A Work in Progress: The State of Shopper Marketing Organizations

For a relatively mature discipline, shopper marketing still seems to be working through a lot of growing pains – if, that is, it’s even possible to clearly define “shopper marketing” anymore.

While there certainly are numerous commonalities evident in functions, roles and responsibilities across companies, a survey conducted by the Path to Purchase Institute in April found that – almost literally – no two shopper marketing organizations are structured in exactly the same way.

And the emergence of retail media networks has, like e-commerce before it, only made attainment of an ideal organizational structure even more complex by adding additional responsibilities to the shopper marketing playbook that typically would be covered by a different function within the organization.

If there is anything that is crystal clear across companies, it’s that few (if any) shopper teams are satisfied with their current org chart (especially when it comes to body count), and that the discipline has become such a “jack of all trades” in terms of scope that an ideal structure is an increasingly tough task.

That’s why many industry veterans are advocating for a different approach to organizational alignment that seeks to clearly identify effective work streams rather than worrying about who reports where and who “owns” the budget.

“Shopper can’t be siloed and be successful,” says Kelly Marsh, director of industry affairs and capabilities at Nestle Coffee Partners. “You have to flow to the work. Having shared goals is the key.”

Marsh this spring joined with other industry leaders from a variety of companies to examine and identify best practices in organizational alignment as part of a work group being coordinated through the Institute’s new Commerce Executive Network. Formerly known as the League of Leaders, CEN was developed exclusively for senior commerce executives from retailers, brands, agencies and solution providers to work together to establish best practices and set standards around key business issues affecting shopper commerce. The work group on org alignment ultimately hopes to share some of its conclusions with the industry at large later this year.

For now, the following report examines the industry’s current thinking, as reflected in results from the Institute’s survey. The data represents responses from 77 professionals from consumer product manufacturers (67) and marketing agencies (10, answering with their closest client in mind). (Members: Review the complete research results.)

Still Growing?

Among the more surprising results from the survey was the substantial number of “new” shopper teams across the industry. In fact, fewer than one-third of the organizations captured in the survey have had formal shopper teams for more than 10 years, and just about one-third added the function within the last five years (see Chart 2).

Somewhat less surprising (although surely more disappointing) is the fact that shopper teams at a majority of organizations (61%) have fewer than five dedicated members (Chart 1). Even more to the point, “I’m just one person, so I do it all” was a comment made liberally throughout the survey. Generally speaking, larger organizations are more likely to have larger (and older) shopper teams, although that certainly isn’t always the case.

Shopper can be a small, yet distinct, formal function because “it often was formed organically from a hybrid of brand-facing and retail-facing responsibilities” that were largely handled elsewhere (like consumer promotion), suggests Kelly Downey, a former CPG marketing leader and executive consultant at management consultancy OxfordSM, which is guiding the work of the CEN group.

“It’s hard to give you an exact head count because there are people who are shared assets. We have assets defined as e-com and assets defined as shopper, but even the e-com assets are aligned to specific retailers,” explained one industry executive.

Perhaps the longest-running debate around shopper marketing, whether the practice should reside within the marketing department or the sales function, seems to have been won: 53% of respondents report into marketing (Chart 3).

This is particularly true for smaller companies, which are less likely to have the extensive customer or trade marketing operations of larger organizations. It also might reflect the evolving role that shopper is playing at many companies, which has been moving the function away from its “trade support” origins.

Jacks of All Trades

As already implied, the size of shopper teams belies the scope of responsibilities the function now covers. In addition to the traditional chores of customer-specific marketing, in-store marketing and agency management, the majority of teams are also responsible for retailer-related digital media and e-commerce/digital shelf activity (Chart 4). What’s more, one-third of respondents are also involved in digital marketing and media that isn’t related to their work with retailers.

Why has shopper become the go-to destination for so much activity? “It’s because of where we typically sit within the organization: the intersection of understanding brand plans and needing to translate them through the shopper lens. We need to understand all the spokes coming from that hub,” says Marsh.

Despite these new responsibilities, the backgrounds of most members of current shopper teams suggest more “old school” skill sets such as customer marketing, brand and consumer promotion experience than knowledge around any of the newer duties in the digital/e-commerce space (Chart 5). That illustrates the difficulty many organizations face in building up the capabilities needed for the “modern” shopper function – which, of course, is compounded by the general shortage of dedicated personnel.

“There are new responsibilities to understand, like digital and now retail media. And then, how do we integrate brick-and-mortar to make it all omnichannel,” says Marsh, who recommends internal investments in training but also tapping into external industry resources. “We’re all going through this together. We have to make sure we’re staying ahead of the learning curve.”

“You need to be open-minded about the variety of talent that needs to come in,” says Downey. “And remember that the learning works both ways, because the fundamental stuff doesn’t go away.”

For the teams large (and lucky) enough to have dedicated “specialists,” e-commerce is the most common responsibility beyond the traditional functions of shopper, brand and sales/trade (Chart 6). That often reflects the need for someone “new” on the team to handle Amazon and other pure-play e-commerce accounts, and increasingly to work with third-party delivery services like Instacart. Dedicated assets for digital marketing and social media are also becoming fairly common.

“There is a lot of different, nuanced subject matter expertise that plays into the role now,” said one industry executive. “We’re still trying to navigate the level of expertise that’s needed in some of these areas.”

As far as programming focus, the most common strategy is for team members to handle activity at specific retailers across all brands, or “simultaneously brand-/customer-facing” as nearly half of all respondents said (Chart 7).

Here’s one area where there is some general consensus about ideal organizational structures. At recent Institute events, a number of shopper marketers have suggested that establishing single points of contact for each key retailer – account directors, if you will – would make both planning and execution a lot easier than current practices, which often have multiple stakeholders across functions managing their own domains.

Positive Spending Signs?

Perhaps the most positive data point from the survey is 19.2%, which represents the average percentage of total marketing spending dedicated to shopper activity (Chart 8). The survey specifically directed respondents to included related e-commerce and retail media spending.

That’s a significantly higher percentage than other recent industry surveys, although those reports generally classify “digital marketing” as something entirely distinct from shopper without considering (or at least discussing) the significant shift in the discipline’s focus toward online activity in recent years.

And that’s a very important consideration, given the fact that only 29% of organizations have dedicated shopper marketing budgets and the rest are still drawing mostly from brand coffers – far and away the most common source – or trade funds to pay for their activity (Chart 9).

From her perspective, “I think absolute budgets are probably the same, but the buckets that they’re coming from are changing – as they should be,” says Marsh. Indeed, 8% of shoppers are now getting some help from e-commerce budgets and 4% from the media till. [Editor’s note: The Institute will be conducting a detailed study of spending practices across the industry this fall.]

Agency Assets

Given the aforementioned internal issues, it’s not surprising to find that nearly two-thirds of CPGs are utilizing agency partners for help with both strategy and execution across a number of critical needs (Chart 10).

And given the prior discussion about the need for new skill sets, it’s also not surprising to see digital marketing as the most commonly “outsourced” activity – although the more traditional chores of marketing creative, media planning/buying and in-store marketing follow close behind.

“Agencies are great for helping to fill some of the gaps you might have,” says OxfordSM consultant Sarah Gleason, who with Downey is guiding the aforementioned CEN work group. “But you’ve got to make sure that someone in-house has enough expertise to make sure they’re staying on track with you. They can do a lot of the heavy lifting, but you still need to be the conductor.”

For the most part, the pandemic of 2020 impacted the shopper function in one of two ways: by temporarily reducing planned programming due either to inventory issues or media pauses; or more permanently by expediting the shift to omnichannel. In the latter case, nearly two-thirds of companies moved more of their activity to digital channels, more than half were able to add more “digital expertise,” and one-fifth picked up some further media capabilities (Chart 11).

“The pandemic definitely sped things up and created an emphasis on the skill of testing and learning in real time – making quick decisions with courage and adjusting as you go,” says Marsh at Nestle Coffee. “The pace of the market is warp speed now, and I don’t see it slowing down. You need quick, critical thinking.”

The Name Game

The function’s ongoing evolution, the continuous expansion of its scope, and the fact that – as illustrated fairly well through the Institute’s survey – its importance to the CPG organization might still be undervalued, has led more than a few practitioners to suggest that a name change might be in order to move “shopper marketing” beyond its roots as a retailer-driven, sales-driving exercise focused largely on the store environment.

t the moment, however, “shopper marketing” is still the name of choice for more than two-thirds of companies (Chart 12). And while almost one in 10 respondents have moved to a name that reflects their increased omnichannel focus, nearly twice as many still treat shopper as a subset of even more old school functions like “customer marketing” or even “trade marketing.”

“What used to be defined as ‘shopper’ has become unclear. Who owns it now and what does it entail?” asks Downey at OxfordSM, noting that the answer can still vary significantly from one organization to the next.

One telling fact might be that “shopper marketing” is much more commonly used by the younger teams (less than 5 years old), which means that the larger, more established functions across the industry, which more likely have a wider scope of responsibilities, are also more likely to be thinking strategically about their name.

“We’ve tried to move everything to ‘omnichannel’ because that’s kind of what the retailers are talking to,” said another CEN member. “But we try very hard not to keep them separated – you’ve got to think about it holistically as in-store and online at the same time. It’s not exactly an easy process yet.”

So … what’s the ideal structure for organizational success with “shopper marketing” — or whatever it needs to be called?

“I don’t think there is a magic bullet,” said one executive during a recent discussion. “If there is, I will spend a lot to find it. Anything we can learn to give us any step ahead is always a win.”

“It doesn’t have to be the structure that’s the obstacle, it’s often the mindset. If the cultural norm is collaboration, then the structure is less important,” says Marsh. “If you’re siloed in your thinking, that’s when the structure will have an impact.”

The trick is to “provide a little more flexibility in the structure so it can morph to the way organizations need to work – and the ways of working need to flex, too. The pandemic helped teach us that,” says Downey. “Instead of identifying structures to get the job done, we need to create paths to get the job done.”

An industry focused on the path to purchase should be able to accomplish that, right?

Path to Purchase IQ