October marked the five-year anniversary of the launch of Kroger's retailer media network, Kroger Precision Marketing (KPM). Powered by the grocer’s data analytics subsidiary 84.51, KPM has grown to become one of the industry’s leading retailer media networks since its inception, tapping purchase data from 60 million households (or one in two U.S. households) to create holistic, targeted campaigns. The Path to Purchase Institute recently chatted with Cara Pratt, senior vice president at KPM, to discuss the state of retailer media networks, data and measurement, and advice for marketers getting into the retail media game.
P2PI: There has been a social media trend, "How It Started vs. How It's Going." Understanding you helped launch KPM in 2017, what was it like in the beginning versus today?
Pratt: The world has changed in five years. People shop differently, work differently and consume media differently. We started our retail media offering as a small, passionate team with expected retail media products. Today, we have hundreds of colleagues influencing a suite of top-rated, full-funnel retail media solutions that thousands of brands are investing in to deliver business impact. Our media capabilities touch every point of the shopping journey — most recently adding programmatic connected TV (CTV) into our self-serve portfolio.
Over the five years, we’ve invested in technology and operational rigor to scale, built models to optimize audience recommendations, created new customer experiences that excite advertisers and, of course, welcomed new talent to join our team. A lot has changed across how we work and what we influence. What remains the same is our passion for making the shopping experience easier and our commitment to making brand marketing more effective.
P2PI: Considering the rise of e-commerce grocery adoption, fueled by the pandemic, and Google's plan to end third-party cookie tracking, is retail media just table stakes now for brand marketers?
Pratt: Yes, retail media is foundational for marketers. It goes beyond the digital shelf, which is increasingly important — even for influencing in-store sales — and into influencing equity and inspiration off retail properties. Put simply, retail media is shaping new and higher performance standards in brand advertising. Marketers have always wanted their advertising to be more effective and less wasteful. Now, retail media makes that possible by influencing the right households and then measuring sales impact. You can strike the right balance for media efficiency and effectiveness — and now more than ever, it’s critical to do so.
P2PI: What are some of the advantages of working with retailer media networks for brand marketers?
Pratt: To be effective marketers, brands need to understand consumer behavior. The advantage to working directly with a retailer like Kroger is that we have a trusted relationship with our shoppers that powers relevant insights from which we can take action. Our loyalty program is connected to 96% of sales. As a result, brands working with KPM know which households to reach through advertising — and then they can measure the direct impact on sales. Performance matters and connecting content to commerce flattens the funnel effectively when relevant creative, channel mix and frequency are all being evaluated at a household level.
P2PI: What are some of the challenges of working with retailer media networks, and how would you advise marketers to navigate these challenges?
Pratt: Retail media crosses over several silos of the marketing world: brand marketing, shopper marketing, e-commerce and even consumer insights. Successful brands are doing integrated planning with retailers across those silos and aligning different retail media KPIs to each part of their business.
P2PI: I understand you'd like to create a more transparent and effective media landscape for CPG brands while building a new era of media accountability. Can you tell me more about this?
Pratt: Brands are under increasing pressure to prove the impact of ad spending. Traditional advertising relies on indirect signals to understand if your advertising is working. Metrics like impressions and clicks only have so much value. The promise of retail media is that brands can see exactly what is working and what is not working. Let’s not waste precious ad budgets on tactics that don’t impact business.
P2PI: In a recent P2PI research report surveying brand marketers, limited access to data and reporting was the most mentioned challenge when working with retailer media networks. Do you expect access to data and reporting to get better, or will it vary and depend on the network?
Pratt: It will vary depending on the capabilities of the retailer. There is a reason eMarketer has declared retail media as the third wave of digital advertising, and that’s because of the accountability we can bring forward assessing media impact. No doubt there’s an opportunity to establish standards for measurement practices centered on business outcomes (i.e., sales incrementality and household penetration gains) as an important bridge beyond the media metrics evaluated today.
We have been focused on influencing this change and elevating practices in the industry since we launched KPM five years ago. With our popular loyalty program that connects to 96% of sales, we have a rich view of consumer behavior and a direct way to measure impact of advertisements. For example, marketers using our programmatic private marketplace receive daily sales results so they can optimize campaigns against in-store sales. The connectivity with brands will only get better from here.
P2PI: Can you share some campaign success stories? What are the ingredients needed to create a great retail media campaign?
Pratt: What has been exciting for us is seeing how our data science can be applied to helping brands grow beyond existing shoppers. For example, today 42% of people clicking on Kroger product listing ads are new to the brand. And the impact of our data science extends beyond our own e-commerce property. We’ve been working with Roku for over two years — allowing advertisers to tap our data science for audience targeting and measurement. On average, advertisers using our data on Roku see a 5.7% median sales uplift and 8.1% median household uplift.
As for ingredients, it’s important to recognize that not all data is created equal. Even first-party data gets old. Data can be narrow, stale, unstructured. It’s important to have highly curated and collected data in standard formats that is current, expansive (spans categories, brands, attributes) and predictive. It’s equally important to have strong practices in how data is analyzed; humans can’t decipher the best combinations of variables — machine learning is necessary.
P2PI: What advice do you have for brand marketers who want to run a retail media campaign?
Pratt: If you’re new to retail media, then the best place to start is the digital shelf. Eighty-five percent of the top 500 [terms] searched on Kroger are unbranded. That is a huge opportunity for brands to influence shopping decisions, particularly in a constrained environment. In mature retail media programs, inspiration can happen beyond search and display assets where trusted bridges have been created, across awareness media like social, programmatic and CTV.
P2PI: How do you see the future unfolding for media investments and planning?
Pratt: The expectations for media performance will only increase. Retail media is prompting more integrated planning and measurement conversations across the marketing ecosystem.
P2PI: How do you see retailer media networks evolving in the next few years?
Pratt: We’re still in the early days of retail media. Watch for retail media networks to become easier to activate and more consistency to come forward across platforms with measurement standards. Since our inception, we’ve been working closely with brands and agencies to evolve our offering in ways that make transactions seamless. For example, we launched our private marketplace to be DSP-agnostic — meaning it [can be] activated within the existing tech-stack of clients.
P2PI: What are some of your personal goals?
Pratt: I’m passionate about developing future leaders and cementing our people-first culture. Ensuring we build on our environment that is innovative, inspired, supportive, transparent and accountable. As you take greater responsibility as a leader, your greatest impact is how you lead through influence, [and] enable talent to learn — to thrive.
With a well-established team focused on our strategy and influencing the dynamic retail and media industries, my goal is to ensure our team stays ahead of the future, remains grounded in the customer problem to solve and invests the right time on business transformation.
P2PI: Anything else you’d like to add?
Pratt: This is a special time for brands. Shopping habits have been disrupted these past two years. This is the time to be influencing new shopping behaviors. Retail media has created new ways for brands to inspire shoppers and measure ad performance during this period of disruption and we look forward to being a leader influencing change at a time when shoppers, advertisers and media partners need it most.
