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What marketing agencies get wrong about grocery and CPG

In general, there is a misunderstanding of the total dynamics that are affecting CPG and grocers today

Victor Lee_Headshot (1).jpegVictor Lee is the president of Advantage Unified Commerce. He began his career in PR and transitioned over to promotional marketing, then to digital marketing in the early 2000s. Through this time, he was able to experience first-hand the speed of change and innovation which has allowed him to lead corporations efficiently. Throughout his career, he has held titles at Hasbro as senior vice president of Digital Marketing, RXBAR as their CMO, and most recently with DTC startup, Kin Insurance as CMO.

Have you noticed a plethora of issues plaguing traditional agencies when it comes to marketing the CPG and grocery industry? Perhaps that’s why for the first time in, I want to say ever, even the Cannes festival was interested in retail media networks. All around the Croisette, there was a buzz around retail media networks, while the players in our niche were a noticeable presence alongside the usual creative rockstars.

I think that’s a good thing. If these agencies are going to work in this sector, they need to grasp how complex and ever-changing the grocery industry is today. Consumers are increasingly demanding personalized experiences, and agencies need to be able to adapt quickly. However, I still see many agencies make the same mistakes when it comes to grocery marketing.

What are those mistakes? First, in general, there is a misunderstanding of the total dynamics that are affecting CPG and grocers today. It’s not just pricing, shelf space, brand, or sales. There are dozens of factors that must be assessed holistically to accurately create opportunities that help both sides of the retail and CPG business.

Second, it’s over analysis. Most CPGs and grocers already have enough data to make informed decisions, but human nature tells us that we need to overthink it, which just drains resources and time. If someone can create an Amazon 3rd party store or a Shopify storefront in a matter of minutes, agencies can also move at the speed of innovation.

And third, it’s the "commerce victim mentality" – we’re almost four years past the pandemic shutdown and many are still using it as an excuse for current anomalies. There are for sure real global challenges that affect business, but if COVID taught us anything, it’s that we now live in a constant state of change, and feeling victimized isn’t going to solve anything.

Given that, a good start in terms of shifting ideals for agencies working with CPG and grocery brands would be the organizational design. I spent the majority of my career in digital marketing and I can remember a time when it wasn’t considered part of marketing, but a separate division — this was both at the agency and brand level. I think it was that way simply because it was easier to bring in "experts" to create a new group or center of excellence, rather than shifting the entire organization's mindset. Regardless, all of this led to bifurcated groups and battles over budget ownership, and decision-making authority.

That needs to change because commerce today is on the same path that mobile marketing, social media, and digital marketing all had when they started to become mainstays of the industry. Consumers don’t think about silos or how an organization is structured so stop differentiating between shoppers and preferred channels, because they move fast and are loyal until another brand or retailer offers something better, faster, and cheaper. 

Applying antiquated consumer and channel profiling under the assumption that people respond as groups is another example of mistakes I see agencies continue to make. Maybe that worked when we had only three TV channels, radio, and print. But the path to purchase isn’t so easy today. Understanding why someone shops at one location for specific needs over the other is important, and to rely solely on a persona and execute against it is the old funnel. It’s not that top-down anymore; it’s a massive high-speed highway with on and off-ramps every 100 yards.

So what should agencies get right when it comes to the grocery sector? Here are a few best practices:

  • Retail media networks should not only be looked at as an incremental revenue stream for a low-margin retail business but for its ability to change physical stores. If you look at each retail location as its own media platform vs. just a store, you’re able to optimize all your in-store efforts
  • If you can measure it, you can manage it so don’t hide behind soft measurements like impressions as a definitive result. While that’s important, it doesn’t tell the full story. Accurate measurement factors in dozens of levers that provide attributable revenue growth over baselines 
  • Automation is important but don’t overlook human ingenuity, automating and aggregating disparate data sources is 100% necessary, but the analysis still needs the human touch to pressure test hypotheses

So far, agencies have adapted to the changing needs of grocery shoppers in a very typical fashion. Some are now adding more variety so grocery can compete with value chains or wholesalers. But I believe retailers and brands would be best served by looking for partners that are willing to innovate in a custom way for their businesses and do it with excitement vs. the rinse-and-repeat strategy that is just not viable anymore in 2023.

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