Commerce media – What is it & how is it different from retail media?

According to McKinsey, commerce media is using transaction data to gain audience insights to make advertising more effective by improving targeting, deliver relevant shopper/consumer experiences and connect impressions to sale, both online and in ‘physical’ stores.

It is about leveraging large-scale purchase and intent data to draw insights that add value to consumer experiences

Sounds vague and confusing? Read on.

Commerce media covers all possible uses of retail data

Commerce media includes the use of insights generated by (online & otherwise) retail data in the online & on-site retail universe. This covers not only the retailer or the brands sold by the retailer, but also third party service providers who want to increase their ROI on marketing spend. They do this by targeting shoppers in a way that they previously could not do before.

Amazon was an early pioneer in this space and now other retailers are catching up fast.

However, supermarkets and other retailers are fast developing retail media networks of their own (Source: McKinsey).

Commerce media also gives retailers in low margin industries (like grocery & FMCG retail) the opportunity to increase margins by selling these insights along with online/on-site advertising space. We all know that consumers already want personalized experiences and only relevant ads. By leveraging retail media, companies will soon be able to deliver targeted ads and experiences through which shoppers can buy within the context of a TV show or the Metaverse.

Insights generated by retail media networks can help companies deliver the targeted experience that consumers want. This in turn will result in higher ROIs that companies currently generate on their ad spend. Why?

Linking ad-impressions with customers and their purchases at a SKU level

According to McKinsey, it is the the ability to match unique customer IDs and ad impressions to stock-keeping-unit (SKU) sales which is disrupting the entire advertising ecosystem. 

This is evidenced by data on effectiveness as collected by McKinsey below.

Salesbeat has also released a recent podcast on this topic and an interview of the Commercial director of a retail media start-up, here


Other commerce media

While McKinsey, BCG, Accenture and Bain have all written extensively about how retail data can be leveraged for advertisements and marketing, a relatively less explored territory is using this data to optimise promotions and availability in stores.

To learn more about how this can be done, email me on veena@salesbeat.co.

An Innocent mistake

In 2019, Innocent Drinks, known for their tongue in cheek ads, made a mistake with one of their campaigns.

Thanks to a team that thinks quickly on their feet, they were able to turn this around to their advantage. In fact, they make deprecating references to this ad once in a while, which reminds people that the team is human too and make mistakes.

So what happened?

The brand doesn’t play by the regular rulebook with their quirky, often irreverent & original tone of voice.

In October 2019, to launch their dairy free nut drinks range, the team released a tweet which included a ‘seasonal’ addition – Conker milk. For those who are wondering what conkers are, they are fruits of the horse chestnut tree – not edible and poisonous.

Innocent drinks posted the below tweet, without realising that people may actually try eating/’milking’ conkers.

The backlash was swift, as many people assumed this was a real product.

The reaction

In fact there were announcements and posts about how conkers are poisonous and harmful if eaten.

The team quickly released an apology, deleted the tweet and proceeded to release a series of tweets about their gaffe.

While apologetic, the brand was self deprecating and chose to make fun of themselves instead.

They used this opportunity to reply to twitter users who posted about the ad.

They even referenced other (edible) brands in their tweets, which interestingly resulted in a spike in demand for those brands.

The results

While the campaign started off on an ominous note, the team’s swift and humorous reaction meant that awareness of the increased and brand loyalty was sealed.

The brand also came across as more ‘human’ to everyone. In fact, this ‘human’ element was so good for brand perception and awareness that they still about this gaffe once in a while as you can see below.

See consumers in their full life*

*Paraphrased from a recent report by Accenture, we look at the ways shoppers and consumers have changed in just a few years and how companies and retailers can remain relevant for them.

Consumer and shopper habits remained the same or similar for decades previously. They changed only when there was a major disruption in the market that warranted it or when consumption power moved from one generation to another. This was usually a once in a lifetime occurrence.

A few lifetimes in one

These days, we pack the experiences of a few different lifetimes into one. We wrote about this previously.

According to the article by Accenture, ‘The world today is radically different from the world of two years ago … or even two months ago. A non-stop barrage of external life forces—health, economic, social, environmental, political and beyond—is affecting day-to-day decisions in unavoidable ways.’

We, at salesBeat, argue, this has been the case for a few years now. Ever since social media came into being. Social media has proved to be the both the delight and bane of a brand’s existence. In the initial days of social media, brands were excited by the potential for them to target consumer and shopper groups.

Social media influencing sales & consumer behaviour

While the articles by Accenture, Forbes and by McKinsey, don’t specifically call this out, social media has been influencing what consumers buy and when for sometime now. This has been making it difficult for both brands and retailers to anticipate demand and stocking requirements.

Another layer of complexity that brands did not take into account with social media is what happens when consumers post their negative experiences with the brand on social media. Or when certain (in)actions cast the brand in a poor light in the court of public sentiment. ‘Cancel culture’ has taken over the world of FMCG & retail too as we saw during the early days of the Ukraine/Russia conflict.

In a time and age when everything makes its way online sometime or another, companies need to anticipate not just how their ads perform, but how the brand itself is perceived by consumers.

Changing priorities for consumers

While sustainability was top of mind for most Gen Z & Millennial consumers & shoppers previously, today, with rising inflation sustainability has taken a back seat. Where personalisation and authenticity were important factors in shopper decisions, again, these are playing second fiddle(s) to value for money today.

According to the Accenture report referenced, ‘People are giving themselves permission to be inconsistent. As they evaluate a growing list of things that matter to them, consumers realize they can’t expect perfect choices in every circumstance. As they make decisions, paradoxes become inevitable. And those inconsistencies are being seen as strengths, not weaknesses.’

Market & geopolitical realities

In the last 3 years, not only has social media been a constant in how it has influenced behaviour, but so have covid, unseasonal weather (climate change) and conflicts, in the form or ‘war’ or trade conflicts.

These have completely changed (and continue to change) the way we live, work and shop. However, companies, both retail and brand are still playing catch up driving uncertainties from a supply perspective.

See consumers as a whole

Accenture suggests 3 ways a company can catch up and keep pace:

  • See customers in their full life
  • Solve for shifting scenarios
  • Simplify for relevance

The paper by Accenture resonated with us as we developed salesBeat keeping in mind the consumer and their life. salesBeat isn’t only about how consumers shop or how shoppers behave, but also about how they react to the changes in their life and how this in turn impacts their choices. Also, as Salesbeat tracks the drivers of consumer behaviour and does not assume that the environment remains static, shifting scenarios are accounted for through them.

More companies need to start seeing their consumers as people whose decisions change with the circumstances around them. Currently their personas are developed based on socio economic and demographic factors that can change with changes in the economic environment around them. After all, shoppers who previously used to frequent ‘premium’ supermarket chains are now trading down to cheaper alternatives, including frequenting discounters more often.

For more detail or to read the Accenture paper in full, follow this link. If you’d like to learn more about salesBeat, visit our website or mail me on veena@salesbeat.co

Personalisation at scale – L’Oreal

When a billion people use your skin care & hair care products and your cosmetics range, you need to consider innumerable textures & colours. All these consumers want products that are tailored to their needs. For L’Oreal, delivering personalisation at this level of scale meant thinking about innovation in a different way.

It would no longer mean a one solution to one problem approach. It meant tailoring the solution for individual consumers who experienced the same problem in different ways.

Leveraging industry 4.0 to achieve personalisation at scale

Industry 4.0 includes robotics, IoT, data, blockchain, VR, AR & AI. All these technologies have a place in the modern industrial framework. They can be combined and can be deployed to make manufacturing more productive and efficient.

L’Oréal not only leveraged e-commerce and recommendation engines during the pandemic, but the company also tested and implemented technologies to deliver personalisation at scale.

Initiatives and solutions

We’ve already covered L’Oreal’s Modiface in a previous blog. Some of L’Oreal’s other various initiatives are:

  • Le Teint Particulier, under the brand Lancome – a product which allows consumers to have their skin tone ‘measured’ at point of sale. A personalised concealer is then manufactured for them right there in the store. The concealer is a combination of one of each of 8,000 shades, 3 coverage levels, and 3 hydration levels. Even the packaging is personalised with information including the customer’s name. It also includes a reference ID for quick and easy reordering.
  • Custom D.O.S.E by Skinceuticals, a L’Oreal UK brand. According to L’Oreal’s tech incubator, “Custom D.O.S.E by SkinCeuticals is the first ever automated system that delivers highly concentrated combinations of SkinCeuticals’ most potent ingredients on-the-spot. Addressing the concerns of over 250 skin types, the D.O.S.E technology is first-of-its-kind because it’s able to mix active ingredients into a single serum at the point of service specifically to target the appearance of skin aging issues, like wrinkles, fine lines, and discoloration.”
  • Agile production lines – by leveraging several industry 4.0 technologies, L’Oreal has been able to manage final product differentiation later in the value chain. Stéphane Lannuzel says, “We can produce the base and then choose the colour for a lipstick right at the very last moment”.
  • Perso, this gadget personalises and customises make up for your every need. Perso relies on an AI derived diagnosis of a photo (corresponding phone app by BreezoMeter) of a user’s face to highlight imperfections ranging from fine lines to dryness. Perso then creates a final product formulated for the user’s skin, pulling from a library of ingredients.

The results speak for themselves

For the year ended 31 December 2021, L’Oreal’s brands grew by 16.1%, nearly twice that of the global beauty market. Sales was up 15.3% vs prior year, with profits up 29% vs prior year.

The group reported double digit sales growth in H1 2022 at 20.9% increase YoY.