Roundel's Shawn McGahee and EMarketer's Sarah Marzano - How Consumer Behaviors are Reshaping Commerce

PVSB 0:01

Hello and welcome to the CPG Guys Podcast, set at the intersection of commerce and tech. Your hosts, Shri Raja Gopelin and Peter V. S. Bond, explore how brands and retailers engage consumers in a digitally driven world. And now, here are the CPG Guys. Hello and welcome again to the CPG Guys Podcast. I'm your co-host, PVSB. I also moonlight as head of industry and client engagement at Flywheel, the Commerce Acceleration Division of Omnicom. My co-host is the co-founder of Think Blue Consulting, the father of Pop Stars Rhea Raj and Cat Size Lara Raj. Their fans, of course, call him Papa Raj, but to me he's my BFF Sri. This past June, Sri and I attended the Cannes Lions International Festival of Creativity. Today's episode is a recording of a conversation that took place at La Residence, our home on the Riviera. More on that in a moment. To our audience, if you're getting value from these conversations, we have three quick asks. First, subscribe to the CPG Guides Podcast on whatever platform you're listening on right now, whether that's Spotify, Apple Podcasts, Amazon Music, or anywhere else you get your podcast, hit that subscribe or follow button so you never miss an episode. Second, leave us a rating. It takes a couple of seconds and it makes an enormous difference in helping other CPG and retail media professionals find us. We built this community one listener at a time, and a five-star rating is the single best way you can help us keep growing it. And third, follow us on LinkedIn. Between episodes, we're publishing thought leadership, industry analysis, and content you won't find anywhere else, all built for the CPG and retail community you're already a part of. Search CPG Guys on LinkedIn and hit follow, or just click the link in the digital show notes of this episode. Subscribe, rate, follow. These three simple actions help us bring you more of the conversations that matter. Today's episode came from an activation we hosted in partnership with eMarketer. The panel is called The New Rules of Discovery: How Consumer Behaviors Are Reshaping Commerce. It features moderator Sarah Marzano, vice president and principal analyst for Retail Media and Commerce Media at eMarketer. Sarah is joined by Shawn McGahee, Senior Director of Performance and Insights at Roundell, Media Design by Target. Now let's get to the conversation.

Speaker 2:23

I'm just really excited to have this conversation, Sean. You and I have known each other for most of the time. I've been covering retail media, and I've always appreciated your perspective on the industry and where it's headed. I also think it's a fitting way to close out the program given Target's position in the retail media landscape and the role that Roundell has played. So let's start with consumer behavior. It's a theme that's come up multiple times during all the sessions today. You are a retailer and you have visibility into millions of consumers across categories, lifestyles, and shopping occasions. From your vantage point, like how are you guys seeing consumer maybe your change and evolve? Like where do you see threat? Where do you see opportunity?

Speaker 2 2:59

Yeah, happy to share. Just want to thank you for having me, the CPG guys and be marked for the time. I think to answer this question, it's really important to be specific because I guess as Target, we have access to hundreds of millions of shoppers. And many of those shoppers are shopping at other retailers as well, like they're not necessarily distinct, but when they are at Target, they're not distinct. Like shoppers when they are in our environment are there for reasons that they are choosing, whether an Amazon or a Walmart or a CDS or any other retailer choosing that moment. And so what we're seeing in consumer behavior is really specific to our shoppers. And one of those things is uh really a pursuit of holistic value. And so our guests do not necessarily come because they're exclusively looking for the lowest price, they're looking for a basket that includes, let's say, lower price staples, but also something trendy or a creator that they follow on social media that might have an exclusive um release uh within our within our um stores or willingness to pay or they're kind of gifting themselves in this specific area. And so the basket overall is looking for value, but that value has a lot of different flavors and iterations that just think experience is also a part of that value. And for us, we're seeing the emotional experience having more value than just the functional experience, like the baseline of your chills are in stock, you know, like um the cashier is nice to meet. Those are like like the bare bones at this point. And so when a guest is coming to Target, they're they're coming for a break. They're coming uh because they know it's going to be clean and that the uh the aisles are gonna be wider, like they're and that's a part of the experience, that's part of the value uh that they're seeing. I would also say uh we're seeing kind of what we're calling like discovery fluidity, and you know, when we can if we can talk about all the funnel was collapse and all that all this stuff, right? Um, but for a target guest specifically, we're seeing things like the shop, the digital and the in-store experience merging. Um, three out of four target shoppers have the app in their hand um when they're in the aisle, um, and that you know the channel-based thinking um doesn't really serve our guests because then discovery is is incredibly fluid. Um, and so like we're taking those insights, we're applying it to Roundell, um, we're leaning into new um new products, we're seeing within our media that if you add new ad architecture to your agreement, like the sales performance goes up 15%. Um, we're leaning into our digital uh fulfillment opportunities to aid in that discovery. Um but it's but I'll just reiterate that it's uh a tremendous data set, a tremendous amount of shoppers that we're able to see it for. But we recognize that it's a specific, unique to Target experience when they met on it.

Speaker 5:53

Yeah, I think you you hit on so many fascinating components, but I love just the the coming back to the fact that shopping at Target is kind of a special experience, right? It's a fun experience, kind of famously that way, and what a wonderful asset to kind of sit on, right? Um, everybody jokes about going into Target and spending far more uh than to not for bad reasons, right? Because it discovered things they didn't know they wanted. So um great such an asset for you all to lean into. Um a theme that has surfaced a few times today, and I think not just because I can't shut up about it, but because people are actually interested in, is the way that retail media operates on top of retail. You have you're coming up on about exactly a year of in-house at a retailer after um spending a really impressive stent over at Google building up their commerce media capabilities. So now that you've had the opportunity to see retail media from the inside and one of the industry's largest players, what have you learned? Uh, what surprised you? Uh, what do you think the industry is broadly appreciating yet?

Speaker 2 6:48

I'll try to be brief. Um, as you mentioned, yeah, I um uh come to Roundale having created and let Google's return media practice uh pitch that it should be somebody's job at Google to do retail media stuff. And then I have this should be someone's job. And um uh so I got the opportunity to create that job and um lead that business for about four years, and um I knew what everyone was doing um in that in that seat and decided to join Rondell because of the incredible data set that they have. Um I am the captain of the market is undervaluing the unique scale data that Target has that's differentiated across the retail media industry. And the thing that I that I see is that uh we are still undervaluing the retailer data, the shopper data as an industry. Um speaking specifically to Target, we're talking about 100 million shoppers. We have a free loyalty property, so we don't have to model for cash transactions the way another number have to do because it's tied to your mobile number and it's free to join. Um we have a cross-category view that very limited retailers have, and so we can give you insights in the full basket and not just on a specific categories uh performance. And um we are truly on a channel where other retailers, digital customer and their Instagram customer are completely different customers. Uh, but for us, as I mentioned, 74% have the app in their hand.

Speaker 8:19

Yeah, that's amazing.

Speaker 2 8:19

I'm the captain of picking up something from drive up and then parking and going inside the store after right, and so we have a very uh unique on the channel perspective. And even with us in Brownell, the majority of our data conversations on measurement and targeting. Yep. And there's so much more you could be doing as far as creative messaging testing, new product um discovery, new product frameworks. Like you really come to see your retailers as e-testing ground for what you want to do from a national standpoint around messaging and product and packaging, custom lifts and vouchers. There's like a bazillion things we could do. And we are still underestimating that and primarily using it to closely with the measurements and product target.

Speaker 9:04

Sounds like some exciting things.

Speaker 2 9:06

So I'm here.

Speaker 9:07

The cash transaction piece is the best thing. I imagine that gives you more granular visibility into certain demographics and geos that are really difficult for other retailers to get to in that precise way. So that's that's fantastic. But also your notes around being a true omni-channel retailer. They think I'm making a purchase from Target, maybe I visited the social site, then I visited the website, but I went to the store and then I visited to order it online anything, right? Like they're and they're they're just saying that was a target experience, right? Even though we're sort of like places industry recognizing that's how consumers behave, both brands and retailers uh and and agencies uh sometimes still tend to organize teams, budgets, and strategies in these silos. So why do you think that gap persists? And how should marketers like what needs to be done to actually change this?

Speaker 2 9:58

Yeah, change is hard. I think is the main thing. And there's a lot of infrastructure and process and inertia uh that has been built around like the channel framework, and it's hard to just let all that go to go truly uh guest first and channel channel diagnostic. We as a drone girl, we find ourselves on being a guest first design forward retail media, and so uh for us with that orientation, it's built into our ethos, and so it it just kind of um we are living that value day in day out, um but we have like sympathy because a lot of a lot of these things were were not built with a similar ethos. It may have been, hey, retail media's high, let me throw some uh tags on my site and start monetizing and standing down the margin of that channel was more important than the experience of the uh shopping customer. Um but I think uh we we've had the benefit of having that that ethos squarely, even how we've gone to market has been more oriented towards here are where our guests are, and so that's where our media is going to be to be helpful towards that experience and not um just here's where our margin lies, and so we're gonna double down on this channel or that channel uh for that purpose. But you know, it's we'll be we'll be talking about this at CAN next year or next week. You know, getting more guest focused, getting uh uh getting out of the silos. Um, but that uh that's I think the strategy become before the infrastructure, if you're strategically approaching that way, you can't I think that the complexity of sort of embedding a surrounding thing or core value set in a large organization is that's the understatement, right?

Speaker 11:37

To be able to start from that foundation uh is so so crucial and important. Um I think part of Randall's story as well has been uh a willingness to expand and test in new environments. Um, a couple of panels ago, they were talking about how retailers were the first users in terms of investing in um some of the newer services. I know off-site media, some are target was an early mover to a core pillar of your offering. You've been quite outspoken about how you're experimenting with emerging AI-powered uh discovery experiences. Let's take this back to like the organizational culture. How do you think about identifying opportunities worth leaning into before the rest of the industry has fully figured them out? And then how do you make sure that you're keeping your eye on the foundational components? You're not letting these new opportunities become distractions.

Speaker 2 12:26

As I mentioned, it goes back to our strategy that we're guest first. I think as you talk about why we were first to market when it comes to like off-site, I think the industry overall is 21% of the mix is off-site, and we tend to leave about 30 to 35% of our media mixes is off-site, um, because through our knowledge of the guests, that's what they were. That's the way they were discovering products, and so that's what we needed to be. Even as we talk about open AI and ChatGPT, we were actually the first free time we did that work to have an offering um within ChatGPT. It wasn't because we haven't said AI five times because of their market. Um it was fundamentally because uh we saw that target traffic from um open AI was growing 40% every month. And like it's just a fact that the increase in traffic that we're seeing in our digital experiences were coming from that channel. So we need to be in that channel to help with that discovery and to drive, and to drive the guest experience in that in that space. And so and maybe we could be more operationally uh rigorous than we than we have with, but it it's a lot to our strategy. Like the strategy says yeah, we are guest first, this is where the guests are, this is where we're going, and then we're gonna we're very willing to test, fail, fail forward, and move and align it with that with that guest first approach.

Speaker 13:45

We had links from Alex on some stage earlier, and she mentioned not letting perfect speed on any of the gut, right? So that feels really salient here as well. When it comes to testing these new AI um discovery environments, what are you hearing from brands? Are they achieving that you're moving quickly? Are they begging you for a chance to show up that way? Like, are they terrified? What's coming? Is there a mix?

Speaker 2 14:06

Essentially, I'm on the measurement side of our business, right? And so I get all the conversations around your CPMs and your cost, and is this sufficient and how effective is this? You're like, oh, we want to test this thing at OpenAI. They're like, we don't care about CPMs. Like, just get us in there. Like we're like overnight. Like they don't care. But I do think that the um interest and the energy in this thing is uh delivering the willingness uh to experiment. And then our story of we're not doing this because it's because it's impact, look at this guest insight that's telling us this is the right thing to do, um, has allowed, has garnered a lot of um um brand and advertiser interest. Um and it just makes me laugh uh at um the amount of rigor that happens in most other channels and then the just the general costing to the win approach that we see made in this approach.

Speaker 14:56

How exciting you have that willingness to just like hold hands and do this together. Absolutely. Yeah, how would you measure success?

Speaker 2 15:02

Right now, um, with the early uh stage that we're in with that activation specifically, um, really it's uh around can we meet the yield and the demand that we wanted to meet? Um and I would say these platforms are also tested, and so it's not as scale from an advertising standpoint um as we would like. And so the primary focus right now is can we get more visibility in that channel as KPI will point. Um and then we are a very incrementality-first um organization. We have a suite of incrementality solutions uh that we use to triangulate what's actually drop to the bottom line. And um we're including that in the in the mix of that we're not only understanding how the chat GPT driver to the results, but what does it add across our whole channel?

Speaker 15:47

Yeah, that'll be so exciting to hear more about as you guys continue on this journey. Um something that sort of also keeps coming up, I think we're gonna hear more about it this week, is that marketers are trying to keep up with this extraordinary pace of change, right? And and you've alluded to this a few times uh through our conversation, but I wonder what you see the role of retail media organizations playing in helping brand partners separate signal from noise, uh, point in the right direction, stay really efficient in terms of where they're uh making their efforts.

Speaker 2 16:13

Yeah, I think change encouraging that you can come to a retail partner to separate signal from noise. As I mentioned, right now, um, as a lot of advertisers are leading into retail media, it's for the purposes of, let's say, a seasonal campaign or a specific moment, or um they want to be on the on the digital shelf, and so they're doing search apps and TPA, uh, like product listings and things in that space. Um, but often they're not coming to their retail partners of we have this hypothesis. We want to understand um uh what message is most likely to convert a shopper um and recognizing that we're not talking about a panel of 10, 20, 30 million, we're talking about 100 million real life people buying stuff. Yeah, um, and that you can go to uh that as a data source uh to answer those questions. And um I don't think we get those type of questions at scale um in the industry, but we but uh but again, I think it's being guess first, it's leveraging the full value of that shopper data um as opposed to just um measuring the campaign results for a seasonal push.

Speaker 17:20

Yeah, I think that's that's a fantastic perspective, right? Because retailers are a pragmatic bunch, right? You're looking at what removes products or products results, and as you harness the power of your data, right? You become even more valuable in terms of someone to turn to. Um I love that. And I think that is that I'm gonna give you one more chance to have the last word here, the very last word, but I don't know, you're gonna have trouble topping that one. Um or the last panel, or so if there was one thing you want everyone in this room to kind of walk away, having top of mind yes, one hot tank, we'd love it.

Speaker 2 17:49

Uh I will say uh channels change, tech changes, the can buzz up word of the year will change at the end of the day. We're trying to move products off shelves, we're trying to influence uh human beings to uh choose one brand versus another. And so uh centering on the customer experience is the is the thing that will persist. Um I think uh I'm proud of how round bell is leading a very just forward approach. Um but as we all leave this room and hear a thousand pitches on the reset, um, you know, it's it's important to really remember that if it's not if it's not a shocker at the heart of whatever we're talking about, it's no coming back to that north star.

Speaker 18:34

I love it. Thanks, everybody.

PVSB 18:41

To our listeners and the over 46,000 followers on LinkedIn, thank you for doing what you do every day, whether you're building brands, driving retail partnerships, deploying technology, or shaping the future of commerce, you are the industry we cover, and this podcast exists because of you. If today's conversation sparks something for you, a new idea, maybe a fresh perspective, or just a reminder of why this industry is worth showing up for every day, share it, tag us, tell a colleague, the more voices we bring into this community, the sharper all of us get. Until next time, keep pushing the conversation forward. I'm PBSB on behalf of my co-host Papa Raj. This has been the CBG Guys Podcast.