A lot of people are tired. They’ve grown weary of the lack of business certainty that the ongoing unpredictability of Covid-19 has wrought. For retail decision-makers, the past 18 months have been full of twists, turns, and massive challenges. But what could you expect from an unprecedented global health crisis impacting every single aspect of our lives? The ongoing Covid battle has put many folks on their back foot again.
The retail industry, in particular, has been losing sleep of late due to Covid’s negative impact on foot traffic and the disturbances in the supply chain, which have diminished inventory and caused prices to spike dramatically, throwing Q4 holiday season marketing budgets and schedules into chaos. With this pandemic, it seems that every time we feel close to getting over the hump and back to pre-Covid normalcy, we are hit with a new challenge with a merciless virus that refuses to go away without a fight. The anxiety and fear are normal. But through the fog of uncertainty, there are many reasons to maintain calm and stay the course.
Retail is alive and poised to thrive beyond its current level. The good news is it has never been more ready to innovate and embrace digital as the key element to fuel its success. Bricks-n-mortar is and will remain a key pillar to brand marketing strategies. Take a look at the aggressive efforts of brands like M&Ms and Lego. Both of them have made sizable investments in reinventing their physical stores into experiential destinations. M&Ms opened a 24,000 sq. ft. store in Minnesota’s Mall of America while Lego in 2021 alone launched over 100 new stores. Even digital natives like Warby Parker have acknowledged the critical importance of physical retail in their growth plans.
E-commerce is the new shiny toy because it fits our immediate gratification society in which we fantasize about finding the perfect product available and delivered quickly and at a cheaper price. The reality is that an online purchase comes with more and more disappointment from a consumer perspective and with greater risk from a brand’s standpoint. Where we thought online commerce was limitless, it is actually as limited– if not more – as its physical cousin.
Bricks-n-mortar and online shopping are both important elements of an evolved brand strategy. The combined entity needs to fight for customer satisfaction, a stellar reputation, positive reviews and churn rate improvement using as many tools as possible. Every brand will have to figure out how to combine both and what is the role for each of these two worlds.
If the pandemic taught us anything, it is that Digital Data should be applied to the consumer journey in a manner that prioritizes privacy-compliant consumer insights. The benefits should accrue to brands before, during and after campaigns with advanced targeting, ad spending efficiency, and channel optimization. The ultimate goals remain Desirability, Profitability and Longevity. Selling a desirable product to someone who won’t get it for months and losing money on delivery costs in the process is not sustainable. For E-Commerce or in Bricks-n-mortar, the success is related to Location and Reach.
The alleged diminishment in customer engagement at physical locations dovetails with the increasing challenges in targeting these people on mobile to drive traffic due to Apple’s ongoing deprecation of audience identifiers on iOS. But what’s truly dying is digital advertising’s overreliance on third-party identifier-based audience targeting driven primarily by Google’s Chrome cookie as well as Apple’s IDFA. As consumer privacy protection has become paramount, our business can no longer sit back on cruise control driven by programmatic era IDs. We must actually take a firmer grip on the wheel and steer our offerings down a more thoughtful, sophisticated path that puts the role of data and technology in the proper context.
The recent release of IOS 15 is the latest iteration of Apple’s privacy-first approach but that doesn’t mean retailers can no longer target and engage with customers in a personalized manner. What it does mean is that we need to return to traditional statistical modeling updated for the age of audience targeting. Fewer consumer signals on a smaller scale will require new sophistication to extrapolate targeting capabilities using asymmetrical data sets. By emphasizing device and geography signals, new statistical media mix modeling can be executed effectively. I’m confident that this will yield just as much efficacy as the cookie and the IDFA.
At the end of the day, less addressability does not necessarily have to mean less return on advertising spend. I predict that incremental reach based on advances in linking digital messaging to actions taken at physical locations will become the centerpiece of how retailers measure success in the retail advertiser attribution model of the future.
Originally published on Advertising Week.