The great irony of Retail Media is that the availability of granular EPOS and first-party sales data elevates it above all other media when it comes to measurability.
And yet, talk to CPGs (and RMN operators) and you will quickly encounter a measurability issue.
And within CPGs, you will find two entities, sales teams and brand teams, separated by a common measurability problem.
The sales team think retail media should be measured on its ability to drive short-term sales uplifts.
The marketing team (and their agency partners) want to track audience engagement metrics and to compare these to media alternatives.
And yet neither metric, even if perfectly measured, will inform the question that everyone within a CPG organisation needs to know – namely, what activities drive brand growth?
Without this, the proper allocation and prioritisation of marketing and other resources into the activities that matter becomes more or less guesswork.
So what does drive brand growth?
The answer can be found in the marketing science of ‘How Brands Grow’ by Byron Sharp. Whilst the laws that Byron and the team at Ehrenberg-Bass Institute described have been understood for decades, and whilst over 30 CPG companies sponsor their academic research, few seemingly apply these laws to their retail media, traditional media or category management growth-driving activities.
‘How Brands Grow’ shows us that the key metric of brand growth is customer (or shopper) penetration (within a market, or within a retailer) and that there are three drivers of brand penetration (brand proposition, physical availability and mental availability).
These growth components need to be measured (and managed) holistically. But very few brands do this, and the key problem is organisational.
Within CPG companies, growth is the responsibility of everyone and no one.
Brand teams are responsible for brand propositional elements (eg. taste, smell, colour, efficacy, pricing strategy, etc.) and driving mental availability (via brand assets, creative messaging and media choices) whilst sales teams tend to be responsible for physical availability (as well as the key propositional elements of pricing and promotion execution).
Teams measure their own activities and mostly use proxy measures rather than linking them to the key outcome that really matters, i.e. brand penetration or new user growth.
In doing so, unfortunately, they lose sight of the whole and especially the interconnectedness of the components.
This is the challenge we have set about solving.
What matters most between media (traditional and retail), category (distribution and presence), and brand attributes and how do they interrelate?
This requires very granular data, the application of media mix modelling techniques to this data and business knowledge straddling category management, retail media and traditional media.
By understanding the relative and absolute importance of physical availability, mental availability, and brand proposition strength to overall brand growth, CPGs can properly allocate resources to the highest-leverage activities.
And the good news for retail media is that, almost certainly, it does a better job of this than traditional media, given its ability to grow physical and mental availability concurrently. The only media that can do this.
