Evan Hovorka, VP of product and innovation, Albertsons Media Collective
Albertsons Companies Inc. sees continuing growth in the importance of retail media networks.
Chain Store Age recently spoke with Evan Hovorka, VP of product and innovation, Albertsons Media Collective, about why retail media networks have proven so popular with grocers and the potential for technology innovation in the space.
Initially launched in November 2021 and developed in partnership with CitrusAd and Merkle, Albertsons Media Collective delivers digitally native, shopper-centric, branded content to the grocer’s shoppers. Media opportunities on the platform include advertising placements on Albertsons-owned properties such as its homepage, department, category, sub-category, email, search, app, and pharmacy, as well as on Albertsons’ off-site targeted ad placements.
Why have retail media networks become so popular, especially in the grocery vertical?
They represent an evolution of the industry, driven mostly by high performance brand marketers who want more accountability and transparency in their media investment. Brands are looking for touchpoints as close as possible to their shoppers with as few middlemen as necessary to get their media dollar working.
Brands also want to have statistically significant reporting that they can prove with science to say this reporting is legitimate. There are no soft extrapolations; you can identify people executing true transactions with your SKUs. Very few companies can do that right.
If you look at Google or a social platform, they're far more advanced in their marketing capabilities. They offer self-serve ad. Compare that to what a retailer like Albertsons has built, which is relatively young and not as advanced.
But we come with a wealth of data, like loyalty programs with high-fidelity CRM records with privacy sign-off, tied to SKUs at the most granular level. You can see that I made a purchase in a certain location on a certain date. It's immutable, and it's as accurate as a CPG company can get in terms of confirming transactions. And a lot of CPGs sell as much as 90% or more of their items offline.
Ultimately, the value of a retail media network is it ties the point of sale to the loyalty program and to a retailer’s e-commerce app and site, providing a unique three-headed dragon of value that is taking the industry by storm.
Why is standardization important for the growth of retail media networks?
We're now presenting a CPG company with four or five different retail media networks. Every few months, there's a new one popping up.
But there’s no agreement on how you build a reporting platform, or define methodology. Even the Interactive Advertising Bureau (IAB) creative standards are not standardized inside a retail media network.
As a late mover, Albertsons feels that we can bring that type of service to our CPG partners and we can try to build it better, with some synchronization across different domains to make things easier for them.
This means CPG companies won’t have to try to figure out five different methodologies with 14 different attribution windows, and then try to tell a performance story. On top of that, CPG companies can look for the media networks that are willing to participate in a standardization project and get a little more sanity back.
How can incrementality help retailers measure media network performance?
CPG brands with high penetration and larger awareness are often already above 50% of market share within a region or a retailer. So that next dollar of marketing needs to be justified.
The incrementality tells you not only did you make a sale, but how much of that total sale amount came as a result of the retail media network advertising. We can prove something like a customer was spending $10 a month on a product before the marketing campaign and then moved up to $12 a month after it.
We would take credit for that $2 incremental part of the sale, not the preceding loyalty the brand has already built with that customer. It really lets brands get granular and surgical with how they want to run performance measurement programs.
What role will generative AI play in the evolution of retail media networks?
Creative automation is an obvious place to imagine an AI engine helping, but it is a dangerous place because there is a lot of brand safety around content like logos. But there's reason to believe things like sizing and scaling different aspect ratios through an automated tool would bring value.
I think the more beneficial track for AI in media planning and optimization would be something humans could do; but involves processing a ton of data. And if to do anything on the self-serve side, we're going to need machines to scale that out and help the CPG company make those decisions.
Bigger than that, with generative AI you can get into all kinds of logistical data sharing, merchant site sharing and coupon price sensitivity sharing, as long as it's through some sort of safe mechanism.
As of Dec. 3, 2022, Boise, Idaho-based Albertsons Cos. operated 2,270 retail food and drug stores with 1,720 pharmacies, 402 associated fuel centers, 22 dedicated distribution centers, and 19 manufacturing facilities. The company operates stores across 34 states and the District of Columbia with 24 banners including Albertsons, Safeway, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets, and Balducci's Food Lovers Market.