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The Agile Brand with Greg Kihlström®: Expert Mode Marketing Technology, AI, & CX
#708: How commerce media is changing advertising with Eric Brackmann, Koddi
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B
Foreign. Welcome to Season seven of the Agile Brand where we discuss the trends and topics marketing leaders need to know. Stay curious, stay agile and join the top enterprise brands and martech platforms as we explore marketing technology, AI, e commerce, and whatever's next for the Omnichannel customer experience. Together we'll discover what it takes to create an agile brand built for today and tomorrow and built for customers, employees and continued business growth. I'm your host Greg Kilstrom, advising Fortune 1000 brands on martech, AI and marketing operations. The Agile Brand podcast is brought to you by Tech Systems, an industry leader in full stack technology services, talent services and real world application. For more information, go to teksystems.com to make sure you always get the latest episodes, please hit subscribe on the app you listen to podcasts on and leave us a rating so others can find us as well. And now onto the show. If you think commerce media is just a buzzword or a trend, think again. It's reshaping the ad landscape fueled by AI first party data and sector specific solutions that leave the legacy one size fits all approach in the dust. So what's coming next? Grocery? Autos? Quick Commerce? If your brand isn't already exploring commerce media, it's probably falling behind. Today I'm joined by Eric Brackman, head of Commerce Media at coti, the technology partner behind four of the eight commerce media networks currently valued at over a billion dollars. Eric has helped COTI scale its commerce media platform beyond travel into grocery, quick commerce, and even automotive, giving him a sharp perspective on where the industry is headed and what marketers need to do now to stay relevant. Eric, welcome to the show.
- [02:56]
C
Thanks for having me.
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B
Yeah, looking forward to talking about this with you. Before we dive in though, why don't you start by telling us a little bit about your background and what your role at COTI entails.
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C
Absolutely. So I've spent my career at the intersection of product development, media and growth. So early on I was a software engineer, worked at a Publicis Group agency doing E commerce deployments back at a time when things like ADD to CART were innovative. You might also like was a compelling new feature. From there I joined Accenture, worked on a number of large enterprise tech projects, analytics projects, and about 10 years ago I joined an early player in the retail media space called Hook Logic. Hook Logic was ultimately acquired by Critio in 2016 and so I followed that path there. In 2018, Cody purchased a piece of the Hook Logic business from Critio and have been with COTI ever since. So as vice president of commerce Media, Coti, I lead our global business across all verticals in the commerce retail media space. So in practice that means I drive growth across all of our partners, commerce and retail media networks, basically doing everything we can to make sure that they're successful. So we really focused on product development growth and making sure that we really create a win win within, within the industry. So one of the things I love about the commerce media space is that again, there is that win win so consumers get better personalized value driven experiences, brands gained a new powerful lever for growth and retailers unlock new high profit revenue streams. And so really if I can make that happen, that's, that's what I'm here for.
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B
Yeah. Yeah. Love it. Well, yeah, let's, let's dive in then. And first, you know, I mentioned the term at the, at the top of the show, but let's define, you know, what exactly do we mean by commerce media?
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C
Great question. So I think I actually love the definition that eMarketer puts behind commerce media. So at its core, commerce media refers to digital advertising powered by first party transaction data. So advertisements can appear on owned and operated digital channels like a company's website or their app or off site, so on the broader open Internet. But the key thing is that it's leveraging that company's first party data for targeting and generally using that first party data for measurement. Generally they're ad networks that are owned by an entity whose core business is not media, but they're doing something else. And media is a Supplement as part of a sort of overall value creation for that business.
- [05:29]
B
Got it. So given this, commerce media is definitely growing, it's growing quickly, but a lot of the industry is still using tools built for a completely different era. Maybe some of the things you mentioned earlier on. So what's the disconnect with legacy platforms and why aren't they the right tool for the job?
- [05:51]
C
So commerce media holds a ton of promise. When you look at the growth of commerce media versus other forms of media over the last couple of years. It's just exponential growth. So at this point, I think based on the industry analysis, 1 in 4, 1 in $5 spent in advertising is spent on a commerce retail media network over the next couple of years. Again based on industry analysts, that's set to grow quite substantially 90 plus percent by 2030. And so it will be a substantial part of the advertising mix for most companies as the industry continues to mature. And again, I think the reason there comes down to those couple of points I mentioned just a minute ago. Consumers get better experiences, value driven experiences, experiences that really make sense for them, that aren't just advertising for the sake of advertising, but really add value to their shopping experiences. Again, brands get those really powerful levers for growth. They can really target the right consumers at the right time. And retailers really get to partner deeply with brands and deliver better experiences to consumers. So it's privacy safe, it's non intrusive, it delivers results. And the reality is it just works. And so on paper, everybody wins, right? But when we talk to leaders in the space, we hear this common theme. There's a lot of worry and frustration about the promise versus what's actually practically playing out in the ecosystem right now. So relevance is often hard to explain. Legacy tat lacks those features. Transparency, the control that you would need. New players are coming into the space, there's a lot of money flowing in. And so we see a lot of new players and sometimes they just don't live up to the hype. And so what we're seeing is just a lot of disappointment versus the potential of what it could be. And so what we found is that brands that want to get into the space don't have to do it alone, right? They don't have to pick between tech that doesn't quite get what they want or versus trying to build something from scratch versus maybe trying to find partners that don't necessarily fit what they're looking to do from a business model perspective. And so our view on the world is that like you can sort of have your cake and eat it too. That you can have the right tech, that you can have the right partners, that you can have the right experiences for, for advertisers, for your vendors and for your consumers. And that's the basis on which we've built our business and our, and our stack.
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B
Yeah, yeah, yeah. I recently saw some numbers on retail media. It's, it's going to exceed TV spend within a, within a matter of years. So, you know, certainly growing quickly and growing steadily. And you know, to your other point, a lot of times these, these are organizations that they're not media companies. Right. They're not. This is not their, their primary business and yet they're seeing a lot of opportunity in doing this. Cody has made some, some moves in tailoring commerce media for verticals like grocery and automotive. How does this like sector by sector approach benefit? And you know, why, why does that matter? And what are, what are kind of the nuances from, from industry to industry that, that make it necessary?
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C
It's a good question. So Cody's been in the commerce media space for quite some time. Retail was an early leader from a category perspective. But we're seeing not just retail, but travel, automotive, quick commerce, financial services, delivery apps, sort of that broader commerce media umbrella. And what we've learned is that commerce media is not a uniform one size fits all thing. There are vertical specific things that need to be considered within each one of those categories. So the channels that those, those companies operate in, the language that they use, the metrics that they use, the frequency of, of purchases. So you might see from a grocer you're purchasing every week and you're purchasing a basket of, you know, 20, 30 different items, all under a couple of bucks. When you're purchasing a car, you tend to purchase a car every couple of years and it's one car and it's a very measured and considered purchase. So you know, the things that, that matter there are just different Travel in the same way. Travel's got a, an interesting facet where the inventory is truly perishable. Right. Once a, once a day passes, you can't go back and resell a hotel room from last night.
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B
Yeah.
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C
Versus, you know, putting something on a shelf. And so there's just all these idiosyncrasies within each industry that have to be considered to be able to do it right. And to be able to get the consumer experience right and the advertiser experience right.
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B
Yeah.
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C
On the other side of the coin, there are things that are the same. So specifically the Thesis around what commerce media can drive for a business, I think is, is uniform across industries. What we see is there's this virtuous cycle where if you've got a really good engine for commerce and commerce media that you are then driving better customer experiences. And those better customer experiences allow you to have more volume. And the more volume that you have within your ecosystem pulls in additional advertisers and additional players into your ecosystem. Then the more players you have, the more investment you get, the more investment you get, you can then invest back into your infrastructure and it creates this virtuous cycle for customer acquisition, for vendor acquisition, for strategic differentiation and in control in the market. It's a play that we've seen folks play out. Like Amazon has done a really good job of this, of creating that virtuous flywheel within their ecosystem. And so that's something that I think we see across industries that there's a ton of potential for when we talk about driving customer experiences. Right. So across industries, the experiences are different, but the companies that are successful are the ones that are really thinking about, you know, how do I make this better for consumers, how do I use monetization, how do I use the tools at my disposal to make things better? Like that's something that's consistent across industries. So our approach there is to really look at, you know, what are the things that are the same, what are the things that have to be core to the platform and the way that it, that it works from an AI perspective, from a latency perspective, from a technology perspective, there are these common threads that you can start to pull out and then how do you layer on top of that the things that make each industry unique and make that configurable versus like a permanent thing such that we can drive differentiation in each one of these verticals, in all of these spaces really, really quickly.
- [12:33]
B
Yeah. So along those lines then, what sectors do you have your eyes on? What sectors are next here? Are there opportunities, industries that maybe might even surprise us that are ripe for disruption?
- [12:47]
C
Good question. So I think retail, grocery, travel, food delivery, quick commerce, we've talked about, there's been significant progress in all of those areas over the last couple of years. There's some emerging areas that I'm quite excited about. One, financial services. So the banks that are getting into this space, the buy now, pay later services that are getting into this space, a ton of commerce data that is available to those companies and you using it in a privacy safe way is really brings a lot of potential for their operations. And the way that they might engage advertisers. Home services, real estate, I think is one that is also ripe for disruption. There's been some interesting consolidation in that industry from a contracting perspective. Home repairs and then the real estate platforms themselves. And some of the vertical integration that's happened even the last couple of months presents a real opportunity for some of the companies in that space to drive differentiated experiences for consumers.
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B
So I want to talk a little bit about you mentioned first party data is one of the strengths here. Let's layer AI into that as well because we've got to talk about AI on the show at least once every conversation. So let's lean in right now. So AI plus first party data. Data, you know, what is, what does that mean in practice when it comes to delivering more relevant advertising?
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C
So AI I think brings a ton of promise to the digital advertising space. There's a couple of vectors that I'm seeing in the market right now. One, audience targeting, segmentation. The ability to get the right ad in front of the right person at the right time is substantially better than it was a couple of years ago and improving every day. And so the AI tools that are available there are quite compelling from an optimization perspective. Two, you're starting to see AI come into the way that advertising is bought, sold and optimized as well. So think on the operations side of things. So setting up campaigns, optimizing those campaigns, budget allocation across things. So we've seen some really strong results within our platform and for our advertisers and for the, the commerce media networks that we work with, using AI tools there to be able to drive real scale and being able to drive even better performance than we've seen out of humans traditionally. Third vector is really around creative optimization. So we're seeing a number of players in the space. Think about not just figuring out who to target, but what to target them with and compiling those assets in real time to be able to drive additional performance. And you know, that's not just messaging and product images, but even things like colors and fonts and formats and things that drive performance. I think the big thing for me, I guess. Well, for there's probably one that's, that's also interesting around just the nature of commerce search itself and how that's going to evolve with AI. So we're seeing, you know, folks experiment with, hey, instead of there being a list of hundreds or thousands of products that's returned to you when you, when you perform a search, you're actually being presented back with, hey, here's A curated selection of maybe the one or two products that are, that are best situated for, you know, this specific consumer. So that's also having a, an interesting impact on, on the future of especially sponsored product ads within the, the retail media space. I think the, the overarching thing for me is that AI empowered by first party data is about driving better experiences for everyone in the ecosystem. So you take each one of those things that I talk through and consumers benefit from more relevant ads at the right time that feel more native, that are additive to their experience. We've got a number of use cases actually where when monetization, when ads are deployed within a commerce environment, performance of that commerce environment actually improves, which is sort of counterintuitive the way that you might think about it. And then from an advertiser and operations perspective, AI makes things easier, makes things better, makes it simpler for folks to engage within these platforms. And then for the folks that operate the platforms there's these really cool tools that Cody has put out there recently to be able to optimize yield and to be able to make real time decisions about what's best for the business. And so I think AI plus actually rich first party data is one of those things that just, yes, it's a buzzword but it truly in practice creates better experiences all around.
- [17:32]
B
Yeah, yeah. And then you know, to go to the advertiser perspective that you mentioned, you know, from a measurement perspective and you know, and I think retail media and similar, you know, commerce media in general provides, you know, amazing opportunities and yet it also, you know, a potential challenge is fragmentation. Right. And so which certainly makes it can make measurement challenging but you know, it doesn't make it less critical. What's the best way for those advertisers to gauge success in commerce media?
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C
So the traditional metric that's used by, by most folks is roas. So return on advertising spend has been the way that the industry has worked for quite some time. I think at this point folks generally understand that but are generally looking to move beyond that. And there's a couple of things that we are seeing brands and networks look at. One is incrementality. So what is the actual lift that's coming from these advertisements versus had I not done anything at all? And so incremental roas, incremental sales are the thing that a lot of folks are looking at on that thread. The second thing is literal sales growth. Right. At the end of the day, the point of a brand engaging with a retailer is to sell things. And so if there's actual sales and those sales are growing, then, then the right things are being done. There's a few other things around customer acquisition that we hit on earlier around engagement metrics around yield that I think are, are also interesting. But I think the industry is definitely moving towards outcome based metrics. Like what are the things that we're actually looking to drive from a business perspective versus just measuring the effectiveness of the advertising itself.
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B
Yeah, yeah. And so you know, with, you know, Cody's worked with many different commerce media networks. So you know, I'd imagine there's a lot of lessons learned. You know, what would your advice be? You know, what do companies consistently either get right or wrong but you know, when launching and scaling a commerce media program, what would some advice be?
- [19:45]
C
So I think the first thing I always tell folks is to focus on the customer experience. Figure out what's right for your customer, for your traveler, for your shopper, and making sure that you're adding value to their experience. Back to that flywheel that we talked about earlier, if you've got that infrastructure, you add that value, the rest of those things start to cycle through and it just works and so keep that as the focus. I think too a lot of folks get into the commerce retail media space to drive additional revenue, to drive incrementality in their own businesses to be able to put more money to the bottom line. And that's great. But what I often tell folks is figure out what are you going to do with that money that actually drives the core business forward. So a reminder back to where we started with commerce media is the media entities within these organizations are obviously are, are sometimes are oftentimes not the primary business.
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B
Right.
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C
They're primarily a retailer, they're primarily an automotive marketplace. And so if you can tie the media strategy and the monetization strategy to the overall business strategy, then you're, then you can get executive alignment around what you're ultimately trying to pursue within, within monetization. I think three actually use first party data. I think the promise of this space is that first party data is used throughout to be able to drive better experiences. But because of different restrictions, compliance, technology, all of these things that start to get in the way and folks sort of make compromises as they go, but actually saying hey, first party data is what makes this special and therefore must be part of the strategy and must be part of what we actually do in practice. Helps things. These helping helps things actually play out.
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B
Yeah.
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C
And I think the last thing for me is, is having a bias for action. I Think there's a lot of folks who will want something to be perfect before they get it out in the market. But what we often see is, you know, speed, adaptability, get something out iterate. Get something out iterate. This space moves so fast. The definition of commerce and retail media is different from what it was six months ago. It's dramatically different from what it was a year ago, two years ago. So as the definitions change, as the players change, as the industry change changes, there's just so much movement. Speed, adaptability, be agile, have that bias for action. Are the things that make people successful. Now I think taking your question, like what are things, what do the folks do on the other side of the coin? That creates stumbling, I think sort of neglecting consumer trust. So the sort of the flip side of that first one sort of being too aggressive in monetization, putting up ads that don't make sense, experiences that don't make sense for consumers simply because they're monetized, just doesn't work. Having the wrong KPIs doesn't work. I think we talked a lot about vertical nuances and being able to really make sure that those work. On the other side of the coin, if you sort of take a copy and paste approach to commerce retail media, you're, you're gonna miss out on, on the actual potential of the, of the modality. There's a lot of desire in the industry to want to replicate Amazon's success. For example, they're one of the larger, they are the largest player in the commerce retail media space. They make up a bulk of the activity. And so there are a lot of brands that will say, oh, I just want to copy that, I want to do exactly what Amazon's doing and make that, you know, that's, that's an easy thing. And the thing I would say is, you know, Amazon forged that path and that worked for Amazon. You know, that isn't going to work for everybody. Not everybody is Amazon and not everyone has the same strategy as Amazon and everyone has the same consumer profile as Amazon. Not everyone differentiates in the way that Amazon differentiates. And so if you want to differentiate in the space, if you want to add value in the space, you've got to find your own path to be able to go to market. So I think it's act quickly, act thoughtfully, have your own strategy. Those are the things that work.
- [23:49]
B
Great, great, love it. Well Eric, thanks so much for joining today. Got one last question for you before we wrap up here. What do you do to stay agile in your role and how do you find a way to do it consistently?
- [24:01]
C
Oh, that's a good question. So I mentioned just a minute ago that adaptability and being agile is sort of key to the industry at large. One of the things that I'm reminded of, of the world that we live in today is that there's a lot of skill decay. So there's a bunch of research that's out there. I think there's a, something from Harvard on this that they used to say that folks wouldn't, would lose about 5% of their skills a year after they graduated from college. And so if you literally learn nothing else, it might take you 20 years to be irrelevant within this space. Skill decay today, especially within professional services, especially within digital media, that skill decay based on research looks more like 25 to 30%. And so if you don't learn new things, you are, you're irrelevant in, in three to four years. And so you've got to be able to learn. And so embracing that, that mindset of adaptability, talking to folks in the industry, staying close to what's going on in the market, staying close to what's being developed from a product perspective. I think one of the things I love about, you know, my role from an ad tech perspective is really being deep in the product and understanding where the roadmap is, what customers want, how we're bringing new innovation, having that iterative process that we talked about earlier. So really being open to experimentation, being open to building new things, empowering teams to be able to fail out in the world and learn from it. It's also just about having fun and doing what you love to do. So that's how I stay agile.
- [25:36]
B
Yeah, I love it. I love it. Well, again I'd like to thank Eric Brackman, head of Commerce Mediaodi for joining the show. You can learn more about Eric and Cody by following the links in the show notes. Thanks again for listening to the Agile brand brought to you by Tech Systems. If you enjoyed the show, please take a minute to subscribe and leave us a rating so that others can find the show as well. You can access more more episodes of the show@theagilebrand.com that's theagile brand.com and contact me. If you're interested in consulting or advisory services or are looking for a speaker for your next event, go to www.gregkilstrom.com that's G R E G K-I H L S T R O M.com the Agile brand is produced by Missing Link, a Latina owned, strategy driven, creatively fueled production co. Op. From ideation to creation, they craft human connections through intelligent, engaging and informative content. Until next time, stay Curious and stay Agile.
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