The Future of Shopping: AI, Retail Media and the Rise of Agentic Commerce with Roger Dunn, Global Retail Media Lead at Diageo

Transcript

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Teresa (00:00):
Welcome to unpacking the digital shelf APAC edition where we explore the unique challenges and opportunities shaping digital commerce across Asia Pacific. With insights from the region's top experts.
Roger (00:23):
Welcome listeners from near and far. I hope you are enjoying the APAC edition of the show. Today I have with me one of the very prominent global figures in the retail media and e-commerce landscape, our very own Roger Dunn. I recently had the pleasure of hearing Roger speak about the future of shopping and retail media at a local event, and we thought it would be too good an opportunity to pass up to get him to share his wisdom on these topics with the DSI community. Yes, we will be speaking about AI but with a twist and we'll be getting deeper into his perspectives on retail media and the nuances of different markets around the globe. So strap in. This one's going to be a goodie, but first welcome, Roger.
Teresa (01:11):
Yeah, hi Teresa. Great to be here. Looking forward to a good little chat here.
Roger (01:17):
Me too. So Roger, you've had an illustrious career in retail media working for ad tech providers. You sit on the IAB Council for retail media in Australia, and we know that you are now working for Diaggio in a global retail media role. So it's fair to say that you know the retail media market pretty well.
Teresa (01:40):
Yeah, definitely. I've definitely had a few different views on the world, I guess from my time agency side through to the tech partners and then now brand side as well, and obviously worked with quite a few of the big retailers as well along that journey. So yeah, hoping to share a few insights today.
Roger (01:58):
Absolutely. So what I'd love to do is to start by getting you to share a bit about your perspectives on retail media markets across different regions. Which markets do you believe are more mature and less mature and why? And what are some of the nuances that you see within the respective markets?
Teresa (02:20):
Yeah, okay. Sounds good. Obviously there's quite a bit of diversity across those different regions and markets as well, but if we look to the US first, obviously that's where retail media was in some definition born with Amazon. And obviously in that market it's become very much a digital first market where that is the online and the marketplace retail media has developed first, not to say in store isn't a fast follower. And then one of the really interesting facts from that market is that the top two media owners are now in fact retailers. If you look across all the social platforms, all the actual traditional publishers, digital publishers, if you aggregate their in-store reach with their online reach, and in Amazon's case I guess their prime video reach, that aggregate reach is now top two and 50% of the top 10 are retailers as well. So very mature market in the sense for retail media in the scheme of things and obviously tons of opportunities there.
(03:22):
For us in the alcohol space it is a little different. There is the three tier system where we deal with distributors and can't spend directly on some of those retail media options. We have to focus more on those intermediaries like Uber or DoorDash or Instacart. But that's a bit of a unique, I guess, quirk or nuance for alcohol in particular. But then if we look, obviously going down the Americas, you've got latam, which is another fast-growing market, obviously a little bit behind in terms of the scale, but a really interesting region. Quick Commerce is definitely a huge one in Columbia. Brazil has a good presence with Amazon in that market. And then you've got local players like Mercado, Libra, which are also in some markets ahead of Amazon. So it is not to say that those local retailers are not taking a leadership position as well.
(04:16):
So very interesting market and obviously huge growth to come I think in that region. If we move across, I guess Europe also relatively mature, certainly Great Britain has a lot of the big supermarkets are well-developed, onsite, offsite and in-store. And then across Europe. Yeah, there's a number of big retailers and obviously those global intermediaries are definitely in this space as well. And then, yeah, I guess apac, again, they're a little different. APAC in terms of scale is actually the biggest region and it's a marketplace first region, so you've got some of the big marketplaces there like Alibaba and Lazada and yeah, definitely a long tail there with a lot of the sellers and suppliers that sell through those marketplaces. And then I guess if we come all the way back down to Australia here where we are, certainly in mature market, lots of big players, lots of the tech players are active in this market. For alcohol in particular, we've got big players like Mixing and Cole's Liquor, which are important partners and very much digital, but also with quite a developed screen networks in most cases. And we've got local players like Rio or Edia obviously building out store networks down here too. So yeah, lots going on and yeah, lots of other trends we can get into as well.
Roger (05:44):
Thanks, Roger. That's really, really interesting. You've touched on a number of really interesting trends across different markets. I'm keen to double click on the quick commerce media market and what's happening in that space. You touched a little bit on that with respect to latam as well as what is happening in the us the likes of Uber Eats, the likes of DoorDash, what are you seeing from a growth trajectory point of view in that quick commerce retail media space and what are you expecting across different markets in the coming years?
Teresa (06:22):
Yeah, so quick Commerce is definitely a fast growing area and obviously the relationship here with suppliers or manufacturers is a little different. They're not a traditional retailer where they're buying product off you and actually it makes that relationship around media and advertising even more important because that's the key conversation between those parties. Definitely a big space. Obviously Instacart over in the US has been building out their own technology with carrot ads as well. So definitely doubling down on building the space in terms of that own tech side of things. And then, yeah, it's very much a regional thing. Uber has probably the best, and DoorDash are probably the best global presence in terms of multiple markets, but they do have quite a different makeup there. And then you've got local players like Rappi or in the US obviously Instacart. So definitely some strong in-market players as well in those key regions.
Roger (07:26):
Super interesting. Alright, well let's move on. I had love to start to get you. Alright, so retail media where it sits within different functions is obviously always a point of contention. So I'd love to spend a little bit more time digging into that topic. In Australia we have many brands that have lower levels of internal capability that is in place to support retail media. And in your role at Diaggio, you are not just building capability locally, but you're looking at that from a global capability standpoint to support various markets. So what I'd love to do is get some insight based on your experience around what are some of the key considerations you feel brands need to make when building internal capability to effectively underpin their retail media efforts and derive value from retail media investments?
Teresa (08:30):
Yeah, sure. So obviously brands and manufacturers need to be building capability in this space regardless of who they rely on for the actual operational buying or investment decisions. But in terms of building out your team's knowledge, obviously you need to have specialist capabilities, you have to have some probably in place, there's a role to be played there in terms of planning principles, you'd need to build out how to invest sufficiently there and build out the right capabilities in terms of where to invest and how to invest across all the different opportunities. They are so varied in terms of who's doing retail media. I mean we see retail media as media, so it tends to sit within those media and marketing teams where that capability around media sits. For us, it's definitely the way we define it is onsite retail media and offsite. So using retailers data to target shoppers off the retailers platforms.
(09:38):
And then in store it's digital in our definition. So we're looking at that. We want to be able to apply data to it. So whether it's onsite, offsite or in store, the best practice will be to apply data either in the planning, in the targeting or in the measurement, and ideally across all three areas. So for us, they're the kind of capabilities that we want to build out and make sure the teams have a focus on. And then I guess when you get into the actual operation of it, then we rely on our global agency partnership partnerships and local partners as well. So for us, that's Omnicom and we're working with Flywheel in a number of markets, which is their specialists e-com agency as well. But it does vary. We've got different partners in different regions depending on the sale there. And as we've sort of touched on earlier, alcohol does have its nuances. So as you can imagine in the uk, supermarkets sell alcohol. So we've got a very different partner set there versus the US or perhaps even Australia where we have the specialist alcohol stores as the major players. So obviously that means that local nuances have to be built in and we have to have specific ways of working in each market that adapt to,
Roger (10:57):
And you spoke about specialist capabilities and partnership capabilities, and I'm hearing the data piece is so critical from a capability standpoint across planning through to delivery. But one of the things I think many brands grapple with is what do we manage in house and what do we build from a capability standpoint versus where do we partner and to borrow capability or buy capability? What's your perspectives on that?
Teresa (11:28):
So I mean we have definitely our own data capabilities in-house where we're, it's not just the retailer's data. That's interesting here, yes, that's an important part of it, but we've also got our own sales data, we've got all of our product data, we've got our own audience data as well in terms of our first party audiences. So there's no way that you could outsource everything and we wouldn't even want to have that capability in house. But I think when it comes to say working with clean rooms or some of the more cutting edge and latest technologies around enhancing retailers data or in fact enhancing our own first party data, then that's where we'll lean into partners who have capabilities in the space, have experience from other categories that they can bring in. And that really adds value for us. So if we're talking about using Amazon's clean room or working with other clean rooms and other retailers, then that's the place where we might lean into other partners to help us really accelerate that.
Roger (12:33):
And so I think what I'm hearing is in areas where you might not have the internal expertise around the tech piece is an area where you're leaning on partners, but equally there's probably an opportunity to heavily lean into partners as it pertains to innovation and where the market's going next because they do have the finger on the pulse with respect to that alongside of the internal knowledge that you have.
Teresa (13:04):
And it's all the good things that agencies do in terms of meeting the market and having a really broad understanding of what the opportunities are and obviously creating specialisms around certain areas there that all adds value. So we're absolutely working with great partners and that's important to our business. But internally, obviously, in order to brief correctly and to work correctly and understand the data ourselves, we need to have some level of capability in every market and region that we operate in.
Roger (13:35):
Yeah, that's really interesting. And I think the ultimate message here is it's an and it's not an or do I go in-house, do I outsource often the best answer lies or the best outcome lies somewhere in between, which is, and we need to be clear around what are those internal capabilities and how do we build them most effectively over time? And what are those skills that we need and roles we need to build that capability, but then also, what role does that agency or agencies play to augment that capability? And that's probably where you get the best outcome from a retail media point of view. You've got the best of both worlds.
Teresa (14:18):
That's right. And thinking about a RA where you've got people who's responsible, who should be across it, who's assisting, having a clear understanding on roles and responsibilities obviously is a key part of that.
Roger (14:30):
It's key. Yeah. Fantastic. That's great. Alright, well that's really, really useful insight around kind of what's happening at a regional level and across different markets from a retail media point of view, some really great insights on how to think about building capability from a retail media point of, and some really interesting insights around what you're doing at Diageo specifically, what I would love to do now is to unpack where the market is going from a shopping trends perspective. So I mentioned earlier that I heard you speak recently about the future of shopping and retail media. And what I would love to do for our audience is get you to share some of the really big trends that you are seeing that are reshaping shopping in the future and what that really means for brands as they think about their digital shelf strategy as well as their retail media strategy moving forward.
Teresa (15:35):
Yeah, sure. So I guess what we're talking about here is the way that AI is coming into the world of shopping Now, obviously it's a huge trend generally, and it's interesting because one of those trends that has become immediately available both to consumers and to marketers and business people at the same time. So we don't have that headstart on consumers in the same way as we have with some other trends. So that's interesting in itself, but it does mean that we're having to adapt very quickly. And I guess the bit I'm really interested in when it comes to commerce is how this agentic shopping is really going to unpack. So yeah, in terms of the big shopping trends, let's talk about three key ones that I'm thinking about at the moment. So obviously we've seen onsite and offsite developed quite rapidly in retail media. I think the in-store piece is now becoming digitized, and that's a really interesting trend as we see far more digital screens being rolled out across networks and we've got that happening in Australia, but also around the world.
(16:41):
And then you've got smart technology in the store, which can also deliver retail media opportunities as well, whether that's a self scanner machine or a smart cart, the caper carts that Instacart are rolling out. Definitely an interesting one there where it's literally looking at what you're scanning and putting into your cart and can serve up a complimentary offer based on the content of your car as you're walking around the store. So things like that really make that impulse buy and the ability to target even more effective. So that's definitely an interesting one. I think video as well, which obviously is not a new medium by any means, but video in retail media and certainly in onsite hasn't been a big thing up to this point. It's much more around those sponsored products and just banners on the site. So I think as video develops, we're going to have more of those sponsored video placements onsite.
(17:38):
And then offsite, obviously we've got things like Prime video and the ability to link up shopper data with a video exposure across connected TV is really compelling for brands because that's the full audio visual experience of video, that branding experience, but looped back with the closed loop reporting to deliver in the impact on sales as well. So while that might not be your primary metric for that activity, it's certainly a good thing to be able to measure through to a sale. So they're the first couple. And then obviously the last one we've sort of hinted at earlier around AI being a huge trend. And yeah, definitely for me this space is definitely hotting up in terms of an interesting topic to look at has been particularly in commerce as well. So it's an interesting one in itself in that consumers and marketers or businesses have been provided with this technology almost at the same time.
(18:36):
So it's something we have to move quite quickly on because consumers are already using it and shopping via these platforms. Obviously it's not huge now in terms of the GMV that's running through these ag agentic shopping solutions, but it is definitely an interesting one to watch for the future, and we can see it coming to life in a few different ways. So we've got these agents inside retailer sites, so things like Walmart, Sparky, which is that shopping agent that is basically ingested all of Walmart's product catalog, all of the attributes, all the pricing, and then on the site you can literally chat to this agent and do your shopping. So you can ask a really broad question, what's all of the items you've got for this particular theme party? Or you can be very specific and ask for a particular item under a certain value, and then it'll give you very specific answers in terms of what's available there.
(19:33):
We've got others like Amazon Rufuss, which is a similar concept on Amazon. So again, ability to ingest all of their product catalog and really surface it in many different ways based on a conversation with it. So really interesting ways for consumers to come in and really find what they want quickly on the site. So they're the agents inside retailers. I think there's other interesting ones like Amazon has the Buy for me solution, which is going from inside the retailer out. And in this case, if you're searching for a product on Amazon and they don't stop that product or that particular brand, then they can still surface a D two C site effectively and capture that intent for the search, but have it the agent go out and buy that product and it'll buy it based on your Amazon address, your Amazon payment options, and have that delivered to you by that particular retailer.
(20:28):
So really interesting. Obviously they want to still own that search and the purchase, but allowing you to buy product from elsewhere. And then the final one, which is obviously the big one that most people are seeing as well is the LLMs out there where you're going from outside a search-based environment back into retailers, and it's about your products being found, whether you are the brand or the retailer. Obviously we both want our products to be found in these searches. So we've got ones like obviously Google's AI mode, which is coming very soon. It's been announced not quite here yet, which will be using Gemini Chat, GBT. And then perplexity seems to be making some moves in this space in terms of the ability to really find and compare products and prices and then have it genetically go and buy that product. So Google obviously will be using Google Pay, but Perplexity has made some connections with different retailers as well.
(21:27):
So really interesting to see how these are coming through. And I guess the challenge for brands will be surfacing in these shopping agents. So rather than SEO, it might be a EO, which is answer engine optimization or GEO is another term people are using. And yeah, it's really important obviously as people use these platforms to find products that your products are surfaced. And yeah, I guess the ways to do that are through making your product catalog machine readable and available, whether that's from your own D two C sites or your own brand sites or surfacing well within retailers as well. It's
Roger (22:06):
A really interesting one. I've been thinking about this a lot. It really feels like it's very much an arms race between some of the major existing tech providers combined with kind of new and emerging entrants in terms of what's going to happen in this shopping AI space.
(22:24):
But I think that's a really useful and handy way to think about it in terms of a framework, Roger inside ai, inside out AI and outside in, I think with the three elements that you touched on. And I think that's a really helpful way from a framing point of view for brands to think about strategically, what does this shift in AI mean from a digital shelf strategy perspective around those three areas that you touched on, which is great digital screens, smart technology and ai, the trends that you've touched on, it all makes product content management even more vital than it already is, and that does require us to think about our playbooks from a digital shelf perspective. How is Diageo thinking about evolving and changing with respect to product content, information management as a result of some of the trends that you've just touched on?
Teresa (23:29):
Yeah, so I mean we have a well-developed approach around digital shelf optimization and the broader shopper experience. So I think the fundamentals don't necessarily change, but definitely thinking about having of those product attributes available. So if you think about all the ways that these agents could be asked a question and people are looking for products, you want to make sure that all of your products have every single attribute there. And then I think the thing I've sort of thinking about or looking at as well is it is often around context. It's not just around specific facts and figures around the product, it's actually what's it good for or where would it be used, how would it be used, what would it be used for? What's the best thing for this particular use case? It's those human questions that people are going to be putting into these LLMs and having the answers for those FAQs, obviously I would thought become a little bit more popular potentially lifestyle images need to be translated as well into text form so that they can be read by the LLMs.
(24:36):
So yeah, there's definitely a few nuances there. And then there's some actual technical solutions as well that perhaps may be more relevant for the retailers out there, but these MCP or model context protocols that are being developed by LLMs to make sites, not just retail sites, but could be retail sites, machine readable. So having all of that product catalog, all of the product pricing, all of the attributes all available in a machine readable sort of API connection as opposed to having that LLM scraping the site and only doing that on a reduced frequency that doesn't get all the information. So yeah, there's some technical work that I'm sure the retailers are looking at and thinking about to make sure that all of their products are available there as well.
Roger (25:26):
Super interesting. So I mean, we've talked about shopping trends, we've talked about global retail media markets. What I want to do is bring this back to what does all of this mean for brands? If we think about where the market is headed, what are some of the practical things that you think brands need to be thinking about to prepare for the future of shopping and the future of retail media more broadly? Because the future of shopping, particularly from an AI standpoint, will change the future of retail media. What are some of the things that you think brands need to be thinking about as practical takeaways?
Teresa (26:08):
Well, I think in today's environment, definitely thinking about retailer is that full funnel opportunity. So that does mean thinking about different parts of your plan, different objectives that you can deliver, and having the metrics that matter in each part of that. Yes, it's great at driving sales and winning that moment of choice on retail sites, but actually further offsite and obviously now using video as well. In lots of environments you can really get a consideration or a branding message across, but obviously they would be measured differently. So I think thinking about it that way is definitely important. I think like we've talked about with ai, it's about remaining discoverable and available so that consumers and shoppers can find you through these platforms. So thinking about how to optimize for that. And these different platforms might be looking at different sources. Some might rely more on your brand sites, some might be looking at Wikipedia, others might be looking at more traditional pr. And that's the kind of things that we'll be looking at and testing and seeing where the products information is showing up. So definitely some test and learns to be happening there. And then in terms of, and that's
Roger (27:22):
An interesting one, Roger, I just want to stop on that point right there. Thinking about where your brand information is showing up beyond commerce sites, I think is a critical piece here. You're talking about many of these AI engines, they're pulling information from an array of different sources, whether it's Reddit, whether it's Wikipedia, so on and so forth. And so thinking about how products live within those environments and product information is as important as how it's living within the retailer marketplace platforms, et cetera.
Teresa (28:05):
That's right. Yeah, I mean, there will be different influence and different importance on a lot of these different platforms. Obviously if you getting to the point where you're actually buying something and the LLMs looking for pricing and specific product information, then retailer platforms, absolutely very important still. And especially if you're saying you need it now or there's different dynamics there that need to be available to the LLM. But yeah, definitely further up the funnel and there's people are getting inspiration, I'm sure there's lots of different areas where you could influence that and make sure that your products are coming up in gift guides or product recommendations as people are looking for much more broad searches and really starting out in terms of looking for the product they need.
Roger (28:54):
Great. And I think I cut you off for some of the other key recommendations you were going to make. So sorry, but I thought that was just a really important point to touch on.
Teresa (29:06):
Yeah, well, I think the other thing is just making sure that you are building out capabilities both in-house, but also working with the right partners to really supercharge a lot of these areas. Some of them are obviously rapidly changing, and that's where you might need a little bit of external help to supercharge what you're thinking and to put that strategy in place. But certainly we're looking at having broad knowledge set in terms across all of these areas internally too. So building out best practice, building out ways of working, building out principles, investment, and how to invest correctly across that funnel. Building out obviously case studies and pilots and making sure that we're scaling those across different markets and into different teams is important. And then internally we've got collaboration to do as well. We work closely with the commerce teams, we work closely with the brand teams and all of these stakeholders are important and have perhaps a slightly different view on the world when it comes to AI or to becoming available on retailers, and that's where we need to collaborate closely inside as well.
Roger (30:16):
And from a collaboration point of view, how do you manage knowledge within the organization around key trends and shifts? And is that done in a coordinated fashion or is it based on relationship? What does that look like for you guys at Diageo?
Teresa (30:35):
Yeah, so we have our SharePoint, we've got communities that we've built digitally internally as well. Obviously as a global organization we have to work across borders. So a lot of it is via digital. We've also get together and have our regular roadshows and team Catchups as well. So it does happen in person too. But in terms of the ways we work, yeah, we've got all the typical channels that you think of. So newsletters, SharePoints, and Teams. Communities.
Roger (31:05):
Fantastic. Well, it's been so great to chat to you, Roger today. As always, it's always really good to talk about the industry with you, some really practical and useful insights for our listeners. We will make available in the show notes, the inside ai, inside out AI and outside in framework. That's a bit of a mouthful for our listeners, but I really want to take this opportunity to thank you very much for your time, and thank you as always to our listeners for tuning into unpacking the digital shelf, the APAC edition with me, Theresa Birdie.