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October 11, 2021

Eric Heller of WPP: Why Brands and Agencies Need to Do More Than Just Buy Media

Written by: Satta Sarmah Hightower
"Is advertising dead in this ecommerce space? … I would venture to say it's transitioning." — Eric Heller, founder of Marketplace Ignition and chief knowledge officer of the Amazon Center of Excellence at WPP

Retail media ad spend will increase an estimated 27.8% this year, amounting to nearly $24 billion brand dollars flowing to retailers.

Though much of this money likely will go to Amazon, the emergence of retailer ad platforms will only give brands more places to spend their budgets.

However, Eric Heller, the founder of Amazon strategy consultancy, Marketplace Ignition, and chief knowledge officer of the Amazon Center of Excellence at WPP, says brands may be putting too many of their eggs in the retail media basket.

He argues that Amazon’s algorithm is still king and brands can’t ignore that fact, even with the new shiny object of retail media.

Heller joined a recent episode of Unpacking the Digital Shelf podcast, "Caution: Retail Media Might Make You Lazy," to discuss the coming trends that will reshape ecommerce and how brand executives can stay on top of — or even ahead of them.

It's Not Just About Media Buying Anymore

Ecommerce has upended traditional media buying, creating more channel silos for brands and a fragmented view of the consumer.

Many major retailers, including Walgreens, Kroger, and Walmart, also are creating retail ad programs and moving to auction models. This changing landscape is causing agencies to transform themselves for a new digital world, shifting from just selling media to focusing on algorithms and performance media.

Heller says agency teams are often organized into separate domains, but this has to change going forward as more retailers create a pathway for brands to talk directly to their customers.

"You've got all this disintermediation that's happening all at once, and I think it does foster and create this reorganization of the agency community," he says.

"The dust hasn't settled yet. Brands are still trying to figure out where they need help. It's not just about media buying anymore. It's about figuring out how conversion happens." — Eric Heller, founder of Marketplace Ignition and chief knowledge officer of the Amazon Center of Excellence at WPP

AI-Driven Algorithms and the Future of Advertising

If brands want to figure out how conversion happens, focusing on Amazon’s algorithm is a good place to start.

Although brands and their agency partners spend a lot of money buying media on Amazon, Heller says Amazon is ultimately not a media play.

"If you’re spending a lot of dollars on Amazon media, but your competitor understands the fundamental nature of fixing operations — making pages convert better, doing all the underlying algorithmic pieces first, getting your supply chain [together] — what you really understand is that you don’t have to spend a lot on media," he says.

Heller speaks from experience. An Amazon veteran, Heller began working at the company in 1998 when it was mostly known as an online bookseller. He eventually went on to create Marketplace Ignition, an Amazon strategy consultancy he sold in 2017 to Wunderman Thompson, one of the world’s leading media agencies.

Lean on Data to Formulate Strategies

Heller says the largest agencies are actually in a strong position to help brands conquer this changing ecommerce landscape because they have enough historical data to formulate effective strategies for how their clients can better connect fragmented online channels.

Advertising and traditional media buying aren't dead yet.

However, the future of advertising looks like it’ll be more artificial intelligence- and data-driven, with algorithms that streamline buying across different retail media platforms.

Brands will also actually develop a long-term strategy around Amazon’s algorithm to optimize their product content and increase conversions.

"There's no such thing as a sustainable advantage anymore in terms of brand search. The sustainable advantage comes from understanding the algorithm and building on sales rank and all of these components [within Amazon’s platform]," Heller says.

Ushering in Agency Transformation

Technology transformation is only one part of the solution for brands. Their agency partners will need to undergo their own cultural transformations, too.

Agencies will need to revisit their existing model and ensure they have the right mix of skills on their team — including strategists with Amazon expertise who can stay on top of its changing algorithm and emerging challenger brands on the platform.

Break Down Silos to Maximize ROI

Today, agencies have separate media, sales, and ecommerce teams, but these silos must be broken down to help brands maximize the ROI of their advertising dollars.

Heller says the pandemic already has forced these shifts within agencies, making it all too clear they must work more closely with brands to reimagine where, when, and how they spend their budget.

He gave the example of a brand continuing to advertise on New York City buses when there were massive declines in ridership and public health concerns about using public transportation.

"COVID really shattered some of those [advertising] budgets, where they came from, and the silos that were tied to them, because you can't afford to be winning city buses in New York, but losing every time someone searches for your brand online," Heller says.

Heller says brands must have the following conversation: "I have to be where people are buying my product. And particularly if where they're buying is at the bottom of the funnel, can I really be concentrating dollars at the top of the funnel if I'm losing at the bottom?"

Conquering a New Playing Field: How Brands and Agencies Can Succeed in Ecommerce

To succeed in this ever-changing ecommerce environment, Heller says brands need to better understand who their competitors are, shift some of their focus away from traditional media buying, and implement a less disjointed, more dynamic advertising strategy.

Digitally native brands continue to grow, and with companies like Thrasio solely focused on acquiring Fulfilled by Amazon businesses and challenger brands, established companies must be much more nimble.

Team Up on Product Pages

Agencies can support brands in this effort by providing a more holistic offering beyond just media buying. They instead can focus on helping brands implement tools and strategies to optimize conversions on their product pages.

"If it's just media, you're not fixing the problems on the page," Heller says.

Along with fine-tuning their product pages, brands simultaneously must have a retail media strategy and decide which of the emerging retailer ad platforms they’ll prioritize and experiment with.

Agencies can play a pivotal role in helping them execute this strategy, assess which of these platforms actually drive the most ROI, and discover "how $1 spent here affects dollars received elsewhere," Heller says.

Increase Cross-Collaboration

Going forward, agencies and brands will need to work more closely to orchestrate a multi-faceted advertising strategy across an ever-growing array of touchpoints. Doing so will require them to embrace greater cross-functional collaboration within their own organizations and realign how they allocate advertising dollars in this new digital-first world.

"The way money flows and the metrics — the way we think about what success means and how to value a dollar spent — all of that is transitioning," Heller says.

For more insight, check out Eric Heller on the full episode of Unpacking the Digital Shelf podcast, "Caution: Retail Media Might Make You Lazy."

 

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