Table of Contents
Bryan Gildenberg
There is a massive conversation in the retail industry today about “integrated joint business planning” as retail and media converge. In reality, retail as media means there are two different business plans that bend in different directions that need to come together — the joint media plan and the joint business plan (JBP). These plans are driven by teams with different definitions of success, vocabularies and ways of working, and the plans themselves are constructed to accomplish different things — the commercial plan is aimed at jointly increasing category sales, while the media plan is primarily aimed at identifying areas of growing advertising spend to drive a lower cost for that identified advertising spend.
Account team leaders will need to be “double jointed” to survive a future with more integrated planning. This double jointed approach needs to start with a common approach to the problem — rooted in uniting these two worlds. Oftentimes, instead of getting more complicated it works better to go back to simpler and more essential questions … so consider this the guide to being double jointed as we approach the world of integrated media/commercial planning. Instead of jargon we start with the basic questions — where, how, what, how much, who and when?
Where? Retailer prioritization models
The first question we should tackle is “where to play” — which retailers are the strongest double jointed plan candidates? Today there are two separate strands of retailer prioritization that need to become better integrated:
- Commercial prioritization — Most large brands have some sort of customer segmentation model that prioritizes commercial resources. Sometimes these are relatively unstructured, and sometimes a top-six consulting firm has been paid millions of dollars to define them. Generally they’re all pretty similar and assess three critical variables:
Size — Scale matters in commercial management.
Growth — Commercial plans are all rooted in dollar growth (we’ll come back to how important this is later).
Strategic fit —: A set of criteria that usually revolves around profitability, collaborative willingness and category-specific opportunities.
- Media prioritization: In addition to sheer size, there are a number of third parties today providing capability-based views of retailers’ retail media platforms. Two of the better ones are driven by the Path to Purchase Institute and Mars Advertising. These generally review the retailer’s skills and available advertising platforms related to:
Advertising tactic availability.
Audience size and quality.
Measurement capability.
Conversion areas:
Strategic fit — Find retailers that maximize category growth potential, commercial collaboration and media capability best.
Growth — Media teams need to understand the growth map for the brands they sell to.Where does projected brand growth overlap with media capability development?
Scale — Retailers with commercial size have audience size. And audience size is one of the most vital elements of retail media planning success.
How? Holistic negotiation planning sessions
Like all of these points this could be a whole section on its own, but useful to remember the frame of reference difference between a commercial JBP (joint business plan) and a media one. Commercial JBPs come largely out of the sales organization and are topline sales wired – many have an account profitability component but the sales organization’s primary accountability to the organization is topline growth. In a return on investment equation, commercial joint business plans are focused on growing the numerator – and the approaches commercial teams will take to win are usually rooted in topline growth.
The media JBP tends to be cost/incentive focused and quite often these teams will maximize an ROI based on trying to shrink the denominator – to accomplish the same task for a lower cost.
Conversion area:
The new planning approach needs to unite numerator and denominator centric thinkers into an understanding of how the other solves problems.
What? Category Outcomes vs. Brand Outcomes
A media JBP will have a variety of objectives around vehicles to be used and jobs to be done and the commercial objectives will usually be tied to the performance of an individual brand. The commercial plan is almost always framed in terms of category growth — the merchant at the retailer is accountable for growing total category sales, not simply switching one brand for another.
Conversion areas:
Omnichannel market share strategies critical — so often in the digital world money needs to be spent to maintain share of the digital shelf in retail media, not just grow share. The digital shelf requires that share investments be refilled, not just harvested.
Category growth platforms — media teams need to immerse themselves in the brand strategies that are category growth accretive — these are the ones that lend themselves best to a “double jointed” approach.
How Much? ROAS vs. RGM
The retail media world is fueled primarily by one foundational metric — ROAS (Return on Ad Spend). A relatively simple event-based outcome measure, adjusted back for “attribution” — i.e., we know not all the sales results during the relevant time window are “attributable” to that spend.
The commercial plan’s lower-funnel marketing activity is fueled by an ROI metric on trade spend. A relatively simple event-based outcome measure adjusted back for “attribution” — i.e., we know not all the sales results during the relevant time window are “attributable” to that spend. This evaluation process is usually owned by a function known as Revenue Growth Management, or “RGM.”
If these two metrics sound the same, there’s a reason — ROAS and trade spend are measured more or less the same way, just with different data inputs.
Conversion areas:
Developing better incrementality metrics.
From the media world NTB (new to brand) — A significant shift in incrementality analysis in the media world is understanding when NTB shoppers have been captures. Media teams can/should partner with commercial teams to identify platforms that can best reach new shoppers.
From the commercial world — Two key ideas that revolve around a concept known as “empty calories” (a phrase RGM teams have known for years) — promotions that have short-term benefit but no long-term strategic value:
Pulled forward volume — Ad spend that drives purchase that would have happened anyway
Deal switchers — Ad spend that only gets shoppers who switch based on sales — these shoppers will switch back to another brand when it is promoted.
Who? Clean Rooms and Connected TV
The fundamental promise of retail media is the retailer’s access to first-party data and the ways in which that first-party data can be used. Today, some of that first party data is used for media targeting and some for commercial targeting – particularly at retailers like Kroger with a long history of using loyalty card data to optimize promotions.
Conversion Areas:
Clean rooms — platforms that allow the temporary connection of two first party data sets for a specific campaign/objective.
Connected TV — the promise of being able to tie commercial results (loyalty-card tracked sales) to specifically what a shopper is watching allows the use of the retailer’s first-party data to target TV audiences based on shopping behavior to specific targeted shoppers.
When? The Truly “Double Jointed JBP”
Using all of the conversion areas above, teams can start to build a truly “integrated”, double-jointed joint business plan. That integration will start in three areas:
Specific campaigns — Identify specific jobs to be done within the two plans that can be planned and operated together.
Shared accountability — Teams begin to understand what the other plan needs to achieve, and to plan activities to optimize both sets of results
Capability development — For all the conversions outlined above there is no substitute for making media teams more commercially aware and commercial teams more fluent in the language and objectives of media teams.
Holistic planning meetings — These seem like the starting point, but it might be better to undertake the first three steps first.
For those of you interested in more on double jointed planning, join me and a number of friends at the Retail Cities Double Jointed Planning Event on September 14 in Chicago. Go to retailcities.com for more info on the event.
Bryan Gildenberg is founder and chief executive officer of Confluencer Commerce. His email is bryang@confluencercommerce.com.
