [about] bringing shopper marketing and loyalty planning into the fold as well, and making sure that’s in our consideration when we build out the right program or activation when we’re talking to CPGs around, “What is the mission you’re trying to achieve? Let us build out the right set of tactics and capabilities to allow you to achieve that mission,” versus coming first with all the different individual tactics and then saying, “Hey, go do these things. Go build a sponsored search campaign.” By itself it is not as impactful as when you do things together.
P2PI: With bringing the network in-house, the retailer launched a unified on-site and off-site platform to deliver a single point of activation and measurement. Can you elaborate on what is meant by “unified” here?
Watts: Our core strategy is easy activation wherever. We know our agencies and CPG partners have lots of choices and complexities that they’re dealing with now with all the pop-up of retail media networks where things were first very simple for them to do kind of one national buy, but now they’ve got lots of retail media networks they’ve got to work with. So, as part of our stand up, our mission has been: how do we continue to find ways to drive simplicity and ease of engagement for our advertisers?
One of the ways that we’re doing that is through the unified approach, and what that means is how do we have a single [user interface] — that requires a single login, a single interface for our advertisers to log in — and be able to buy both on-site, off-site, sponsored search all through one single UI and then also see measurement for all of those within one single UI as well so they’re not having the ping-pong between different systems. They’re not ping-ponging through different variations of measurement and reporting systems. It’s all in one single UI for them for ease. That also gives them the ability to see holistically how their campaigns are being effectively used or not, or where they can make optimizations live. Our aspiration is to continue to bring additional channels in like in-store audio ... we want to bring more of the digital screens in store into that purview as well.
P2PI: What are your thoughts on the buzz surrounding artificial intelligence (AI)? Will it be the metaverse of 2022?
Watts: Let’s hope not. That was a disaster. [Laughs] I remember first coming into this space and everybody talked about the metaverse but ... now you don’t hear anybody talking about the metaverse at all. I don’t think that’ll be the case for AI and machine learning (ML). I think there’s too many really good use cases for AI and ML in the space. ... Not only the efficiencies of work and automation of work, I think it can also help us with just how we think about analyzing consumer behavior. As a retailer, we have robust first-party data on all of our customers so to understand their shopping behavior. And how do you use AI and ML to be able to help really build smart audiences in a different way in the future? I think it’ll definitely have staying power with us.
P2PI: How important is in-store? What are the retail media opportunities within brick-and-mortar?
Watts: About 90% of purchases are still done in-store, and that’s an awesome opportunity to reach consumers just like reaching them digitally is. It’s the next frontier, in my opinion, to ensure that we are able to have the right capabilities in-store. [But] you have to be able to do it in a tasteful way that still allows the consumer to have a great in-store experience. So whether that’s the digital screens, whether it’s the native mobile app, or if it’s print that you’re using in-store or holographic imaging, whatever the situation is and how you’re doing it, you have to have a strategy to that in-store experience and ensure that you’re not doing anything to jeopardize how a consumer feels when they walk into your store. They should be able to walk in your store and they should feel excited about the season [for example]. The time of year should match the consumer mindset for that particular time of year, and we should be doing that through all the digital touchpoints.
And then we should be thinking about ease of shop for them through the native mobile app, and how we are driving discoverability, inspiration and value to them through our advertising in-store. All of those things work in concert with everything we’ve been doing in the retail media space for the last several years and bringing those together to me is really powerful and it could be a really bright future for advertising if we do it the right way.