69. Some Personal News

Change is Coming: the future of agencies + why RMN's should be in your 2024 budget

Oct 15, 2023

A very warm welcome to all the new subscribers. I’m thrilled to have you as readers and truly appreciate your feedback and support.

Feathr is supporting SPN this Quarter. Check out their marketing platform built specifically for nonprofits. Their easy-to-use advertising, email, and automation tools makes it so simple to run and report on your integrated marketing campaigns.

Today’s SPN includes the following:

What is the Future of Agencies? Change is Coming.
Why Creative performance and Media performance must live together.
Where is the opportunity for Retail Media Network’s in fundraising campaigns?

As with every edition of SPN please reach out with any questions or comments. I respond to every single one.

Let’s dig in.

Change is Coming

A new report caused some controversy this week.

Titled “The Future of Media Agency Models: Change is Coming” and published by the World Federation of Advertisers (link below in Reads) it says just 11% of respondents believe their current agency model fits their future needs, while 24% believe it’s unfit for future purpose. Ouch.

Lots of the issues covered in the report will be familiar to SPN readers and this sentiment from a WFA member resonates:

“We are desperately short of people who can connect the dots, talk across our different touch points, and challenge us to think differently. Everything has become far too channel-centric and executional.”

It’s wild that most of the agencies quoted agree they’re not fit for future purposes!

What struck a chord is that to flourish in the next 10 years agency partners will need to retain the brightest people who can combine the creative with the analytics. And the key word there is people - the single asset any agency really has. The same is true of nonprofits.

There are very few agencies I’ve worked with that have relished the challenge of working with ambitious Org’s. Especially in the nonprofit sphere. A shocking number of them just bring hashed work from other accounts, bend results to their end-benefit regardless of validation or accuracy, and incessantly remind you about the number of hours that remain available to you for the month.

My absolute favorite example of metrics-bending from an agency (and they’re a household name who were “donating their agency’s time and support” was when they suggested our EOY brand video had received a benchmark smashing 98.7% Video Completion Rate. What they failed to mention was that the video inventory they’d bought was unskippable.

Whereas the best agencies I’ve worked with embrace accountability. They’re available and willing. They create innovative plans not for the sake of “innovation” but based on insights specific to donor audiences, and your goals. And they find a way to execute.

Of course the tests they run or hunches they have about a channel or an audience don’t always work out. But rather than try pull the wool over your eyes, they celebrate a learning and they use it as a building block. Establishing a high degree of trust on both sides of any partnership is critical.

I talked about “Creative” last week. To take it a step further I really believe that creative performance is as or more important than media performance. The two have to live together.

Agencies are best positioned to drive this because they understand scoring and measurement better than anyone else, and they should be open to intelligence/analytics supporting media decisioning.

Both Org’s and agencies need to understand the urgency that is required for this alignment, especially when Gen AI will become a major opportunity and a major threat to campaigns’ effectiveness.

Transformation is always an opportunity. It’s also a two way street. Are you asking enough of your agencies? Do you have them working on the right stuff to ensure you’re both set up for success? Get yourself a capable co-pilot. They’re invaluable.

Where’s the Opportunity for RMNs in Campaigns?

I’d been hearing a lot about Retail Media Networks (RMNs) up until early this year. Then Generative AI completely overtook the media landscape. When I went to confirm my suspicions that they too had taken up prime position next to Snapchat on life support, I was surprised to find them still existing and even prospering.

The more conversations I’ve had about RMNs the more I strongly believe you need to carve out space for them in your budget. If not immediately, then in 2024.

What are RMNs?

Consider them a hybrid creation of contemporary merchandising for CPG brands, which now have even more appeal to marketing teams as 3rd party cookies phase out, meets an Amazon-like marketplace model for retailers. Let me explain.

Three main forces helped “create” RMNs:

1. The shift of consumer buying behavior online, significantly accelerated by COVID, forced CPG brands to think of how to stand out in the crowded eComm market – a market most of them had never played in and weren’t willing to start. Instead, these brands started pressuring big-box retailers – Walmarts and Targets alike – to give them a way to “get eye-level shelves” in the digital world.

2. As 3rd party cookies started phasing out, advertisers from all verticals were looking for ways to find potential consumers that weren’t cookie-based but were still more telling than “avid newsreaders”-type audiences. Credit card and retailer audiences were top-of-mind, but no reasonable solutions were commonly available.

3. Retailers wanted to take a page out of the Amazon’s strategy book and diversify their revenue in the digital world. Amazon is a marketplace – it took advertising money off 3rd party resellers from day 1, effectively creating a utility similar to Google search in every other vertical, where every up-and-coming D2C brand had to be on Amazon – and had to pay Amazon – to stand a chance at acquiring consumers and reaching profitability.

These three forces combined resulted in more retailers – starting with Walmart and Target, and then smaller brands such as BestBuy and Sephora following suit – creating technology to allow CPG brands to promote products on “virtual shelves” by buying first positions on Category Pages and in Search. If you’re in search of yesterdays/todays/tomorrows donors, I’d wager that you’d find them online shopping.

Where’s the opportunity for nonprofits?

CPG brands are not the only ones able to benefit from the infrastructure of RMNs – and use cases for other verticals will continue growing. For retailers to invest in the creation of tech to only allow CPG brands to benefit from it carries two significant drawbacks:

- They’d pretty much be competing with Amazon in the category Amazon created in the first place.
- They’ only monetize their inventory but not the data.

Competing in a pre-existing category means foregoing the first-mover advantage – neither Target nor Walmart, let alone smaller players, would be able to beat Amazon in the marketplace business. They’re 20 years and some tens of billions of dollars behind. They need to create a new pie instead of nibbling off the Amazon piece – and that pie is most likely in verticals outside of CPG.

More and more of these individual retailers are starting to sell not only their digital shelf inventory directly but also the data about how consumers use these shelves – their buying habits, how they spend the money, and more insights alike. This data provides a much-needed advantage to the non-profits, especially as 3rd party cookies are phasing out, and we all need more ways to target people “contextually”.

The market is highly fragmented and is still most applicable to CPG brands.

It’s not all roses in the RMN world yet. Very few retailers currently allow any other use of RMNs than for promoting products already selling on a retailer’s website, and the ones that do can only sell the data via some direct deals with a list of select publishers.

BUT that is starting to change. Now might not be the right moment for most Org’s to dive straight in, it’s something to keep on the radar to gain a first-mover advantage.

Do you use Criteo or TheTradeDesk?

Some of the traditional digital advertising players are already entering the market to make the data available programmatically. Criteo seem to be aiming to unite the RMN market and make consumer spending habits’ data available for targeting across the entire web. TheTradeDesk is partnering with Walmart to ingest its user data into TTD’s User ID 2.0. You could begin to take advantage.

There are a few practical applications that already exist for nonprofits in this sphere.

Direct partnerships with retailers.

The online version of the “round up your change” use case so popular offline. The Salvation Army is probably the Org that has “shaken” the most benefit from it given their offline positioning and retail locations.

Yet more and more online retailers are making direct partnerships available. Org’s that approach retailers first (Corporate Partnership opportunities?) can “reserve their spot.”

“Curated wish list” sales.

Lots of Org’s offer physical goods they sell where the proceeds are donated, whether via direct partnerships such as Charity:Water partnering with Aveda, “Give a Hand” stickers at McDonald’s, or direct-offered goods such as Inspired Gifts from UNICEF.

These products can be sold via retailers’ online websites – making nonprofits eligible for direct benefits of the RMNs and creating an added value of understanding “donor-shopper’s” behavior for future use.

Data Clean Room-like partnerships.

While few retailers currently offer their data for sale within the broader online inventory, most are creating their Clean Rooms.

I wrote more about Clean Rooms in this edition and explained the technicalities – in a nutshell, it allows your Org to share the data with a retailer to “merge” it with their back-end and understand how your donors are interacting with a particular retailer – what they buy, how much they spend, and other information of kind.

If your donor base overlaps significantly with a specific retailer, this is obviously a gold mine of data to use in the future – or even now – to determine your targeting or businesses to partner with.

Wrapping Up

RMNs are expanding and seem to have all the market conditions going for them. The number of use cases will only grow over time. Let me know if you explore this either internally or with your external agencies -I see huge opportunities for brand and revenue growth.

Now onto the fun stuff!