The Power of iROAS in Experiential Retail Media, with Andrew Lipsman, Commerce and Media Analyst, and Matt Eichorn, Co-Founder and CEO at Freeosk

Transcript

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Lauren Livak Gilbert (00:00):

Welcome to Unpacking the Digital Shelf, where industry leaders share insights, strategies, and stories to help brands win in the ever-changing world of commerce.

Peter Crosby (00:23):

Hey everyone. Peter Crosby here from The Digital Shelf Institute. Think of a store that's not just a place to buy things, but an experience that you can see here and touch. That's the essence of experiential retail media, the new frontier where advertising, content and commerce merge to create memorable moments for shoppers and incremental revenue for brands in both the short term and the long term. Andrew Lipsman, commerce and Media Analyst and Matt Eichorn, co-founder and CEO at Free asks joined Lauren Livak Gilbert and me to explain it all. Andrew and Matt, welcome to the podcast. Hey, Andrew, thank you for joining us.

Andrew Lipsman (01:02):

Hey, it's great to be here, Peter

Peter Crosby (01:04):

And Matt, so delighted to have you on the podcast. We're looking forward to this. Thanks. So Andrew, let's start in with you. I have to know from your time at eMarketer other places, I have long been a fan of your brain and you've always been a super incisive data-driven analyst. You have an action mindset like what to do about these things, and you bring that superpower to today's topic on the rise, experiential retail media. And so I think it's important after you say a long phrase like that to start with the terms define it for us. So when we talk about that, what does that encompass and how is it different from the traditional sort of in-store marketing or sampling that we've seen for years?

Andrew Lipsman (01:49):

Yeah, well, the way we defined experiential retail media is that it's multisensory, multimedia, and multichannel. So what we mean in this context with product sampling as an ideal example in the context of the free asks experience is that you get to activate multiple s senses, your sight, smell, taste, all of these sorts of things when you actually get to experience the product. It's a digital kiosk, so it is multimedia, and then it also activates across channels both within the physical retail experience as well as digital experiences. And just to rewind really quickly on, why does experiential retail matter? I think for me, we often zoom past the why in retail media generally. And for me, it's actually always been about marketing effectiveness. I grew up in the Marketing Effectiveness school, and I just believe that when you bring rich media experiences close to commerce, advertising and media is much more effective. And so to me, experiential retail media, product samples, things of that nature are the pinnacle of marketing effectiveness. And then I think Free has been around for 15 years before retail media was a thing. So they were just well ahead of their time in understanding how important this would be in bringing measurement to in-store media experiences.

Lauren Livak Gilbert (03:22):

And sampling is hard. I remember from the brand world having to create a new product and then being like, okay, let's start a sampling program. It's like, oh my gosh, okay, we got to get the sizes. We got to work with the manufacturer. We have to figure out what this experience looks like, who do you ship it to? There's a lot of complexity. So I feel like this experiential sampling really makes it easier for brands to be able to access consumers, be in a place where they already are and really kind of drive a shift in how they're experiencing the product. So can you talk about, and maybe this is an Andrew and Matt combo question here, but how are you thinking about from the brand side, how they're using this to drive market effectiveness and how is it different than a traditional sampling program?

Matt Eichorn (04:13):

Yeah, thanks for saying it's hard. Part of our pitch has always been we make this look really easy To everybody else, it is actually really hard, but I think as Andrew said, we've been doing it for 15 years, so we've figured a lot out. But a couple of things. One, what we hear from brands and shoppers, but what we hear from brands is that the consistency of messaging is really nice. So we have a huge 32 inch touchscreen and we're able to bring to life the best assets of the brands. They spend all this money, you mentioned launching new products, you spend all this money figuring out what is the right tagline, what is the right visual, what are the right colors? And so a downside sometimes of traditional sampling is that that messaging is not consistent. So to be able to bring to life in full media sound motion graphics is kind of great.

(05:06):

The other part which is really nice is that free ask. We are sometimes dispensing a sample that's a sample size, but also sometimes we're dispensing the full size item. So let's say if it's a granola bar, we're able to dispense a full size item. So the value that shoppers get out of this is oftentimes sometimes more they're able to experience it. And of course, if it's something like a laundry product, they can take it home, experience it, and then come back and shop. And as Andrew mentioned, measurement for the brands is critical. And so because we are tied to the shopper loyalty program, we're able then to measure that effectiveness once the shopper goes home and comes back over time.

Peter Crosby (05:49):

Andrew, that seems like the, oh, no, go ahead. I'm sure.

Andrew Lipsman (05:52):

Yeah. Well, I mean, product sampling has been around for a long time, and it's just always been a form of traditional marketing where it's like it works. There's an intuition that, oh, this is important to grow your brand, but it is kind of been like TV historically where it's not really measurable. You just did it on faith. Now it's much more systematic and you can bring the measurement to it and understand the effectiveness. So that actually allows it to import really nicely into retail media. So it's part of really a full funnel program. It activates all parts of the funnel itself, but then it fits in nicely to me, I've kind of thought of product sampling is like the cherry on top of a good cross channel retail media program

Peter Crosby (06:37):

And tying it into the loyalty program just makes it, connects it up, I would imagine with lifetime value and other important metrics that really tell you what the payoff is perhaps over a longer period.

Andrew Lipsman (06:57):

Does that make sense? This is one of the first things. So I actually heard about Free asks back at its founding date. I thought this was the coolest idea that you could actually bring, I'm such a data nerd that you could actually bring data to sampling. And I was thinking about, oh my God, it's tied to the loyalty card. You can actually see how people behave then into the future. So there is an evolution going on in measurement in retail media. We live in the ROAS world today, but we all kind of know CPGs. We have to evolve towards incrementality. And the next step beyond that really is understanding lifetime value or at least long-term value. And so one of the coolest things here is this is really the best way to understand how something that doesn't necessarily happen in the same volume that let's say offsite advertising does, you have hundreds of millions of impressions. It's finite in terms of the number of people who would sample a product, but each engagement is a lot more valuable. And so you get to see that in terms of how many of those people actually try the product. It's a lot high percentage of conversion, and then some percentage of them keep buying it into the future, and that's where the value really

Peter Crosby (08:16):

Accrues. So we'll get to the metrics in a minute, but before we get there, I think Matt, it might be really helpful since we are an audio podcast for you to try and really bring to life for our listeners what the shopper experiences when the Free Ask Machine jumps out in front of them and confronts them with a possibility of joy, why don't you walk us through what that looks like and feels like to the consumer and therefore what is the brand control in that experience as well?

Matt Eichorn (08:50):

Yeah. Well, first of all, again, I think we're all about product discovery. We want shoppers to discover their new favorite products. So that's kind of our starting point. And so the way we do that is, again, we're among the shopping path. So we're not on the fourth wall. We're when a shopper is in the middle of their shopping trip, we're hard to miss. We have really small footprint. Anywhere you can stack three cases of beer, you can put it free us, but we're really tall and so we're like 90 inches tall. So we definitely stand out and we're oftentimes in a part of the store that's heavily trafficked. So we're in the freezer cooler section, and again, we're able to bring items and categories out of their home location. So you're walking along, you'll see a huge 32 inch touchscreen with motion graphics to grab your attention very clearly stating what sample is being featured.

(09:45):

And then the Frias also has integrated shelves. So all of the full size product for sale, what we like to say is within arm's reach of a sample. So a shopper walks up and they can either scan their loyalty card, they could enter their telephone number, however that retailer prefers, they could scan their retailer loyalty, their retailer app. So they scan at a scanner and then a individually wrapped sample is dispensed. So they have the opportunity to try it right there. If they really like it, they can pick it up the full-size item and put it in their cart or take it home, try it later, and then we can watch again, as Andrew said, that conversion over time. It

Lauren Livak Gilbert (10:25):

Reminds me of Costco sampling when you go into Costco and you try all the different foods and then you go purchase

Matt Eichorn (10:30):

It. It is, it is. And part of that is actually Warehouse is a great example where in each and every Sam's Club warehouse club. And so those are large environments. And so to be able to have that entire experience happen all in one place is really valuable in that case to the member. So they have this experience and they don't have to walk anywhere to go find that item. It's right there for them to pick up.

Peter Crosby (10:59):

And Matt, just so I understand, are the retailers buying the machines and you are managing who's advertising on them in any particular week or month or however that works? I'm just wondering what kind of the whole thing is.

Matt Eichorn (11:16):

You bet. And of course, as Andrew mentioned, we've been around for 15 years. So as retail media has arise, our relationship with the retailers have changed. And primarily we're a part of the retail media group. So one of the things that Free asks offers, which retailers love, is that our equipment is provided at the retailer at no expense. So free asks, covers the capital, and then we work in partnership with the retailers, retail media groups to get programming by the brands.

Andrew Lipsman (11:44):

Retailers have been slow to move into in-store retail media. I've been beating the drum on this for a while, and the biggest inhibitors have always been CX and CapEx. So frees, as Matt just mentioned, they take care of the CapEx, the cx, they're always worried about disrupting the shopping experience. This is very additive. It's a clear value add to the consumer, so it overcomes those hurdles. And then the last one is the small footprint, which within the store environment, the retailer is always so concerned about anything that might disrupt the traffic flow, and this doesn't do that. So what I've been advocating for years now is don't, retailers are really kind of prevented themselves from getting into in-store retail media. And I'm like, you don't have to do it all at once. You don't have to bite off every single experience in the store, do the ones that are obvious, make the most sense, and have the least disruption. So there are other surfaces that I think are also great, but free Us certainly to me is one of the no-brainers.

Peter Crosby (12:51):

And then adding to that list that you just rattled off is and are measurable and incremental. And that's what I thought it'd be maybe fun to go into now. And Lauren, I just realized I stole your question. No,

Lauren Livak Gilbert (13:04):

That's okay. And before I get to measurement, I just want to say something I've heard Andrew say so many times, and I love, and it's that all the stores a stage. And I think that that is so powerful because even if you think about Gen Z, gen Alpha, they want a combined experience. They don't just want to buy online, they want to go in store, they want to touch things. I mean, I'm even imagining sometimes I'm like, I want to sample before I purchase this online. I'd go into a store and get that so that I wouldn't have to return it. Right.

Matt Eichorn (13:33):

And Lauren actually before again, this partnership with Andrew is great because although I'm really into measurement too, I understand the importance I'm with you in that we come at this from really the fun aspect of shopping. And again, my background is in store and I have a strong belief that shopping should be fun and that the physical store, we've over rotated a little bit on.com. Clearly it's important. Clearly it's a really important part of every retailer and brand strategy. However, we can't forget that the volume of traffic is in store, the volume of sales is in store. And so all the measurement is important, but if we start with the shopper first and make shopping fun, I think is, and again, as you said, it's fun, but it also has a lot of utility. I'd actually really, I saw perhaps on Instagram or TikTok, I saw this new brand, but now an opportunity to actually try to store before I convert I think is really important. But the fun part is I'm high on the fun part.

Lauren Livak Gilbert (14:48):

I love it. I agree. I agree. Okay, so the part also fun for a lot of people, but maybe not as fun. So let's chat about this. Andrew, you already mentioned, we all know ROAS is roas and we can't just rely on that. We need to lean towards incrementality. So how are you helping brands and retailers think about what they should be investing in from an in-store retail media perspective, how they should be thinking about measurement and how this kind of fits into that?

Andrew Lipsman (15:16):

Yeah, I mean it starts with just that mindset shift from ROAS to I roas, incrementality, making sure that the marketing actually drives a sale that wouldn't have otherwise happened. The funny thing is we kind of accept ROAS in e-commerce and digital, but in store, you can't get away with that if you're like, yeah, I have some ads in store and you want to take credit for every single sale that happens in the store, it just doesn't make sense. So with Free Ask, we're looking at people who obviously actually sampled. So even there ROAS is more legitimate because it's kind of qualified to not just everybody

(15:59):

Or every sale. So they actually had to do that. But there's a higher bar of measurement with incrementality. And so in the research report we show side by sides of roas and I roas, and it's really cool to see that the incrementality pencils out over a 28 day time horizon. We did a meta study that showed it was an average of about a $5 I oas, but some of those people keep buying into the future and buying into the future. So after a 26 week period, it was three times higher, about $15. Some of the studies were measured even further to 52 weeks, and it was often about a four or five x improvement. So that's the thing. And I say it's about marketing effectiveness. Sometimes it's actually a very small subset of people who convert and then buy into the future. It doesn't take a lot to move the lever if that person starts to really become a loyal buyer. And so oftentimes, I think marketers can talk themselves out of media that's not purely the cheapest media. They're all looking for return based on cost effectiveness and cost effectiveness. I'm putting that in quotes, drives roas, but it doesn't drive incrementality. So you really do have to invest in those higher quality experiences to drive that value that you will see as it plays out into the future.

Peter Crosby (17:34):

And so just so I understand, when you talk about the incrementality, and this is my, I don't do this every day for a living potentially stupid question, but the incremental ROAS that you talk about after 26 week or 52 weeks, is that a consumer continuing to buy more or a consumer that sampled maybe even 26 weeks later coming in and finally buying the product? Which or is it both or what is that? Does my question make sense? Which is that,

Andrew Lipsman (18:05):

Yeah, I mean it ties to the loyalty card, Matt. That same consumer can be tracked over time. So some percentage of them are going to try it that one time they'll buy it and they may not become a loyal consumer. Maybe they buy it elsewhere. Some of this is that we don't have visibility into their purchase patterns in other stores, but even if you just narrow it to that store, you will see that a decent percentage of them continue buying. And some of them start buying very, very regularly. I mean, it's amazing to see how many of them will buy every month into the future.

Matt Eichorn (18:39):

And I think the short answer it is definitely both because one of the things that Free asks introduced was this idea of delayed conversion in that the idea that because we know exactly which shopper received a sample and on what day and what visit, we really do see people, not everyone buys on impulse. Some people are taking it home and they're thinking about it, they're trying it, they're adding on their list, and maybe they come back maybe, and it's not the first visit, but it's the second visit. So it is definitely a both, but if for shoppers, we're looking for them to discover the new favorite product, again, for brands, it's all about finding new. And so that is such a critical part of their business. And so we're a magnet for new just because we are really disrupting certainly the shopping experience, but then also we're just bringing one item to the forefront and it really breaks through and that's what you need to get new customers.

Lauren Livak Gilbert (19:40):

And do you find that certain categories work better with something like this, like food versus personal care? I'm thinking of, I wish there were sampling for dog food, but I know that doesn't probably exist, but is there a specific category that maybe works better?

Matt Eichorn (19:55):

Yeah, so we have sampled dog treats and cat treats. So pet, oh my gosh, for sure, for sure. One of the categories we do, so it's really funny, again, we're a really data-driven company. We have been doing this for a while. We have millions and millions, I think we've given out, I don't know, 300 or 400 million samples. And so we have a ton of data. And conventional wisdom would be for a while we were like, oh, anything with chocolate, right? Our engagement, because we can measure with by store and we can measure people's engagement. I think the interesting part for me was one of the times we had someone was launching a new pen, and so we dispensed a full-size pen as popular as chocolate. So our conventional wisdom isn't always correct as to what for a while, we just said anything with chocolate does great. I don't know, pen, A new pen matched the engagement. But yeah, no, it is truly really anything shelf stable. So anything that can fit in the palm of your hand is individually wrapped can be dispensed. So yeah, we hit all categories.

Lauren Livak Gilbert (21:00):

I love it. I mean, I also think we can't underestimate the fact that most of the population loves free stuff

Matt Eichorn (21:07):

Across every demographic. I mean, it is universal. It is universal. And so we want to take advantage of that also. And the same measurement that we're putting to all of our sample activity. The other thing, this, what the freas does, it really does create an audience in store. So we have shoppers who are stopping and very willingly engaging with the free asks. That's an opportunity to also serve some other ads. So while they're waiting for their sample, they may see ads for other categories, other items. They could be an important retailer message about one of their big initiatives like curbside pickup or something, or to download the app. So we use that opportunity to also introduce other categories, let's say beverage or frozen food, which we will not be dispensing through the free asks anytime soon, maybe one day. So it's a real opportunity to really cover the entire box with an audience who, again, we always talk about this audiences, it's people who and shoppers who want to learn new things. So they're sort of ripe for all these awareness type messaging that can go hand in hand with the messaging that's about the sample they're getting.

Andrew Lipsman (22:24):

It works for low engagement and high engagement products, which I think is kind of cool in a low engagement category. I think of some household items. You might just need some product education. You try it that one time and that dish soap or whatever it is, has the benefits that you want and so you'll buy into the future. And then there's also high engagement categories, things like chocolate. My personal favorite is Australian licorice, Wiley Wallaby. I mean, I've always been, licorice has always been top tier candy for me, but once I steered into Australian licorice, there's no going back. It's just a totally different level of quality.

Lauren Livak Gilbert (23:01):

You either love it or hate it. I feel like licorice is one of those things where you're never in the middle. I really don't like licorice, but people who love licorice are just all in. So totally,

Peter Crosby (23:13):

I had no idea the Australians had reinvented the licorice category. I'm going to have to try it.

Lauren Livak Gilbert (23:19):

Have you learned anything from this podcast, Austral Licorice?

Peter Crosby (23:22):

Well, let's keep learning because Matt, I mean we've been talking for a while I think in the industry about this merging of digital and physical into something that creates the sum total being hopefully more powerful. And I'm not sure all the experiments in this realm have worked out to that advantage. And I'm wondering, given your experience at Free asks, and with 85 to 90% of CPG sales still happening in store, what do you think, just as we start to close out, what do you think is the biggest missed opportunity for the digital and e-commerce leaders at brands when they think about the opportunities that can happen in a brick and mortar environment today?

Matt Eichorn (24:06):

Yeah, I mean certainly we are a bridge, right? But I cannot stress enough at how important in-store is as the sort of starting point for an omni experience because the numbers, it is a retailer's mission to get more and more people and a brand's mission to be buying online. I just think that the audience in store is being overlooked as really, really valuable. And I think part of that also is we also say these are real shoppers in the real world. So again, from a fraud standpoint and a brand safety, it's like these are people who are, we know our shoppers, we know they are in the right mindset, and because it is tied to the loyalty card and an email address, we have the opportunity then to then get them to influence them to perhaps purchase online when they're outside of the store. So for us, it's really continuing that conversation. It's a conversation that we think starts in store, but then it can extend online.

Peter Crosby (25:20):

Who do you find are, who's your best advocates of this happening? Do the brands sort of put pressure on the stores to move into this realm? Is it retail stores themselves are really running hot with this and it's sort of trying to bring the brands along? Or is it kind of an equal

Matt Eichorn (25:41):

Collaboration? I think it gets down what I've always found, it gets down to the strategy of the brand. And so that is sort of the core and what is happening for that brand at that time. Are they a challenger brand? Are they a disruptor brand? Are they a small brand that's on fire and is just really just need to get a lot of awareness? So for me, we're a strategic tool and being able to make sure brands understand what we can offer them. But it all starts with what their strategy is. And for me it's, it's not necessarily the most adventurous brands, but it's brands who have something, they have a very clear strategy they're trying to employ, and they can very clearly see that this is a different tactic, very different than one of a lot of the others that are out there.

Peter Crosby (26:32):

And on your side of the house, if you're in our listener's seat and they are starting to wave their les mis flag around IRO as and to make that argument inside their own house and figure out how that works, who should they be allying with to make that case and who are the players? And because in making that shift and making the decision to commit to it, because a little daunting when you've been able to rely on something that's a little fuzzier to do your math. And I'm wondering just how you advise firms about moving in this direction.

Andrew Lipsman (27:14):

Yeah, I mean it really requires within the context of retail media, organizational change, these organizations are not built for this. And there's this weird dichotomy in that CPG brands are the ones who have led the charge and led the conversation on incrementality because they never really believed that you put a dollar in and you get $4 out. Those sorts of returns on a CPG brand are just not that realistic in most instances. At the same time, the organizations are not built for this to happen. Marketers are fundamentally incentivized on things like ROAS and cost efficiency. And those two things go hand in hand, but they're actually antithetical to incrementality. So there's this trap. You need to, I think, get alignment with the CMO. They need to understand that they need to push for more recognition and acknowledgement of this within the C-suite because this ties into sales truly growing sales.

(28:15):

So that sales leader and the CMO should be working hand in hand on something like this, and then it has to go up to the CFO. And so right now, these things are, the people sitting in these seats are often working at odds, but they shouldn't be. And so I think that you need to see more compelling examples of how incrementality really works for those light bulb moments to happen with particularly the CM O and the CFO and get them on the same page. And I think if they get a conviction around this that you'll actually see brands start to see a connection between the measurement from their retail media programs and the actual increase in sales performance of their brands.

Lauren Livak Gilbert (28:57):

And Andrew, that is so incredibly accurate because I feel like the marketers, even the CMO is not measured on that long-term benefit in their goals and objectives. They have short-term focused goals because they need to show the value, especially in marketing and especially today and especially with the changing role of the cmo. So that's a fundamental shift in how your golden objective as an organization that really needs to change and you need to have a CMO and leadership that is willing to wait to see those results and understand the benefit. That's a big shift

Andrew Lipsman (29:35):

Right now. There's a lot of short-termism and we're advocating here, let's think long-term how brands really grow. You can activate some things in the short term, but it is actually going to play out in terms of brand growth over quarters and years, not a short-term attribution window.

Peter Crosby (29:55):

You were talking about,

Lauren Livak Gilbert (29:56):

Sorry, go

Peter Crosby (29:56):

Ahead, Peter Termism, short-termism. Well, you were talking about finding ways to sort of bring examples to life for your C-F-O-C-M-O sales leader triumvirate. And I think one of the things that I would say is the research that you've conducted, Andrew on experiential retail media that FSK has on their site is a great place to start. And probably the easiest place, if our listeners want to find that, is to just go to the Google machine or whatever search thing you're using these days and enter free asks experiential retail media into the search, the search engine. And it will find that for you. And I think at some point in the fall, you folks are also coming out with a refreshed version of this original research is from back in May, and you have more news coming up in the fall that people will also be able to find. Yeah,

Andrew Lipsman (30:47):

That's right. This first research put a stake in the ground on experiential retail media, and I think it was really the first time to get a good view into how marketing effectiveness works in terms of lifetime value. And now we're working on some new stuff that will take the conversation even further and unpack LTV lifetime value even more. I think there's a lot of education that needs to happen within CPGs and understand how this really works, the mechanics of it. And I am hopeful that this will start to change the marketing conversations within these brands.

Peter Crosby (31:22):

Well, you better be careful. You might find yourselves back here to keep teaching us. We really appreciate what you two have shared today in the opportunities for getting IRO as on the map. I think it's terrific. So thanks so much for joining us guys.

Matt Eichorn (31:40):

Thanks a lot, Peter. Thanks Lauren. Thank you for having us.

Lauren Livak Gilbert (31:43):

Thank you both.

Peter Crosby (31:44):

Thanks again to Andrew and Matt for all the info. Hello, governor. That's right. The DSS summit is coming back to London on October 16th with an action packed half day thought leadership and networking event for industry leaders. Request your ticket at digitalshelfinstitute.org/DSS Europe. Thanks for being part of our community.