Wednesday, May 29, 2024

Obsession with ‘closing the loop” is driving marketers towards retail media

Guest post by Tom Goodwin,
Business Transformation Consultant

Tuesday, April 23, 2024

By Tom Goodwin. An industry is being forced to spend money closer and closer to the point of sale, not because it’s best to spend it there, but because it’s easier to show clear attribution.

The obsession these days in Advertising and Marketing is “closing the loop.”

It’s daft.

– Here I am watching TV ads for Tide, and not immediately going online and buying it.

– Here I am, hearing about Crunch gyms on the radio and not immediately joining one, because they are further away.

– I’m reading about Patagonia and I didn’t perform a search on the brand this week.

– All these ads are, in modern thinking, totally useless and a waste of money.

For a while Marketing has been driven into the ground because of shortermism, the idea that unless Ads or Marketing create immediate impact, it’s no good.

And we can defend this because if most CMO’s tenure last 2-3 years, there is a vulnerability in ONLY altering metrics like brand awareness and health that make take years to impact sales, or worse still, may only sustain them or allow a price rise to go through without impacting demand.

So most CMO’s do sensible things, like balance short term performance with long term health, they water the Grape Vines and pick the Grapes and make and sell the wine.

But “Closing the Loop” has turbo charged this.

It’s now more important to claim success than create it.

Any sale thats not attributed to something you did is seemingly discounted.

An industry is being forced to spend money closer and closer to the point of sale, not because it’s best to spend it there, but because it’s easier to show clear attribution.

This is what’s driving the drive towards retail media, the degree to which data can show that the loop is closed, that the “ad worked” and to attribute 100% of the sale to the sponsored placement.

It’s absolutely bananas.

Brands are paying a fortune to ensure people click on the first paid link for “American Airlines” rather than just picking the 1st result as a free organic link. And they are happy to, because these ads appear extremely “valuable”

If we are honest.
– last touch attribution is rather daft, because it suggests that a decision to buy anything is the result of the last thing we did, which makes no sense. I’m buying Colgate because I trust it, not because it’s suggested.

– Closing the loop is generally a pointless task because most results of ads happen a long time after and far away from the ads. To focus on what we can see, means we ignore 99% of data trails that we can’t.

– Multi touch attribution is a sophisticated solve, but despite complex sounding methodology, is statistically impressive pseudoscience.

Retail media isn’t a “good” or “bad” idea per se.

But it’s likely to explode in growth, ( far more than this chart suggests) and take away from traditional media, entirely because of it’s ability to APPEAR to be creating success.

It’s like putting ads for Beer in pub toilets and thinking we’re driving beer sales. Life is more complex than charts will ever show.

Retail Media Growth

Published on Tuesday, April 23, 2024 at 2:31 PM

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