The growth in size and sophistication of Retail Media Networks is proving a challenge for CPG brands in a number of ways and not least organisationally.
At P&G, back in the day, we believed that "all organisations are perfectly designed to achieve the results they do" and so organisational thinking was embedded into our modus operandi. We followed a similar approach at dunnhumby when we considered how we should organise ourselves as we pioneered the deployment and monetisation of data analytics and retail media in the UK's first advanced Retail Media Network.
P&G led the way in the adaptation and deployment of brand and subsequently category management and were at the forefront of the introduction of Customer (ie retailer) Business Units that significantly increased the resources deployed against major retailers.
These teams have evolved to include specialist shopper marketing (mainly focused on instore activation) and digital/ecom teams, often supported by digital agencies, as well as dedicated finance, supply chain and insight teams.
This organisation template has become fairly typical over the last twenty to thirty years for large CPG companies but we believe it needs to be redesigned.
The creation of specialist digital teams possibly made sense when retailers introduced home delivery and this new channel brought with it a need for specialist skills. But increasingly, retailers are merging their commercial teams rather than splitting them out by channel and Retail Media Networks are channel agnostic. And just because a customer visits a retailers ecom site, it doesn't mean they are an online shopper. For many retailers, a huge part of their web visits are from customers who are actually instore and online or are at home and researching ahead of an imminnet shopping trip.
We think that channel specific shopper and digital teams should be merged to create Retail Media teams with a remit to driving growth in all distribution channels.
The key functional capabilities now needed by Customer Business Units are : Category, Retail Media, Insight, Supply Chain and Finance.
Category and Retail Media teams need to work together to drive growth. In both cases this comes from growing customer penetration.
Category teams will drive penetration by achieving distribution, ranging, availability, physical and digital presence, price and promotions.
Retail Media teams will drive penetration by achieving growth in awareness, consideration and customer numbers.
These teams will be highly collaborative as retail media drives physical availability and presence and augments promotional activity such as gondola end displays and price reductions.
Insight teams need to source and deploy the necessary data to measure the above and inform what is, and isn't working. Their key metric should be customer penetration. They should know what factors drive it and the relative importance of those metrics to overall performance.
We think that digital retail media, which requires specialist skills and media buying tools should no longer be outsourced to media agencies who's focus on "performance" risks missing the bigger picture of brand growth of which there are many components. Instead, brands need to build these skills in house or at least govern them via a dedicated Retail Media unit whose focus should be omni channel. Retail Media teams will collaborate very closely with Brand Media teams and agencies particularly on offsite retail media (where, for example, a campaign on ITV X or Channel might be shown to an anonymised but measurable sub set of a retailer's audience, trackable via their loyalty card usage). They also must compete for fair share of the total ad budget. CPG leadership teams will need to think objectively about the appropriate split between retail and non retail media, and combine these with brand, channel and retailer specific investment decisons. Retail Media leaders must be skilled at justifying why they deserve a higher share of overall media spend.
Finance teams need to understand what drives profitable growth and when it makes sense to invest in certain activities because the payback will be large but not necessarily immediate.
Winning with Retail Media is now an imperative for CPG brand owners and we believe those that embrace and master this new model and modus operandi will outperform those who fail to adapt