DGMN's Austin Leonard - Scaling Retail Media Across Small Town America

Austin (00:00)
I'm Austin Leonard, VP and GM of Dollar General Media Network, and you are listening to the CPG Guys Podcast.

Sri (00:06)
Hello and welcome to the CPG Guys Podcast. I'm, of course, Sri, your co-host and also CRO and co-founder at ThinkBlue Consulting, your trusted partner in your Omnichannel development journey, where you can get in touch with me at Sri at thinkblueconsulting.co. Please do listen to my older daughter's music at www.rhearaj.com and follow Lara Raj, my younger daughter is a member of the world's fastest growing global girls pop group. Katseye who has just come off a clean sweep of the AMAs. Three nominations, three awards, and today we are recording live from Cannes.

This is the first in a series of 10 podcasts. We're actually going live here at the show. And unable to join me today is my co-host and co-founder, PVSB, who also moonlights as head of industry and client engagement at Flywheel, the Commerce Acceleration Division of Omnicom. He barely got in from the United States, so you can expect him in all our other podcasts. Make sure you're subscribing to our podcast on your preferred listening platform, where you can get our latest episodes, even go back to consume some of the 600 plus episodes we've already published.

And of course, you did listen to our Fortune 500 C-suite series, didn't you? Which featured CEOs, CCO, CMO, chief growth officers, and so much more. If not, follow the tale of the last 10 episodes that ran late May to end June. And now let me get to our guest. From where we are, we're looking out of the Croisette and doing just fantastic here in Cannes. There's a massive transformation happening at the moment, where everyone else is aggressively fighting over the urban suburbs, while Dollar General

Is sitting on an absolute gold mine, quietly dominating small-town America with over 21,000 physical retail boxes and growing. Marketers are starting to realize that if you aren't machine readable for the AI algorithms but hyper-local for the actual physical neighborhood basket, you're completely leaving money on the table. So as you think about leaving money on the table, we're gonna get into a lot of that today and figure out what can actually be done. And I have

Austin Leonard, let me tell you something, folks. Having the Vice President, General Manager of the Dollar General Media Network live on the show here inside our beachfront studio at Can Lions is an absolute blockbuster milestone for the show. If Peter was here and his analytic brain would be turned on as always, today he'd say we're digging straight into how platform went from traditional offsite execution to creating an absolute physical digital loop across the entire last mile of America. So

Folks, you better believe it to help us cut through the noise, find the true commercial signal. We're joined live at the law residence of the CPG guys by a legendary retail media pioneer who I've actually known for quite a bit. Publicis, Epsilon, Walmart, eBay, that's all in his background, and now he's leading the definitive change to connect global CPG brands with one of the most underrepresented high-frequency shopper bases in the country. Join me in welcoming the CPG guys.

Austin, welcome again. This is your first time short of a season stuff going on. Welcome to the show.

Austin (03:02)
Wow, Sri, what an intro. That is how you welcome a guest to a podcast. I love to hear that. First of all, let's take a step back. Can you believe that Dollar General and Dollar General Media Network, or at Cannes, can you believe that we're here on in La Residence? Of course. It is the first time we've been here. I'm very excited that Tony Rogers, our CMO, and I were able to make it happen with a lot of support from HQ. But DG has made it to CAN.

Sri (03:25)
Tell our audiences, Tony Raj has been on the C P G guys.

Austin (03:28)
I believe he may have been episode number six hundred on the nose.

Sri (03:31)
Six hundred indeed, man.

Austin (03:33)
And I think I'm getting close to the letter jacket. So I

Sri (03:36)
Ouch, okay, we can start planning.

Austin (03:38)
don't I don't need that anytime soon. Maybe as we get closer to the fall.

Sri (03:42)
We will keep our eyes on that one, man, but welcome to the show. You know, with you I had no doubt that you guys would have a presence here, not just here, but a possible like all the big events. So no surprise whatsoever. And I think you have a special something going on later tonight that we'll look forward to, which of course there'll be pictures, videos, and somebody's promised me a picture with somebody. So you know I gotta send that to my kids and

Austin (04:02)
Absolutely. So of

course. Well, because there's always going to be a musical background for you. For us, we're excited. We we actually have Third Eye Blind playing the Dollar General Semi-Cannes kind of life concert tonight in partnership with our friends at Cusick, Doordash and Keval. And we are super stoked to come in with a different type of approach, but

Sri (04:23)
Intimate a hundred and twenty people?

Austin (04:25)
That's one

people inside, maybe a hundred outside, but very intimate with a a band that is gonna rock the the place.

Sri (04:31)
So the big question are the C P G guys in the inner hundred and twenty or we the out?

Austin (04:35)
I didn't think I'd be allowed back in La Residence on Wednesday for our big event, the most important event

Sri (04:40)
He gets

the plot. eh

Austin (04:43)
you guys were not on the inside, but of course she was in the inside my sort of

Sri (04:45)
Looking

forward to man. Thank you for having us. Thank you for joining me today. For our listeners in the digital line of notes of this episode, we'll include links to Dollar General's company corporate website for our listeners to access while we go on with our conversation. And of course, Austin's LinkedIn profile. Austin, let's jump right into it. So from off site execution to online domination, as I mentioned, when DGMN first launched, the teams did a masterful job building audience data models to execute campaigns almost entirely off site because the app wasn't natively like a big e-commerce thing.

But since the massive nationwide scale up of one piece same day delivery, which you guys have totally got into last November with Tony's blessing, your on-site web and mobile traffic has absolutely, I would say, exploded completely. How's this massive traffic surge fundamentally shifting your product roadmap from the offsite performance we discussed so much to high margin onsite?

Austin (05:35)
Yeah, so let's go back to the first thing you said. So we were built as an off-site first media network. And that is primarily because uh we uh our experience on the digital side was built for an in-store shop. And and the app was built as a tool to help our shoppers be able to navigate our stores, find coupons, incentives. And what has been exciting for us is as the digital engagement of our shopper has grown, and again, keep in mind we have over a hundred million addressable shoppers within DG Media Network.

Sri (06:02)
joke man. That's a

big number.

Austin (06:03)
And fifty percent of the of the shoppers that go to the app, they visit a store within 48 hours. So we're still very highly digital engaged, whether it's an in-source shop or an online shop, but the ability to bring the last mile of e-commerce to the last mile of America or same-day delivery to now 18,000 plus dollar generals has absolutely been a a driver of the business and allowed us to bring more capabilities online for our brands on the website.

Sri (06:28)
Congratulations. We look forward to further growth. I'm sure your presence here can means even more growth for all of you. I want to jump a little deeper into contextual search, the taxonomical resets, etc. So as you mentioned, Tony Rogers mentioned that search is becoming an entirely different animal on the Dollar General app as you mature as an omnichannel player. You said that on a show. Episode 600, we're moving past a customer basically typing party favors in a keyword to contextually asking things like

I'm having a birthday party for a bunch of eight year olds. Tell me what I need to get. What are the back end ad product transformations that you guys are working on to actually allow for this shift so that the consumer can get what they're asking for?

Austin (07:09)
Yeah, so

Going back to the baseline of the app was built for the in-store shop. It's been as a tool to help shoppers be able to find products in-store historically. So we've actually rebuilt our entire algorithm to make sure that we're leveraging all the signals both online and in-store to be able to deliver the most relevant search experience. And that tailors back into the paid search experience as well. It's organic. So what we're thinking primarily about is how do we tie this as a tool to make the experience better, both for our customers and also for our advertisers? The thing that was crazy to me when I started.

tree is the biggest feedback I got was not about the the actual it wasn't about measurement it wasn't about the actual execution of our campaigns it was actually about hey if if you want us to invest more on in your app and on the website we need the experience both paid and organic to actually feel more like a digital experience and so we've made uh some huge strides in some big investments to to really upgrade that

Sri (08:04)
Awesome, man. We're looking forward to seeing all this play out in the marketplace. And then preparing for the fall subscription five wheel, what I'm thinking is Dollar General has announced a massive retail subscription program. Tony mentioned it again on episode 600. That's coming out in the fall, making delivery free. There's going to be a ton of new consumer benefits. the thing we think about is subscription models and retail inherently capture like a fierce, I would say a loyal, high lifetime value consumer.

From a media network perspective, how are you building exclusive high impact ad packages or specialized audience segments to let brands actually target this particular locked in subscription cord right off the bat? Because brands are gonna be hungry.

Austin (08:44)
Well I think the the underlying part of of where we're gonna be going with with

subscription and a loyalty program is my DG rewards already and the MyDG program. So that is how our customers can actually tap into the entire experience, how they can make sure they get the right coupons applied digitally and in store. And so that'll be part of the fuel that will drive that. We're doing a lot of work with our partners to figure out how do these different mechanisms come to life and how do we make sure that it's bringing value to the customer. And from a MyDG loyalty and reward standpoint, we're we're excited about the the partners that are leaning in there.

Sri (09:16)
That's awesome. So can brands assume that day one, as the subscription program is launched, very quickly you guys will ramp up and they'll have the ability to actually access that audience?

Austin (09:27)
So I think that's I think that's T B D. we're we're seeing is a lot of great growth in My DG delivery, our first party delivery. And I think the important part is that we we wanna see obviously, does it have the scale and does it have the the actual growth that the brands are gonna be looking for? But it's a part of the overall ecosystem. So I think we're we're gonna have some some interesting ways to partner.

Sri (09:46)
That's awesome. Great to hear, man. So let's jump into the 100 million first party substrate that you already discussed, right? The Dollar General Media Network sits on a mountain of direct 1P shopper profiles housed through your partnership with Bridge. But unlike your big box competitors who deal with highly suburban or urban data, 80% of your twenty-one thousand plus stores are in communities with fewer than twenty thousand people,

How does this hyper rural often sold retailer geographic footprint allowed DGMN to provide clean, deterministic attribution that completely avoids the audience overlap and data duplication that plagues traditional programmatic buying in our industry?

Austin (10:25)
I think

The most important thing to start with is that that footprint that we have, again, 80% of the stores are in rural markets. That means that we have very unique audiences. We have customers that are hard to reach in some of the traditional digital and linear channels, but they're very engaged. And so we're a part of their community and we're bringing the ability for them to engage. We also have obviously almost 4,000, over 4,000 stores in suburban and urban markets. So that allows us to have the scale as well as the unique reach that brands are really looking for. And that's been a really big driver of.

business overall, you can't reach a national buy or a national audience without having DG because of how big the US is and how overserved I would say the major urban centers are and how underserved the rest of America is.

Sri (11:10)
No doubt about that, Arsen. So on the CPG guys, we love talking about the difference between card swipe reporting, which is your traditional credit card data, and true business incrementality. Tony shared an incredible stat from a recent joint campaign with Unilever where they saw 2x higher incremental ROAS relative to benchmarks, and a full third of purchases were completely new to brand. When a skeptical agency media buyer challenges you on incrementality,

How do you use closed loop data to mathematically prove that you're driving net new volume rather than just claiming credit for like an unavoidable registering that happens?

Austin (11:44)
Well, first and foremost, we are now a member of the IAB over the past year, which is really we follow the IAB again.

Sri (11:50)
you I had

no doubt all the right things.

Austin (11:52)
happen. Well listen, the business foundation is there and helping get to the next level is something that they've really empowered me to do, which is I'm excited as the the team that we have is is doing a great job of of supporting that. And I think the important part from a measurement standpoint is that it's always been built with the IB retail media measurement standards in mind. We we use testing control with true holdout measurement so what IB calls the gold standard. So we feel very strongly that as we have continued to build capabilities that we're building the right tools that will allow us to help show the lift and

in business that we're providing.

Sri (12:24)
And what's the early feedback you're getting on incrementality from brands?

Austin (12:28)
So we've got strong incrementality on most of our programs. it's obviously the I think the the thing in retail media measurement that's important is that not every campaign is is going to always be a positive one. So we like to actually share the results and our benchmarks for incrementality and in traditional ROAS are are they moving the business forward? Are we driving the right amount of traffic? Are we actually delivering new customers and new product sales? And that's a big part of what DG is overall in the ecosystem, is we are a customer acquisition model.

Twenty one thousand points of distribution, that's a big part for the brands.

Sri (13:00)
Yeah, and we've talked about one P delivery now having unique data. So looking forward to all of that. A reminder to audience that I'm speaking today live from Cannes the festival.

Right here at Cannes France

Austin (13:11)
Believe it.

Sri (13:12)
Austin Leonard, GM and VP of Dollar General Media Network. So moving on, I would really want to get into the in-store audio revolution that's taking place led by y'all. So your massive new partnership with QSIC to spin up one of the largest in store digital radio networks in the country is being really heralded by everybody. In store audio has historically been treated like a background noise, you know, like a legacy operational.

announcement tool is the word that comes to mind. How are you guys turning this into a dynamic, programmatically addressable ad product? Can a CPG brand sync the offsite streaming digital audio directly with the real time audio trigger in the physical aisles with a shoppers actually holding the basket, for lack of a better word?

Austin (13:57)
So I think first and foremost that it's a it's a great fit for our format. Our our average store size is 7500, 8500 square feet. And when you have that store footprint, you need to have tools that can reach those shoppers. And audio, you can cover our stores with fewer speakers than maybe some of the big box stores, but you can also do it in a way that actually leverages the and enhances the shopping experience. And so that's first and foremost. You gotta have coverage, you gotta have scale.

And the second point is what you just said around you actually are we're bringing the e-commerce digital measurement and the programmatic capabilities that all of our partners have gotten used to on the on the digital side and on the e-commerce side. We're bringing that into how we're executing these campaigns in store. So very basic, like the way that most in-store audios has been run historically is like you you bring

Build your list of stores, you run the campaigns, you pick your slots. We've flipped the model on that and said, Hey, which products you want to advertise and what's your goal? We'll build you a plan using the AI media planning tools that we have built in the platform. And DG in store radio network will be able to then decide what is the best store for this for your products and what's available, what's actually available when that's running to make sure that the product is available on shelf, what's the best time of day for your category? And then from a measurement standpoint, that targeted

it is. Yeah.

And and so instead just saying you're buying across 12,000 stores, is what is the right 5562 stores that you want to actually be in and that we're seeing the best engagement and lifting for your product specifically because the measurement part is the other key part. You we're actually measuring it in flight with real closed loop reporting. Fabulous. And then afterwards we can still do the big incrementality test that allows you to do market match testing and show that this is having a lift versus the stores that don't have the ads.

Sri (15:36)
Awesome.

So when are you and I going in store to listen to the radio network?

Austin (15:39)
Brooke

you tell me when. we're both traveling a lot. There there aren't any DGs in Cannes, but I think when we get back to the States. We get back, man. I think maybe the end of July we might be in in a great market for for DGs. Looking forward to it. Ithaca, yeah, I think I've heard of it.

Sri (15:54)
Actually

on the you can see right behind us on the video here, Austin's referring to the Omnicommerce Leadership Program with a media focus. Austin, here's the cool part. The graduating project, or for the students to get their exec ed certificate, they have to build an agent to incorporate media into JBP. Yeah. It's gonna be a good one.

Austin (16:16)
It's phenomenal. I'm so excited. Yeah.

Sri (16:20)
So your insights team led by Angela Martin tracks two very distinct customer archetypes. Your core value driven shopper who's stretching every single cash flow dollar, a fast growing segment of trade in, suburban consumers looking to maximize convenience. How does DGM and let a brand dynamically flex its creative assets across your self serve platforms so that they can serve value based coupon stacking messages to one cohort and convenience and premium tier messaging to the other?

Austin (16:47)
So I think the growth in digital has allowed us to expand out the capabilities for on-site audience targeting as well as the ad formats. the first step is making sure that it's obviously flows in the customer experience. From a creative standpoint, we've built out the ability to make sure that if you want to serve to a different audience, you can obviously use traditional audience targeting. We also have built into what we're doing from a search algorithm change the incentives and the coupons are built into that because they're such a part of the natural experience that we want to make sure that those offers

Flow through. So we've got traditional display. we've got some other formats that we're launching, but the ability to actually flex based on the job to be done is something that we're very focused on because we know that with the growth of delivery, we're seeing a lot of that trade in shopper. We're acquiring new households far different than our traditional households. And so the higher income bracket, they are a very interesting customer acquisition for our brands. But our core customer, obviously, we want to continue to serve them and make sure that they're getting what they need as well.

Sri (17:44)
Awesome. Good to hear, man. So one of the most fascinating organizational structures at DG that is your team doesn't sit in this separate media thing going on on the side, but inside marketing, reporting all the way up to the CMO, Tony Rogers, who we of course we've had on the show. And you're all housed under one executive leader, which I gotta think is a great thing. In most legacy retail environments, these are separate what I would call fiefdoms that y'all have eliminated that fight for control.

How does this unified layout give you a speed to market advantage when the brand won't spare with their national enterprise marketing dollars directly with targeted retail media networks to create a one plus one is equal to three as opposed to standard two?

Austin (18:23)
the key thing that Tony and I love to talk about is there's fewer silos. So Tony owns enterprise marketing, DG Media Network, and the digital experience. So as a team, we work very closely together to how do we enhance all of those and ultimately drive more sales to DG to fuel the entire business. And because we report up into the COO, the Chief Merchant is Tony's peer. So we've got Chief Marketing Officer and Chief Merchant Officer in all these meetings together, partnering to help make sure that not only are we doing the right thing.

For the customer, but the experience continues to get better and that we're delivering value across those. So, from a basic standpoint, we've been able to build integrated marketing programs with enterprise marketing faster. We've been able to integrate into the DG.com and app experience in a very different way. And it does allow us to sit down with our partners and say, hey, what do you want this to be? And instead of it being a long, drawn-out process, we can actually move very quickly to execute programs.

Sri (19:18)
That's awesome. So DGMN was built on a highly successful managed services model a while ago. You're now aggressively scaling up your self-serve capabilities to give enterprise agencies the keys to the kingdom so that they can do stuff themselves, get curious, get inquisitive, get ROI measurement, things of that nature. As programmatic bias demand more and more of the self-service execution, how are you ensuring that the software integrations maintain the necessary governance that's required?

clean room privacy, which I gotta think is paramount these days, and simplicity.

Austin (19:51)
So think first and foremost, the table stakes is that we need to be able to help support the brands however they want to buy. So we have a great managed service team that allows us to run campaigns. It's actually the same team that runs our enterprise marketing campaign. So that's someone that has experience with hands-on keyboard, they know a lot about the DG audience and the advertising tools. But from a self-service perspective, we actually partner with Libram. And so they have through Safe Haven, we have the ability to set up custom clean rooms, do some interesting data collaboration that allows us to actually partner with multiple platforms.

Including the Trade Desk, DB360, and Yahoo, so that if that's where the brands want to buy, we can get them, whether they're custom audiences, syndicated audiences, or something even more unique, we can actually help serve them where they want to buy. We've also done a really cool integration with our with between Keval and the Trade Desk, where we can actually have DG.com inventory flow into the Trade Desk. So if they're buying and doing their off-site buy.

programmatically, the vision is that they'll also be able to buy DG.com inventory in that same offsite buy. It allows you to have the frequency, the audience targeting, the reach, and the measurement all in the same place. We're gonna we've been testing that with managed service buys to start because it's a huge efficiency gain for for my team just getting those campaigns off the ground. But I think it really solves on some of the promise of retail media, of being able to make sure that you can actually deliver a better creative experience offsite and and navigate into the onsite experience in a way that it actually

drives more value for the for the brand advertiser.

Sri (21:18)
How cool is that, man. I'm sure brands are getting excited. Doing this especially manage

Austin (21:21)
They are they are they are very excited.

Sri (21:24)
to self service all the entire ecosystem you described, including all your partners. What a big plus that is.

Austin (21:31)
It it is and they're very excited about it. They they've been asking for it and there's still plenty of the brands that say, Hey, we we still need your help to use the managed service, but the goal is that however they want to buy, that we can give them access in that way.

Sri (21:43)
Understood. So let me wrap this up by asking you a important one. Tony had stated that the ultimate North star is to turn the sixteen million monthly active users inside my DG into sixteen million individualized marketing journeys, dynamically guided by the next best actions. So to close us out, what is your forward-looking vision for how AI will let Dollar General Media Network automate the generation of millions of what I would call distinctive creative variations so brand can scale.

personal consumer conversions down to individual households when the time comes.

Austin (22:14)
where I believe AI will help us is really fueling that journey for personalization. And the promise of being able to deliver that across all the different shoppers, across the industry, not just the DG, has been almost there. But in order to actually do that in a really scalable way, you actually need the technology to move as fast as we want to move. So instead of just talking about these great journeys, you can actually have them deliver. So next best action, those journeys are already mapped out for how we see that the customer engaging.

how we think we can help them find more value by shopping with us. And from an AI standpoint, we believe that that'll also help us with audience targeting, the creative delivery, the measurement, and most importantly pulling out those insights to help show how it's doing that. Not just, hey, here's the end result, but understanding why that personalized journey is happening.

Sri (23:01)
this is awesome. Let me remind our listeners, you can find all of our content. All you have to do is go to a web browser, type in cpgguys.com is the URL. If you know someone or has something to contribute on this ongoing discussion, please drop us a line at reach us at cpgguys.com. That's R-E-A-C-H-U-S at cpgguys.com. To all those listening in, thank you for the clicks, likes, comments, direct messages, meeting us at trade shows, coming to our events, recording episodes with us to the extent of 600 plus.

And to all our sponsors, we're always eternally grateful to you. The show doesn't exist without all of you. You work with us all year. We're grateful to have you as audience and partners. Thank you. Austin, thank you for doing this live from can. We're looking forward to later half of this week when we have events going on with y'all and we're looking to, see what podcasts come out of that as well.

Austin (23:50)
C'était très fantastique. Thank you for having us here. We're very excited and can't wait to have everyone jump on the bandwagon.

Sri (24:00)
And that's a wrap of this episode of the CPG Guys.