The Digiday Podcast: What Rich Lehrfeld’s Media Buying Background Means for Walmart RMN Business

Release Date: October 29, 2024

Host: Kameka McCoy, Co-Host and Senior Marketing Reporter at Digiday

Guest: Rich Laerfeld, SVP and General Manager of Walmart Connect

1. Introduction and Episode Overview

In this episode of The Digiday Podcast, host Kameka McCoy delves into the booming world of retail media networks (RMNs) with a special focus on Walmart Connect. The episode explores how Rich Laerfeld’s extensive media buying background has shaped Walmart’s approach to the retail media landscape, positioning it as a top contender amidst a crowded market. Before engaging with Laerfeld, Kameka and co-host Michael Berkey, Senior Editor of Media Buying and Planning at Digiday, discuss the latest industry developments, including agency earnings, the rise of AI in marketing, and the emergence of new ad exchanges.

2. Agency Earnings and the Rise of AI in Marketing

Kameka McCoy and Michael Berkey kick off the discussion by reflecting on the recent ANA Masters of Marketing conference, highlighting key trends and takeaways.

• Conference Insights:

  • Berkey emphasizes the "great networking and even learning a couple of things from what's being presented on stage" [01:10].
  • Key themes included the ongoing debate between brand versus performance marketing, and the innovative use of data to drive marketing strategies. For instance, a presentation from AT&T explored thick data, which combines qualitative insights with quantitative metrics to better understand consumer emotions and behaviors [02:03].

• Artificial Intelligence (AI) in Marketing:

  • AI remains a hot topic, with Berkey noting its pervasive presence: "I don't think there was a single session where AI didn't come up" [03:01].
  • AI is being leveraged to manage vast amounts of data, enhance creative processes, and optimize media decisions. However, Berkey suggests that while AI is promising, its impact on the bottom line is still more theoretical than tangible: "In terms of actually materially affecting the bottom line, I just don't see that yet" [04:16].

3. CMOs Under Pressure: Case Studies of Red Lobster, Starbucks, and Gap

The conversation transitions to the challenges faced by Chief Marketing Officers (CMOs), particularly in legacy brands striving for renaissance.

• Red Lobster:

  • Facing operational challenges, Red Lobster has recently appointed a new CMO with a strong background in rebranding efforts from Smokey Bones. The hope is to replicate past successes and invigorate the brand [07:05].
  • Berkey points out the immense pressure on CMOs to juggle marketing, sales, data technology, and infrastructure, often leading to shorter tenures: "They're just expected to be magicians to solve all these problems, and not all of them can always do it" [08:03].

• Starbucks and Gap:

  • Starbucks has brought in leadership from Chipotle, a brand that successfully navigated significant PR challenges, including E. coli outbreaks and social media backlash over portion sizes. Berkey expresses optimism about Starbucks’ potential for turnaround based on Chipotle’s resilience: "That CMO did a pretty admirable job of staying the course, keeping the message relatively simple, focusing back on healthy, fresh ingredients" [09:38].
  • Gap, on the other hand, has seen positive results, but the future remains uncertain for other legacy brands.

4. The Proliferation of Ad Networks: Spotify’s New Ad Exchange

The podcast shifts focus to the expanding universe of ad networks, with Spotify launching its own ad exchange aimed at small and medium-sized businesses (SMBs).

• Spotify’s Move:

  • Kameka highlights Spotify’s initiative to create an ad exchange or supply-side platform (SSP) to scale its automated ad business, mirroring strategies employed by giants like Meta: "So we are once again on the cusp of everything is an ad all the time" [10:54].
  • Michael Berkey remarks on the saturation of the ad network market, forecasting a potential shakeout due to the sheer number of players: "I don't think the marketplace can ultimately sustain all that and we'll see some shakeout" [11:54].

• Implications:

  • The move underscores a broader industry trend where every company seeks to monetize its data, leading to the creation of numerous ad networks and retail media networks. Spotify's venture into this space is seen as an attempt to diversify revenue streams beyond subscriptions.

5. Interview with Rich Laerfeld: Walmart Connect and Retail Media Networks

The heart of the episode features an in-depth interview with Rich Laerfeld, whose transition from media buying to leading Walmart Connect provides valuable insights into the RMN boom.

a. Background of Rich Laerfeld

Rich shares his journey from being a seasoned media buyer with over 25 years of experience to stepping into a sales-focused role at Walmart Connect. His extensive background equips him with a unique perspective on building and scaling RMNs.

b. The Retail Media Boom: Causes and Impact

• Defining the Boom:

  • Rich attributes the surge in RMNs to several factors, including the prioritization of first-party data following Google’s fluctuating stance on third-party cookies: "The notion of understanding your customer and delivering that value is going to be critical" [17:40].
  • The integration of data and technology to drive sales at the point of purchase has made RMNs a valuable asset for retailers looking to diversify revenue streams [15:18].

• Historical Context:

  • Retail media isn’t entirely new; it has evolved from traditional in-store displays and site media to sophisticated, data-driven platforms that engage consumers both online and offline [30:58].
  • Rich explains the transformation: "Retail media infused… using data and insights in a safe way to use audiences to buy, operationalize, and ultimately measure" [30:58].

c. Walmart Connect's Evolution and Strategy

• Insourcing and Platform Development:

  • Walmart Connect began by insourcing its media business five years ago, focusing on creating a customer-centric platform that leverages Walmart’s vast first-party data to deliver targeted and measurable advertising solutions [15:18].
  • The strategy revolves around automation, self-service, and transparency, aiming to cater to both large and small suppliers with scalable solutions [21:08].

• Team Building:

  • Rich discusses the importance of assembling a diverse team with expertise in various facets of media, including agency relationships, programmatic advertising, and data analytics: "Bringing different types of people from different types of companies… they have different perspectives" [28:32].
  • Emphasis is placed on fostering a culture that aligns with Walmart’s core values while integrating new media technologies [28:44].

• Strategic Partnerships and Technology:

  • Walmart Connect has engaged in strategic partnerships, such as the pending acquisition of Vizio, to enhance its full-funnel marketing capabilities, combining upper and lower funnel strategies to deliver comprehensive value to clients [21:15].

d. Future of Retail Media Networks

• Industry Consolidation and Aggregation:

  • Rich forecasts continued consolidation among large retailers, who will likely keep their RMNs in-house to leverage extensive first-party data: "The large ones like Walmart Connect continue to insource" [33:57].
  • Mid-tier and smaller retailers may turn to third-party aggregators to manage the complexity and scale of advertising operations [35:37].

• Innovation and Expansion:

  • Walmart Connect plans to expand its offerings through connected TV (CTV), influencer collaborations, and enhanced automation tools: "We're seeing much more lifts in their performance" [35:44].
  • Emphasis on proving incrementality and delivering measurable impact remains a cornerstone of Walmart Connect’s strategy [35:44].

• Vision for the Future:

  • Rich emphasizes creating new avenues for brands to connect with customers, increasing accessibility for all sizes of brands, and continuously improving performance metrics: "Those three things, new ways to connect, access for brands of all sizes, and performance and value creation" [35:44].

6. Conclusion

The episode wraps up with Kameka McCoy expressing appreciation for Rich Laerfeld’s insights, highlighting the transformative potential of retail media networks and Walmart Connect’s strategic positioning within the industry. Listeners are encouraged to share the episode and engage with Digiday’s ongoing coverage of digital marketing trends.

Notable Quotes:

• Michael Berkey [02:55]: "AI is just the shiny new object everywhere."
• Rich Laerfeld [15:18]: "Retail media infused, using data and insights in a safe way to use audiences to buy, operationalize, and ultimately measure."
• Rich Laerfeld [35:44]: "We're seeing much more lifts in their performance."
• Michael Berkey [06:26]: "The haves continue to have and the have nots are doing their best to have a little bit at the top of the spectrum."

This comprehensive summary encapsulates the key discussions and insights from The Digiday Podcast episode, providing valuable information for marketers, advertisers, and industry enthusiasts interested in the evolving landscape of retail media networks and Walmart Connect’s pivotal role within it.