The disruption the world has seen since early 2020 has forced an already challenged retail sector to accelerate and adapt to developing trends. Those include the urgent need to replace third-party cookies, consumers’ shifting preferences away from brick-and-mortar stores to e-commerce and the revolution of streaming TV as the viewing platform of choice. How can retailers reinvent business models and marketing strategies to thrive in the new normal, or what has become our new reality? Not only have changes to shoppers' behavior accelerated due to the pandemic, they are almost certainly permanent. According to Viant's white paper, “Behind the Rise of E-commerce in America,” 82% of people who reported shopping online more during the COVID-19 pandemic say they plan to keep shopping online with increased frequency once the pandemic ends. This special report from Ad Age Studio 30 and Viant examines the latest issues dominating the conversation within the retail brand marketing community, from social commerce and sustainability to digital out-of-home and connected TV, the rise of retail media networks, the metaverse and the new open web.

GET READY FOR RETAIL 3.0

present

44%

Reactive health management products (e.g., masks, hand sanitizers, etc.)

Shelf-stable pantry items

Fresh or frozen meats (e.g., beef, pork, chicken)

Other

Other fresh grocery items (e.g., fruits, vegetables, dairy)

Preventative health and wellness products

54%

48%

32%

33%

WHAT GOODS THAT YOU DID NOT PURCHASE ONLINE BEFORE COVID-19 THAT YOU HAVE PURCHASED DURING THE OUTBREAK DO YOU PLAN TO CONTINUE TO BUY ONLINE AFTER THE PANDEMIC ENDS?

People-based advertising: The evolving customer and the New Open Web

Many marketers are concerned about what happens when cookies disappear. After all, they were the mainstay of programmatic advertising from the beginning. But let’s face it: Cookies are an outdated technology. They’re bad for privacy, bad for consumers, bad for attribution and ultimately bad for marketers, too. Fortunately, there is a persistent, interoperable solution for the death of the third-party cookie: people-based software. People-based targeting works without requiring consumer log-in and doesn’t run afoul of privacy regulations. It provides accurate, persistent data and even allows marketers to group people into households to manage reach and frequency across programmatic channels. And that includes high-growth channels like connected TV and digital audio. A people-based approach complements the efforts brands and publishers themselves have undertaken to bolster their first-party data and find new audiences. “This is a moment of renaissance for digital advertising and the potential of the open web is greater than ever for marketers,” Tim Vanderhook, CEO and cofounder of Viant, said. “New emerging channels, such as streaming audio, digital out-of-home and in-game advertising, provide new ways for marketers to connect with their audiences outside of walled gardens in moments that matter. We’ve already seen how connected TV has changed the landscape. As the open web evolves with cookie deprecation, marketers should move to a people-based standard. It puts the user first and delivers a better consumer experience.”

Chris Vanderhook, chief operating officer and co-founder, Viant

Beyond measurement: Growing your customer base in the new open web

Tim Vanderhook, CEO and co-founder, Viant

The move away from third-party cookies has led to new personalized solutions that amplify product awareness and customer needs for retailers and brands. Executives from Viant and Publicis Groupe Commerce discuss how a "people-based" approach will inform marketing strategies for brands in emerging channels.

People-based advertising

Emerging channels

Shoppable design

The path to sustainability

Buy now, pay later

What’s next?

Tired:

What are consumers looking for from today’s brands in terms of products and marketing, and how do companies deliver on those expectations? For one, consumers want targeting that makes sense for them; customers who have never bought nail polish won’t care about that week’s special deal. A national retail pharmacy used people-based advertising to promote its back-to-school and beauty products, targeting their shoppers and competitive shoppers based on retail transaction data. As a result, it netted a 19% lift in buyer penetration and $9 return on every ad dollar spent (ROAS), quadrupling the initial campaign goal. Similarly, using the new open web to target new customers rather than existing ones, a multinational tire manufacturer was able to use connected TV (CTV) and online video to reach SUV and ATV owners, driving a 23% lift and a 77% decrease in cost per view.

Using Viant’s people-based data, a children’s clothing brand achieved

its goal for ROAS ($18 ROAS versus its $5 goal)

conversion rate lift

above goal for new customer acquisition

3.5x

162%

E-commerce:

Emerging channels

More than a third of people say they'll be shopping online more often as a result of the pandemic. So, how do we find consumers where they are? Demand-side platforms and incremental testing.

“There’s one thing that ties all emerging channels together: a new dynamism for the new open web,” said Kara Henderson, Viant’s senior inventory partner manager. “Emerging channels give marketers more native and immersive experiences to share, creating an organic fusion of message, content and format—often at a substantial early-adopter discount. But to make this all work, you need to take an omnichannel approach, and that requires working with a partner—like Viant—that has its own identity graph built in. With that, you can go into a campaign with clear frameworks and brand principles but be prepared to use in-flight campaign data to get the most return out of every ad dollar spent. You can shift budget into the channels and formats working best for you.”

Reliable targeting can drive the most valuable impressions, and specialized campaigns should be able to convert those consumers. When a popular footwear brand wanted to target new potential customers, Viant merged the brand’s first-party data with its people-based lookalike targeting, and filtered desktop and mobile ads for those frequent lurkers who hadn’t converted yet. The result was a 12% ROAS and a 99% post-impression conversion.

150%

Global footwear brand results:

lift in foot traffic (store visits)

DOOH is on track to be a $26 billion industry by next year, and choosing the right DSP will help brands rake in their share. “Programmatic buying of DOOH allows a channel that was once used for top-of-funnel messaging exclusively to drive consumers closer to purchase with content tailored to context,” said Henderson. DOOH drove awareness for a plant-based food brand across shoppers at a prominent high-end national grocery chain by promoting product availability to people who lived within a few miles of a store location.

Digital out-of-home

Podcast ad revenue alone surpassed $1 billion in 2021, and it’s expected to reach $2.74 billion by 2025. A leading paint brand was able to drive product awareness to multicultural audiences through digital audio. “Household measurement is crucial for connected home audio,” added Henderson. “Ad-supported audio formats delivered over smart speakers reach everyone in earshot, but a householding approach helps marketers manage reach and frequency at the household level—and attribute sales to the ad exposure.”

Digital audio

“We see CTV ad spend continuing its growth as more consumers are engaging in connected TV platforms and moving away from linear or traditional TV,” Tim Vanderhook said. “At least one CTV device can be found in over 80% of American homes, and CTV ad budgets are expected to double by 2026.” CTV’s power to target customers worked for one national bookseller, which used keyword- and purchase-based tactics as well as geo-fencing to increase foot traffic in its brick-and-mortar location, resulting in 1.8 million in-person visits and a 33% lift in total sales.

Connected TV

Incremental testing is the key to knowing if d-to-c sales are advertising-based or subscription-dependent. A d-to-c toy company used Viant’s Household ID capabilities to determine if its sales lifts were due to recent campaigns, resulting in a $3.58 ROAS.

Direct-to-consumer subscription service

“As Web 3.0 comes into existence with new technologies such as blockchain, it will open up new opportunities in the open web,” said Tim Vanderhook. Brands are already experimenting with non-fungible tokens (NFTs) as well as the metaverse at music festivals like Coachella, a cultural hotbed for influencers and the younger, hipper target audience for these next-level experiences. And for young audiences who may be the first generation of metaverse natives, brands are teaming up to find safer, smarter ways for children to play in these digital worlds.

NFTs, the metaverse and Web 3.0

Amy Lanzi, chief operating officer, Publicis Commerce

Hootsuite reported that more than half of online brand discovery happens in social feeds, and according to the MikMak Shopping Index, TikTok accounted for 10% of all e-commerce traffic. To put that in context, the same index found that Pinterest accounted for 16% of e-commerce traffic in 2020, but that dropped to 9% in 2021.

Social commerce and livestream shopping

“One thing that we know today is that digital has become the preferred way that brands and retailers create customer connections,” said Tim Vanderhook. “That being said, people still crave live experiences.” Brands are paying more attention than ever to design and functionality; stores and apps can’t just look good, they have to work well or brands risk losing customers. They’re doing this by focusing on omnichannel marketing where consumers are driving brand presence, such as with connected TV and shoppable ads. Vanderhook said he sees CTV ad spending continuing in a steep, upward trajectory because some 80% of American households own at least one CTV-connected device, and that market share is too large to ignore. Using machine learning to innovate the shopping experience is also a heavily leaned-upon option. By leveraging behavioral data to create predictive models, such as point-of-sale recommendations for new products, brands can use their digital consumers to inform their in-store policies, and vice versa. Recognizing the interplay between digital and brick-and-mortar is also important. Take curbside pickup for instance, which was a clear winner during COVID-19. “At its core, curbside pickup means that over 70% of all purchases are digitally enabled,” Amy Lanzi of Publicis Commerce pointed out. “You’ve made your list, you went to the app, you’ve done a lot of exploration digitally before even going to the store. And we know now that, behavior-wise, most consumers will actually go into the store to pick up additional items that they forgot when they made their curbside order. The integration and shoppability of both forums needs to be fluid and considered.”

Shoppable design

of American households own at least one CTV-connected device

80%

of all purchases are digitally enabled

70%

Fuel and footprint of shipments Management of emissions and waste at both factories and order processing locations

The supply chain dilemma

Important ESG FACTORS to consider re: the supply chain STRATEGY

Social

Environmental

Governance

Widespread supply chain disruptions have affected nearly every industry, and it has become obvious that it won’t be cleared up anytime soon. Early on in the pandemic, overwhelming numbers of executives—9 in 10—told McKinsey they intended to find solutions to make their supply chains more flexible, agile and resilient. But while improvements have helped, long-term strategies need to be implemented. Nearshoring is often mentioned as a solution, but many companies find that increasing their inventory proves more effective and cost-efficient than building factories and production centers. Increased lead time has helped brands, too, like placing orders on high-demand seasonal products six to eight weeks earlier than usual. Having shipment contingency plans in place has also become increasingly important, such as having a percentage of the product shipped by boat per usual, while another subset travels by air. Of course, when purposeful reduction of inventory and advertised products isn’t done or doesn’t work, that’s when consumers most often feel the squeeze. Passing the costs of back-end production on to the shopper is an age-old practice, but these days when that’s necessary brands cannot afford to gloss over the price increase. Being transparent with consumers about why and where costs are increasing, as well as when things might return to the rates they were accustomed to, will go a long way toward preserving that important customer relationship. Placing an emphasis on environmental, social and governance (ESG) guidelines can also help inform supply chain strategies. Resale and secondhand marketplaces saw a surge in use during the pandemic, in part because of the ability to get purchased goods more quickly, but also because of the increasing awareness around sustainability and reducing carbon footprints. Because of this, brands that place an emphasis on “conscious curation,” or a purposeful downsizing of advertised product, have been able to avoid disappointing or losing customers.

Fair and flexible treatment of employees, particularly those who deal with shipping, packing and delivery of goods Partnerships or contributions made to local or reputable service organizations, particularly those that align with the brand’s products or ideals

Transparency in contracts, both with customers and regarding labor practices Active company leadership in customer-facing interactions (such as email messaging) regarding delays, advancements or disappointments

Fashion retailers make their initial revenue from selling a product, but when they offer circular services like alterations, restoration and even resale, this increases customer interaction with the brand (a win for marketing), increases the life of individual products (good for environmental sustainability) and makes the brand’s green or eco-friendly messaging tangible to everyday consumers. Circularity can also incorporate end-of-wear planning, such as offering ways for the company to recover the materials after the consumer has finished using the product. For direct-to-consumer brands, this likely involves shipping well-worn or finished products back to their source, meaning carbon offsets will be an important marketing point. For brick-and-mortar stores, point-of-sale drop-off locations, such as fabric recycling bins or electronic collection sites, can serve the same purpose. Looking at every part of a brand’s supply chain will help companies decide how best to focus their sustainability efforts, and data and science will help inform those strategies as well. How many parts of your supply chain do you own and directly manage? Which outsourced parts can be reduced or regulated better? How much leverage do you have to be both ecologically and socially responsible with your production and distribution? Depending on your goals and business structure, the biggest target areas to focus on are waste elimination and decarbonization throughout the entire supply line.

The path to sustainability

BNPL helps tip “cart abandoners” toward completing their purchase. Shoppers are more willing to increase their cart size when BNPL is an option.

Unlike traditional layaway plans, the consumer gets access to the product immediately. When installments are paid on time, there are no extra interest fees (beyond those imposed by the consumer credit card company), and no credit checks at the time of purchase.

Consumer benefits of BNPL

One of the biggest advancements to come out of the COVID-19 era was from fintech: the buy now, pay later (BNPL) systems, essentially a point-of-sale loan that allows shoppers to pay off their purchases in short-term installments. Buy now, pay later started in the beauty and fashion sector, but has expanded across categories, and within a short couple of years BNPL is now seen nearly anywhere a credit card is accepted. According to a report by Worldpay, global e-commerce transactions were up 19% between 2019 and 2020, with a solid 2.1% of those payments—about $97 billion—coming from BNPL. A surge in BNPL advertising in 2021 helped further educate consumers on what these payment plans offered, and the payoff has been immense. Some estimates place BNPL purchases to top $1 trillion by 2025.

Buy now, pay later

The pandemic also pushed a more reluctant BNPL demographic into early adoption—the over-40 set. Gen X and boomers, who are sometimes slower to convert to new systems, began using BNPL when their own online shopping increased. One estimate forecasts that Gen X and boomers will account for a huge 30% of the BNPL share by 2025, with more than 8% of that being senior citizens. The ability to use BNPL options both for online and point-of-sale transactions has really opened up the market as well, giving customers the ability to choose how they shop and pay and giving merchants increased flexibility in offerings. There are roughly a dozen BNPL apps, and according to Zip, more than half of BNPL users are dual-apping, meaning they are taking advantage of multiple apps, either for the benefits provided, the alternating pay schedules available or to use the app offered by a merchant they patronized.

You may have noticed that major retail outlets have been building out their own media networks over the past couple of years, and that won’t slow down anytime soon. A Merkle Co. report found that 81% of CPG brands planned to increase their spending on retail media networks this year, and as the owners of so much valuable first-party data their ability to create finely targeted campaigns for any number of advertisers or brands is an exciting prospect. “With buying moving more and more to e-commerce, retail media is a great way to capture shopper marketing dollars that might otherwise have been lost,” said Chris Vanderhook. “It also helps offset the profitability hit caused by free shipping. Retail media helps further personalize the consumer journey and provide relevant advertising at an impactful moment for consumers. No wonder that it’s growing by double-digit percentages.” “Retail media and retail media networks are opening new opportunities,” added Tim Vanderhook. “The massive—and likely permanent—shift to online buying means that brands have to reach customers in a virtual buying environment, right at the point of purchase. This channel helps brands maximize the impact of retail ad spending and to run point of purchase media independent of Google and Amazon.”

With so much new tech hitting the web, it’s an exciting time for advertisers. At the Ad Age Next: Retail conference in April, many brands spoke about how they’ve been adapting, the pain points they’re still reeling from, the upgrades and data points they’re prioritizing and the feedback they’re receiving from their customers. As the retail economy bounces back from its early pandemic pitfalls, remembering the following key takeaways can help keep brands on target:

What's next?

The rise of retail media networks:

Fashion brands know that consumers recognize and reward authenticity, and that merely paying lip-service to important consumer demands like wide-ranging product size and model inclusivity is a losing strategy. In other words, if your messaging talks the talk, your brand offerings better walk the walk.

Inclusivity should be expressed in both message and product

“Retail marketers need to build hybrid consumer experiences and demonstrate return by utilizing and connecting online and offline marketing,” said Tim Vanderhook. “This will help ensure that marketers are reaching more households and getting more conversions, while improving the overall consumer experience. By connecting online and offline advertising, advertisers are able to improve their measurement and effectively track and optimize their media investment and ROAS.”

The future of shopping is a hybrid model

Think of the widest, broadest scope of how consumers could interact with a brand—that’s the metaverse. “The metaverse is a more immersive experience than Web 2.0,” said Publicis Commerce’s COO Amy Lanzi, and a prime example of an entry point brand trigger is sound. “How you sound is really important, whether we're talking about what you sound like virtually or when someone is in-store.”

The metaverse is more than just crazy tech—it’s the full range of experiential

Tim Vanderhook, CEO and co-founder, Viant

The supply chain dilemma

About VIANT

Viant is a leading people-based advertising software company that enables marketers and their agencies to centralize the planning, buying and measurement of their advertising investments across all channels. Viant’s self-service demand side platform (DSP), Adelphic, is an enterprise software platform enabling marketers to execute programmatic advertising campaigns across connected TV, linear TV, mobile, desktop, audio, in-game and digital out-of-home channels. Viant’s identity resolution capabilities have linked 115 million U.S. households to more than 1 billion connected devices and is combined with access to more than 280,000 audience attributes from more than 70 people-based data partners. Viant is an Advertising Age 2021 Best Places to Work award winner and the Adelphic DSP is featured on AdExchanger’s 2021 Programmatic Power Players list.

About Ad Age Studio 30

Ad Age Studio 30 is the creative content arm of Ad Age. Built on the same bedrock of journalistic integrity, Ad Age Studio 30 specializes in multichannel membership content for Ad Age subscribers, as well as custom and sponsored content that resonates with our audience. To partner with Ad Age Studio 30, email James Palma at jpalma@adage.com.

People-based advertising

Emerging channels

Shoppable design

The path to sustainability

The supply chain dilemma

Buy now, pay later

What’s next?

“The conventional is out and the unconventional is in. Decentralization is coming, and it’s coming fast.”

“This is a moment of renaissance for digital advertising, and the potential of the open web is really big for marketers.”

"Retailers have a new challenge where they're planning for a hybrid experience, and that requires an omnichannel experience with flexibility that the consumer's really going to drive. So new emerging channels, such as streaming audio digital out-of-home, in-game advertising, etc."

Tired: The deprecation of third-party cookies is a data apocalypse for the majority of advertisers whose tech stacks relied on inefficient but widespread anonymous, probabilistic proxy identifiers. Wired: The death of cookies opens a path forward to people-based advertising that leverages first-party, deterministic data for brands to develop better, more personalized customer connections—and advertising.

Wired:

“This is a big opportunity for brands when you're able to move from discovery to purchase in just a couple of clicks.”

People-based advertising: The evolving customer and the New Open Web

Shoppable design

The path to sustainability

Buy now, pay later

present

a callout here teekay teekay a callout here teekay teekay a callout here teekay teekay a callout here teekay teekay — Name teekay, title, company

CTV’s power to target customers worked for one national bookseller, which used keyword- and purchase-based tactics as well as geo-fencing to increase foot traffic in its brick-and-mortar location, resulting in 1.8 million in-person visits in a 33% lift in total sales.

DOOH drove awareness for a plant-based food brand across shoppers at a prominent high-end national grocery chain by promoting product availability to people who lived within a few miles of a store location.

If we have learned anything from the previous two-plus years, it’s that the only prediction anyone can make with any certainty is that the future is unpredictable. The retail industry is not immune to that unpredictability. In May, the largest retailers in the country announced disappointing earnings results due to inflationary headwinds, despite robust sales and ad revenue. But savvy retail brand marketers should also pay heed to the other major lesson of this latest crisis economy: Enormous challenges often lead to game-changing innovation—and ultimately immense growth.

UNPREDICTABLE FUTURE, UNLIMITED POTENTIAL