# S2 E4 - History of Retail Media 4 - PVSB - CPG Guys - Kroger mania

S2 E4 - History of Retail Media 4 - PVSB - CPG Guys - Kroger mania 

[00:00:00] welcome to the middlemen. I'm Tom Limongello, and I'm here with Todd Sawicki. We, as middlemen, live at the intersection of media and e commerce, and we would like for you to join us in our discussions where we turn that chaotic intersection into your comfort zone  

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[00:00:18] Tom: So welcome to this episode of the middleman. We are going to have a guest today that is from the CPG guys. And Todd, we, we met them at CES, right? 

[00:00:28] Todd: Yes, we had a chance to meet Peter at CES and Peter is one of the co hosts, . CPG guys has been a podcast that we've been big fans of 

[00:00:35] Todd: and ultimately, Peter. Had a had a rainy Sunday where he where he was home sick and decided he wanted to go listen to new podcasts and decided to listen to the middleman. And what really caught his attention was where we kind of started our journey with the middleman, which was talking about the history of online. 

[00:00:52] Todd: Retail media and the rise of it. . And one of the things he really wanted to point out was something that he himself was, was a part of, which is the role, the [00:01:00] key, important foundational role of dunnhumby and dunnhumby America. 

[00:01:03] Todd: And, you know, one of the things I think is, is really fascinating is we talk about the, the, the quotient mafia and your involvement and background in the rise of retail media yourself, Tom, but also. And we have touched on a little bit the rise of dunnhumby, but it is great to have Peter talk about the role of dunnhumby and really offer some interesting insights into, uh, how dunnhumby really Pioneered the role of loyalty programs and which is such an important foundational piece of retail media today and also the rise of the dunnhumby Mafia as a quotient like group of folks who've been so influential and so important. 

[00:01:39] Todd: And Peter really is one of those people to me, this has been a fascinating part of this podcast and journey is memorializing and learning about the history of this space and having a chance to really Record for posterity's sake. Where did this all come from? And how did we get here? And I think that's a great lesson for us overall, which is to hear his [00:02:00] story. 

[00:02:00] Todd: And how personalization and personalized one to one marketing in a lot of ways. Was, uh, partly invented by dunnhumby in dunnhumby, America. And truly is interesting in terms of how they piece together these proto digitals marketing systems to pull off this, the, the really, one of the really successful examples of one to one marketing, 

[00:02:21] Tom: I think for me, the most important thing is you sort of learn this at some point in your career that you don't need a ton of tech to be able to implement. Some of the more interesting, uh, ideas, like, so this concept of doing personalization via mail, which we'll get into, and it's fascinating, um, you know, if you're growing up today, you might be like, well, how did they even do that back then? 

[00:02:43] Tom: They didn't have mobile phones. They didn't have all these data points that they have today. So I think that part of it is super interesting. For me, it was a puzzle piece. Of the history. And so if we want to have a look , I wasn't able to piece together this timeline until [00:03:00] I heard from Peter bond. 

[00:03:01] Tom: Here's where that initial loyalty piece from Kroger came in because it was sort of a missing piece in the late, you know, mid nineties . I knew sort of the really early stuff from Coca Cola. Yeah. putting out the first coupons because Quotient really was a manufacturer's coupon based loyalty product before it was a retail media builder. 

[00:03:23] Tom: And, understanding what the retailers were doing, it really allowed me to go up and research and see from Kroger and Safeway through to Kmart, um, into Walmart and, and Amazon. How it really pushed through and sort of how the retailers have always been looking to leverage their data. And it's really just until the digital age that we were able to sort of connect those point of sale transactions and loyalty registration data. 

[00:03:51] Tom: To the online programmatic world, which is, where our genesis of as a podcast and our discussions really began because that that's that sort of [00:04:00] revolution is still happening where programmatic ideas and concepts and tactics are making its way into the retailers world. Um, but, you know, there's, there's friction because they don't work the same way. 

[00:04:12] Todd: Well, and what, uh, what for those of you who are listening, what, what Tom has done is shared. He's created a timeline, a slide going back to 1887 and Coca Cola issues, the first manufacturers coupon through to today. The, the, you know, what Amazon ads is doing in terms of turning into a truly multi site, multi retailer platform with their retail media program from 1887 to 2025. 

[00:04:36] Todd: And so there's this timeline, which we're gonna, we'll share a link in the show notes and episode notes here in terms of so you can download this, but it's really a fascinating visual timeline. Of the history of retail media from again from 1887 to today in 2025 that that Tom's put together. So I encourage everyone who can't see it on the screen right now to go download it and take a look. 

[00:04:58] Tom: Yeah, and I think it really sets [00:05:00] up this discussion with Peter who does a really great job of going through the detail of what it was like to be there in the mid 90s, developing this sort of direct mail personalization product before any other retailer had really done it.  

[00:05:14] Tom: Today with special guest peter bond from the cpg guys Thank you for coming. Um peter and thank you for reaching out  

[00:05:22] Tom: to us. You actually the reason we know you now is because You, I think you were sick on a Sunday and you were looking at some of our old episodes and you found one, the history of retail media, which you found a, you threw some shade on us and, uh, I'm, I'm totally okay with it because, uh, after listening to some of your episodes, Sri's the retail media guy and you were the loyalty guy. 

[00:05:44] Tom: And your problem with our history of retail media was that we didn't really know loyalty that well. And loyalty really is the underpinning of retail media. So I wanted you to come on and give us a Todd. Todd actually 

[00:05:55] Tom: Absolutely. I was no, we should have Peter on. This is, know, it it's good to have [00:06:00] another person who is there for the beginnings of modern retail media or digital retail media and, you know, and memorialize your history and story at the same time. So 

[00:06:12] Peter Bond: Well, thank 

[00:06:12] Tom: at, uh, IRI then dunnhumby, then after that CVS health fetch and now flywheel digital. So you really had an amazing purview. Um, but tell 

[00:06:23] Peter Bond: can't keep a job. 

[00:06:24] Tom: What's that? Yeah,  

[00:06:25] Peter Bond: I can't keep a job. 

[00:06:26] Tom: there you go.  

[00:06:27] Todd: I  

[00:06:27] Todd: think it speaks to more. The landscape has really evolved 

[00:06:31] Peter Bond: it has.  

[00:06:31] Todd: the that's that's to me the story. Because look at. Tom and I have bounced around as the world has evolved too. And so I think that speaks to the evolution of the market, the technologies, everything that leads to here today. So I'm not sure it's you as much as it's like the larger ecosystem at play here. 

[00:06:48] Peter Bond: Well, thank you guys. It's, it's a pleasure to join you today. And yeah, I was binging on your podcast as I found it. And I think I was searching for Clive Humby That's how I, I [00:07:00] found, 

[00:07:00] Tom: Oh,  

[00:07:01] Peter Bond: uh, yours. Uh, in fact, I, I always joke when I run into an ex dunnhumb-ian that if we were to take a 23andMe test. We would all find strands of Clive and his wife Edwina in our common ancestry, but yeah I I was so intrigued by you're talking about the history of retail media and Most people think of retail media in its digital form, right? 

[00:07:24] Peter Bond: starting with 1. 0 is kind of the introduction of personalized on site Advertising typically in the form of product listings, uh, ads and what have you. And I, and it, it dawned on me that, and that's when I reached out to you. I said, you know, there's, there is a lot of background on this that goes into 1989 when, when dunnhumby was formed. 

[00:07:51] Peter Bond: They partnered with Tesco. And then in the early 2000s when, um, When they, when they partnered up with Kroger. So I thought it would be good if I [00:08:00] could kind of walk through some of the background. on how that all happened and how, to your point, loyalty data underpinned the ability to do all of this. So, if you're not familiar with dunnhumby, they're a company that was formed by one of your prior guests, Clive Humby, and his wife, Edwina Dunn, so that's the Dunn and the Humby. 

[00:08:21] Peter Bond: But they had started by helping Tesco to understand How using this big data and the ability to process the big data could help identify, uh, customer behavior and therefore give you signals as to how to treat your customer to get them to spend more. Because, um, one of the things that I found when I was at dunnhumby working with Kroger is Kroger did segmentation of its customers. 

[00:08:51] Peter Bond: Based upon frequency of purchase and, and, uh, transaction size. And, and what they found is their [00:09:00] most valuable customers, they called them their premium loyals, they represented about 5 percent of their, uh, Uh, of their customer base, uh, but delivered, I think, uh, north of 20 or 25 percent of the volume. That even amongst that most loyal group, 43 cents of every dollar they spent on consumer goods happened outside of Kroger. 

[00:09:19] Peter Bond: So there's still a lot of value in understanding who these customers are, because there's just an ability. And, and it's, the idea was that you're, you're always going to do better by marketing to people who already like your brand. And get them to spend more than trying to bring new customers in. So. What, what happened with, with Kroger, and it's a really interesting story, I have a dear friend of mine, his name is Dave Ciancio. 

[00:09:44] Peter Bond: I met him in the late, uh, in 1999, early 2000, when I was at Priceline. com. Many people don't remember that Priceline had a short lived, uh, grocery division, where you could name your own price for groceries. 

[00:09:58] Tom: had no idea about that.[00:10:00]  

[00:10:00] Peter Bond: It was an interesting one, and it was a 

[00:10:02] Todd: It would be popular today, given inflation. 

[00:10:05] Peter Bond: It would be incredibly popular.  

[00:10:07] Peter Bond: And the idea was that, that by offering consumers the ability to select, um, a category and say, Hey, I don't really care what brand you give me, just give me a discount. 

[00:10:18] Peter Bond: You're now isolating the price shoppers away from the brand loyals. And now, you know, the biggest problem with frequent shopper discounts is you give it to everybody, regardless of whether They needed it or not. Priceline was a, was an interesting model. But that's where I met Dave Ciaccio, because I, I, I helped negotiate the deal to bring Kroger into that ecosystem. A couple years later, Dave, was intrigued by what he was hearing about dunnhumby over in So he went to their site and they had a contact button, so it was a little form, and he sent a message. He said, Hey listen, I'm Dave Ciaccio, I'm the Vice President of Loyalty at Kroger, I would like to talk to [00:11:00] you. 

[00:11:01] Peter Bond: And apparently it sat in the general inbox for three months. Nobody read the message. And then one 

[00:11:09] Tom: Nobody uses that thing. 

[00:11:10] Peter Bond: Nobody uses that thing, right? And then one day, uh, someone at dunnhumby actually went and looked at, and there it was. And they're like, let me, let me try and figure out who this guy is. Uh, this was early days, so I don't even know if LinkedIn was available yet. 

[00:11:25] Peter Bond: But, they ended up writing back to him and said, Uh, sorry, we just got to this. Is this real? And he goes, no, it is real. So, and they joke about it today, the fact that it could have well gone overlooked and dunnhumby would  

[00:11:38] Todd: Absolutely.  

[00:11:39] Peter Bond: the impact that it did with Kroger. But basically, dunnhumby partnered up with Kroger and they said, listen, you have an enormous, enormously powerful data set. 

[00:11:49] Peter Bond: You, for, for many years, you've been managing a loyalty program called Kroger Plus. And the value proposition to the [00:12:00] consumers was the only way you get frequent shopper discounts is by scanning the card and identifying yourself a transaction. And the second way you drive value is Kroger was building fuel stations in all their parking lots. 

[00:12:14] Peter Bond: And every time you spend a certain threshold, they give you another 10 cents off a fill up, a per gallon fill up, right? Uh, and so that was the value. So they were actually scanning and identifying, attributing the transaction volume at a very high level, to the tune of about $0.96 cents of every $1.00 that went through a register at Kroger could be identified back to a household. 

[00:12:38] Peter Bond: I mean, in terms of loyalty data quality, the only thing that beats that is club stores, right, at a  

[00:12:43] Peter Bond: hundred percent,  

[00:12:45] Peter Bond: but pretty  

[00:12:45] Peter Bond: good. It's really 

[00:12:47] Tom: that's when you get into the ad tech world, people were just like, Whoa, 

[00:12:50] Peter Bond: I mean, if you think about chain drug, right, CVS is probably more in the 70 percent range, right? Walmart isn't even that [00:13:00] good. A large percentage of Walmart's transactions are cash. 

[00:13:04] Peter Bond: You can't tokenize cash. You can, you can tokenize credit card hashes, but if you don't have an identifier, that means it's very challenging. So, they knew they were working with really powerful data. So, they set up a pilot and tested it out. The results proved to be very effective. And so, rather than hire dunnhumby, As a consultant, they entered into a joint venture where each of the companies owned 50 percent of an entity called dunnhumby USA. 

[00:13:32] Peter Bond: And that was, that was the origins of dunnhumby in the U. S.  

[00:13:36] Peter Bond: Now the data asset was obviously the household, but the points of information they had were kind of very 20th century. And what I mean by that is that when people registered for a plus card, they gave their physical address and their name. If they wanted check writing privileges, they had to go through some [00:14:00] additional credit checks. 

[00:14:01] Peter Bond: But two pieces of information they were not collecting at the time. Remember, this was, this started in the 90s. They weren't collecting phone numbers, because at the time nobody really had a cell phone. And they weren't collecting email addresses, because nobody had email. Right? So dunnhumby had to work with what they got. 

[00:14:19] Peter Bond: Like, the thought of going out and collecting those data points for 50 million shoppers is just an, without, a funding mechanism to incentivize the users to give that would be a very daunting task. They said, okay, we're going to have to work with physical mail 

[00:14:35] Peter Bond: but they wanted the direct mail to be personalized, right? And that becomes a big challenge you're thinking about offset printing and to get it affordable. And that's really hard to do if I'm sending Peter a different message than  

[00:14:53] Tom: So you're, you're saying that basically they were looking to print personalized, 

[00:14:59] Peter Bond: print [00:15:00] personalized 

[00:15:01] Tom: kind of crazy because people tout doing digital personalization and it barely ever happens.  

[00:15:05] Tom: Even though it's much easier to do. So Kroger was actually going out to say, I'm going to print you something different that you will get in the mail. 

[00:15:14] Peter Bond: Yeah, and it was important to do that because they knew that how you shop and how I shop are fundamentally different. And the items and products that I will appreciate value on are fundamentally different than yours. And that was the only way to get the biggest bang for the buck. 

[00:15:34] Tom: How did they even do that? 

[00:15:36] Peter Bond: So here's how they did it. 

[00:15:37] Peter Bond: They said, okay, let's start on a very basic level. Is there any, anyone out there, any printer who has the ability in one form or another to do personalized digital printing? And they sent out RFPs and they finally identified one in particular, R. R. Donnelly. And R. R. Donnelly said, [00:16:00] here's what we can do for you. 

[00:16:01] Peter Bond: We can offset print the basic sheet, right? So the colorful sheet with a blank space in the middle. And what we can do is, and it'll be on perforated paper, right? So imagine a very long, narrow strip of paper with perforation so that there are seven different, essentially, mini pages on that one sheet that you can tear and turn into, you know, The shape of a coupon, right? 

[00:16:31] Peter Bond: And what we'll do is we will Inkjet personalized print a very basic message on that coupon. It's a, it's basically a black and white line art of the, of the product itself. Right? Say 50 cents, names the product, puts a barcode on it that is scannable at the register. They said, we can do that for you and we can do it at scale. 

[00:16:55] Peter Bond: So, what does that mean to dunnhumby? Well, now dunnhumby can send very personalized [00:17:00] offers. But, because of the limited, experience of what it looks like. It's probably not something that you would use for what I would, what we in marketing would call upper funnel activation. Like I'm not going to create a lot of awareness and get people excited about trying a new product when all I have is basically dot matrix line art. 

[00:17:24] Peter Bond: Right?  

[00:17:25] Tom: I mean, that's kind of like the best test of whether personalization works. There was no pizzazz, there was no 

[00:17:30] Peter Bond: There was none. There was 

[00:17:31] Tom: drawings, basically.  

[00:17:33] Peter Bond: And I do believe they tested it, and it didn't prove to be very effective. But where it did prove to be very effective was rewarding people with offers on products they were already familiar with and they already bought. And just thanking them for shopping at Kroger by giving them value on products they already buy. 

[00:17:51] Peter Bond: And so what they did is they targeted their, their top two, uh, groups. That premium loyal group and the next group down, the loyals. And four times a [00:18:00] year, Each member of those, those segments would get a direct mail piece that contained two sheets of these seven coupons each, so 14 coupons in total. And all of the items on there, if I open them up, I would look at them and go, Oh, I buy that. 

[00:18:15] Peter Bond: Oh, I buy that. Oh, I buy that. Now I've got 14 highly relevant coupons to how I live. That's going to drive me in. to buy more products. And when I buy those products, I buy other products. And what they started to do is they would create control groups. And they would hold out not sending these coupons to them. 

[00:18:36] Peter Bond: And then they would send uh, they would send the coupons to the test group. And then they would compare the two groups you know, they would, they would then, uh, after the, after the coupons had expired They would then wait typically another two weeks, so that would be the pull forward period. And they would measure, and what, where Don Humby excelled was doing the actual analytic measurement. 

[00:18:58] Peter Bond: So they would select the [00:19:00] control groups, uh, hold, hold out, uh, you know, hold them out, send the test groups, uh, the, the offers, and then see how they did. And what they saw was it delivered an enormous amount of incrementality. So that was the very, that's what I would call Kind of like ground zero in the US for personalized, uh, retail media. 

[00:19:25] Peter Bond: Why is it retail media? Because the channel is owned by the retailer. The con, the, the, the loyalty today underpinning it as the retailer, the, the delivery mechanism is through the retailer's channel. So they started by doing that and, and then blossomed from there. They, they started doing things that were more colorful, where they said, okay, now. 

[00:19:48] Peter Bond: I want to put together a more upper funnel discovery set of, of things. And in that particular case, offset printing is important. But they still couldn't get to the point where they [00:20:00] could do a complete coupon book with offset printing and the quality of the offset printing. So what they did is they started organizing coupons into groups of four, and if you think about it, imagine yourself an eight and a half by eleven piece of paper folded down the middle, alright, and now it's reading like a book. 

[00:20:21] Peter Bond: So there are four coupon pages on that. Two on the inside, two on the backside. Now they figured, okay, what I can do is if I can organize the coupons and the offers, right, the, the products that are being presented in a logical format. I can create maybe 20 pages that have 20, 20 sheets that have four pages each. 

[00:20:47] Peter Bond: And then I can say, okay, I'm going to produce a coupon book for Tom. I'm going to produce one and I'm going to choose. Four page group one, group three, group seven, group nine. [00:21:00] I'm gonna run it on a daisy chain, drop one on top of the other, bring them all together, straighten them up real nice, put a staple in the middle, um, and at the same time, laser print the specific offer so that even if you and I got the same four page, the specific offers for those four products will be different. 

[00:21:20] Peter Bond: You may get one that says, Just 50 cents off because they just want you to buy one. Whereas, they want me to buy, they know I buy a lot because I've got a family, they want me to buy three, so my offer is buy three, get this.  

[00:21:32] Tom: This is where that famous, uh, workhorse of the promotions world, the two boxes of Cheerios or the 5 coupon was 

[00:21:40] Peter Bond: Exactly. Exactly. So they started doing that. And then as dunnhumby started to partner with other people like Macy's, they tested out literally transforming how catalogs were printed. We all remember the days of the Sears robot catalog, showing up on our parents, uh, front door, and it 

[00:21:58] Todd: Yellow page size book.  

[00:21:59] Peter Bond: [00:22:00] right? And so what they said is, how do we reduce the cost of those? So what they started to do is, with Macy's, is that same kind of daisy chain approach, is figure out What is the configuration so that we can take advantage of offset printing but personalize the combinations of pages that you get versus what I get, so that we're actually delivering to you a catalog where just about every single product in that catalog is intended for you specifically because you have shown relevance for buying it. 

[00:22:35] Peter Bond: That was kind of the first generation of work. With what you had, which was physical mailing  

[00:22:40] Todd: the funny thing about that is I think we forget how radical and innovative that printing was for that era 2020 years ago. Like today we think, Oh, you can print everything, you know, off laser printers. It's super easy. You can customize. A million letters to a million or a million postcards or a million pieces of mail to a million people in that era. 

[00:22:59] Todd: That is [00:23:00] radical innovation 

[00:23:01] Todd: and it is, and it required, it required new software writing. So, and, and there were, there were, There were patents that were created as a result of that. Um, that created a lot of intellectual property in this space. That was kind of the early phase. And then Around about 2012, so they started doing this with Kroger as a pilot, and I want to say 2003 2004. 

[00:23:24] Peter Bond: By the time I arrived at dunnhumby in 2010, they were at full, full scale in doing personalized, um, Direct mail. Where they started to branch out is when, uh, dunnhumby formed a group called dunnhumby Ventures and started looking for investment partners. They ended up buying a company called BuzzAgent, which does experiential sampling, which they then sold to, uh, Power Reviews, another company I worked for in the past. 

[00:23:55] Peter Bond: But one of the things that they were looking at was The early stages of a company [00:24:00] that's now part of Oracle and it's called DataLogix and DataLogix came to them and said You have something and we have something. What you have is you have a lot of purchasing behavior that can assemble highly relevant audiences to advertisers. 

[00:24:16] Peter Bond: What we have are cookies that sit out on Millions of people's computers, and if we take your group and we take our group and we look at the overlap, there are probably 30 million people where you can build an audience and we can serve a programmatic ad on whatever site they go to that are part of our network. 

[00:24:40] Peter Bond: And so they said, let's start testing out personalized programmatic advertising. So this is where Kroger would use their purchasing behavior data to build audiences and then brands could advertise typically in, you know, in banner ads at the top of the [00:25:00] page, so someone goes to ESPN or they go to, you know, whatever, and up pops an advertisement for Minute Maid orange juice, right? 

[00:25:08] Peter Bond: And it's a co branded ad with Kroger. And what they're then able to do is know who the ad was served up to. And then they could go back and actually, in a closed loop manner, see whether someone actually bought that product at Kroger. And that was kind of the, the beginning of what I would say is today's modern retail media. 

[00:25:31] Peter Bond: Now they jumped the gun and went to programmatic offsite, which is more upper funnel, primarily because nobody had a mobile app and nobody was selling groceries. Through e commerce on a mobile app or on a website. So there was no opportunity to do paid, uh, paid product listing ads. There was nothing there. 

[00:25:53] Peter Bond: So they kind of went, they went to 

[00:25:55] Tom: physical grocers, retails, I mean their, their websites were like brochure where up[00:26:00]  

[00:26:00] Peter Bond: They were really they all, I mean, for most of them, it was mostly up until. are still  

[00:26:04] Peter Bond: pretty that 

[00:26:04] Tom: Yeah, I mean, it was like the pandemic. Thank you, Todd. I was sort of 

[00:26:08] Tom: forgetting what was. 

[00:26:09] Tom: what was that huge impact, but it was the pandemic. Yeah. Before that, except for, uh, Holdo Hayes, who had bought Peapod, pretty much everybody else was just sort of like telling you like, Hey, we have a lot of great stuff in the store. Come look at it. 

[00:26:21] Peter Bond: Yep, that was it. So that, to me, was the kind of the untold story of, you know, as, uh, as, uh, Paul Harvey would say, that was the rest of the story  

[00:26:32] Peter Bond: in terms of kind of what got us up to where we are today. 

[00:26:35] Todd: you know, it's fascinating in terms of the, they were Kroger, especially being so early with that very innovative digital direct mail strategy. Yet today they are not necessarily a leader in retail media. 

[00:26:51] Todd: They could, what could have been right. You look back and, and, you know, they, and even dunnhumby to an extent, what could have been, and now dunnhumby America is [00:27:00] trying, you know, Kroger is trying to do more retail media today and they're playing catch up, but I think there's this interesting Thing to think about if they had continued to push on it in the natural direction of digital, they could have been one of the table setters for what it is today and instead now playing a bit of catch up. 

[00:27:19] Peter Bond: And if you look at what Walmart has done in comparison, they did lean all in. They, to the, even their most recent, uh, Earnings report, they made mention of the fact that they continue to chase e commerce profitability as a primary objective. And then what they also say at the same time is, guess what? Look at what percentage of our profitability comes from our revenue streams of three things. 

[00:27:48] Peter Bond: Retail Media under Walmart Connect. Data and Insights under Walmart, Luminate, rebranded Scintilla, and their Walmart Plus membership program. Those three things are generating [00:28:00] enormous amounts of money. If, if Kroger had been, they had a much bigger head start, they might well have, they might well be in a fundamentally different position now if they had leaned in on, on those capabilities. 

[00:28:14] Todd: it's fascinating to think about the landscape of retail media and how it evolved and how it didn't include Kroger despite that early potential head start. When you see and hear the story of Walmart Connect starting roughly 10, 12 years ago in that 2012 timeline, um, and, and, you know, buying jet a few years after that, and really going all in on digital, and then, you know, hearing about the story of like Best Buy media starting 10 years ago as well, 

[00:28:39] Peter Bond: Or  

[00:28:39] Peter Bond: Target Target Media. 

[00:28:41] Tom: too. Yeah.  

[00:28:42] Peter Bond: There, there's another one that could have been 

[00:28:44] Todd: up and down kind of thing, like they invest ahead of it, and then they turn away from it for two years and  

[00:28:49] Todd: come back  

[00:28:49] Peter Bond: Here's what I would say about target. If you go out, it's very much a dunnhumby story. Like I think I told you in a previous conversation that at [00:29:00] one point when I was at CVS running category and brand personalization, one of my former dunnhumby colleagues, Mindy Heights Gill was running, was running, uh, Loyalty and personalization for Walgreens. 

[00:29:13] Peter Bond: And a third colleague of mine, Tom Trounts, was at Rite Aid. So all three of the major chain drug accounts, loyalty was being run by, you know, the legacy of dunnhumby. Target's a really interesting one, right? Target Retail Media or Target Media Services rebranded Roundel. If you go out into the ecosystem and you look at, um, who's running Uber Advertising? 

[00:29:38] Peter Bond: Kristi Argyilan. Target. Who's essentially running UB Media at Ulta? It's Allison Soderberg. I can count you. Who's at the trade desk now? Claire Wyatt. I can sit there and start ticking off all of these 

[00:29:54] Tom: Todd, It's not just the 

[00:29:55] Tom: quotient. it's  

[00:29:56] Tom: not just the  

[00:29:57] Todd: Yes, It's not just the quotient  

[00:29:58] Todd: mafia, 

[00:29:58] Todd: it's the dunnhumby 

[00:29:59] Peter Bond: [00:30:00] There, there are other, we have many mafias. There are, there are many mafias in our, mafias in our industry. 

[00:30:05] Peter Bond: There's a lot of DNA out there. And they were an early player. And they're another one that you would think now, uh, would be in a very, very advantageous position. And yet, right now, their, their funding is essentially being Uh, minimized in order to tackle the bigger issues that they have, uh, in physical store volume. 

[00:30:28] Tom: so so then we fast forward all the way to the news. Now you  

[00:30:32] Tom: have target hurting on earnings. And then you have yesterday, we didn't plan this  

[00:30:37] Tom: when we had you on yesterday, both  

[00:30:40] Tom: Kroger and Albertsons got rid of their CEOs. So what happened? 

[00:30:47] Peter Bond: Uh, okay, so what happened? they, 

[00:30:52] Todd: Given the news about one of the two,  

[00:30:54] Todd: apparently a lot happened.  

[00:30:55] Tom: Yeah.  

[00:30:56] Peter Bond: So one, they, they, they, they, they never [00:31:00] got to the altar. 

[00:31:01] Tom: yes.  

[00:31:02] Peter Bond: they, they, they never got married to it. And one of them had to pay a very big price to, uh, for the failed marriage. So that, you know, an  

[00:31:10] Tom: 800, million Kroger had to pay because they were too cool. 

[00:31:14] Peter Bond: So I guess the question, if you read, there was some cryptic messages there. 

[00:31:18] Peter Bond: The more telling one was from Kroger when it said Rodney McMullin. abruptly resigned as a result of an ethics investigation not related to the operations of the company per se. Now, you can read into that the fact that Vivek over at Albertsons also resigned. They announced that their EVP and COO, Susan Morris, was going to be elevated to CEO, and right now one of the board directors is interim CEO at Kroger. 

[00:31:51] Peter Bond: But, Clearly, there are some issues related to what was going on as they were trying to [00:32:00] get this through regulatory approval. And I wasn't there, and I'm not privy, and I don't know. I suspect that it has a lot to do with the level of communication the two of them had with each other. Um, While that was going on and whether that was considered to be up, up, on the up and up. 

[00:32:22] Tom: Yeah. 

[00:32:22] Peter Bond: I, I'm not going to say that. But I will, I will direct people to, uh, someone who is very controversial in the industry and who does have an opinion. If you go on to LinkedIn and you look up Britain Lad, he wrote chapter and verse about what he thinks is the cause of this and what are the next steps. I'm not going to go any  

[00:32:42] Tom: Yeah. We can, we can post that in the show notes. 

[00:32:45] Peter Bond: Yeah, that that's fine. But, um, I think the bigger  

[00:32:48] Tom: does it do for the  

[00:32:50] Peter Bond: mean? What's it mean? It means that one, the larger value that Kroger would have had in terms of offering bigger [00:33:00] scale for national advertisers might have pushed them into that very elite group of Walmart and Amazon as  

[00:33:09] Tom: The national, the national  

[00:33:10] Peter Bond: the nationals should be involved. 

[00:33:13] Peter Bond: As opposed to where everybody else is right now, which is basically being managed at a trade level by the shopper marketing teams of all the major brands. This could have put them above the line.  

[00:33:26] Tom: So you have, you have two types though. You have Albertsons, Kroger, and then Ahold, which are kind of the, the big regionals. But  

[00:33:33] Tom: then you have the smaller guys, the HEBs,  

[00:33:36] Tom: the Hy  

[00:33:36] Peter Bond: the Super Regionals, right, as  

[00:33:38] Tom: it the Supra Regional or something like that.  

[00:33:40] Peter Bond: Super, Mega Regionals, Super Regionals, yeah.  

[00:33:43] Tom: yeah. It's kind of like boxing weight classes or 

[00:33:45] Peter Bond: Yeah, I think that, you know, I fundamentally believe this is a year where most of these RMNs are going to have to do one of two things. They're really not proving to be very successful at [00:34:00] attracting brand dollars to invest in upper funnel discovery activities. 

[00:34:05] Peter Bond: Programmatic, streaming, television, all those other things. It's just coming out of the trade funds, and that's actually a loss because If they were spending on in store activities, they keep all the money as a retailer. If they're selling, streaming television, they have to share that money with DSPs and other publishers, right? 

[00:34:23] Peter Bond: So, there is a, there is a real problem there with the mechanism. They're going to have to do one of two things. Either they're going to have to command a scale that gets them into that national group. And that means Wegmans, Meijer, Publix, and AGB. all get together and say, we're gonna have a combined access point to, for you to execute retail media. 

[00:34:45] Peter Bond: Now you have scale, right? They're, they're either, they're either gonna have to do that, or they're going to have to say, listen, we're, we're gonna focus on selling our own owned and operated, you know, [00:35:00] lower funnel conversion stuff, and that's a shopper marketing activity. We're gonna seed the upper funnel. 

[00:35:07] Peter Bond: To a coalition like Bridges Ripple and we're gonna say we're gonna plug in there and are we're gonna have to share We're gonna have to share some of our revenue with them, but let them sell it And we'll take a piece of that action, and it will come from brands for sure, 

[00:35:24] Todd: It'll be truly  

[00:35:24] Peter Bond: to, it'll be truly incremental. And, and the question becomes, what do you want? If you want the incrementality, you're going to have to, incremental funds, you're going to have to give up some of the margin. And a lot of them, a lot of, a lot of people who went into these retail media networks, and sold in the value prop of a retail media net, uh, uh, to these retails, and sold in the value prop of a retail media network. 

[00:35:47] Peter Bond: Promise them really big margins, like 60, 70%. And that's just not the reality of how it's playing out if you want to partner with someone else in the ecosystem. You have to give up some of that. So [00:36:00] it's certainly better than the 2 percent you've been operating 

[00:36:03] Todd: for sure, but it's not 70 80  

[00:36:04] Peter Bond: but it's not 70 80 

[00:36:06] Peter Bond: So that  

[00:36:07] Todd: is that, you know, Tom and I like to talk about, you know, Tom's background is like very similar to yours, Peter, right?  

[00:36:12] Todd: Retailer and, and, uh, vendor side. And I'm, I'm the ad tech publisher person of, of the duo and hearing the story in these transitions. 

[00:36:21] Todd: It is such the back to the future moment of we saw this play out in. Publishing  

[00:36:27] Todd: in terms of the rise of ad networks  

[00:36:28] Todd: 20 years ago, and then the rise of programmatic 10 years ago, and publishers had to evolve and work as coalitions. And so it's it's it we're sort of seeing retailers have to learn those same lessons of you're right. 

[00:36:44] Todd: You can't sell by yourself. And there's these, and the biggest bone I've picked with, with our men's is the fact that use the term network, even though they're not networks,  

[00:36:52] Peter Bond: they're not ours.  

[00:36:53] Todd: And as an ad network person, I'm like people that when you actually start working with other retailers, then you have this [00:37:00] ability. 

[00:37:00] Peter Bond: I, I think the ship has already sailed on that term. I think  

[00:37:03] Peter Bond: you're just gonna have to come, I think you're just, you lost that battle long  

[00:37:07] Peter Bond: ago.  

[00:37:07] Todd: know, what  

[00:37:08] Todd: true networks are, and I think what's fascinating here is a. Retailers have so much to learn from publishers and in watching  

[00:37:17] Todd: how they evolved that to work with other people. 

[00:37:20] Todd: But the other aspect here is there's some interesting opportunities for retailers and publishers to partner. And I'm surprised when I'm seeing more of this, which is the publishers know how to sell upper funnel brand campaigns. And they're natural allies for the retailers. Like the fact that these, you see Best Buy, CNET, but why isn't there this whole landscape of  

[00:37:39] Todd: people? 

[00:37:39] Todd: Like all the recipe sites would be naturals to partner with the, the super 

[00:37:44] Peter Bond: And there are things they need to  

[00:37:45] Todd: Bridge Ripple and everything.  

[00:37:47] Peter Bond: Yeah, there are things they need to do to, to take friction out of this ecosystem. They certainly need to make measurement more transparent. Everyone has their own black box. [00:38:00] And the second thing they need to do is they need to standardize their ad products to make it easier for people who sell media to sell media. 

[00:38:06] Peter Bond: So those are two things. Now what's, what's so fascinating to me about, um, about where this is going is Retail Media Networks, they're really not, they, they, they started, they took over selling, you know, Quotient was doing all the selling, right? For the original Retail Media Networks. And they just got greedy, and they said, I'm going to, I can do that, and I can sell it, and I can take the margin. 

[00:38:35] Peter Bond: And it's proven to be much more challenging for them. You know, they're,  

[00:38:39] Peter Bond: I know, shock,  

[00:38:40] Peter Bond: no,  

[00:38:41] Tom: Yeah, no, I, I  

[00:38:42] Todd: It's harder than you think. Oh my God. Never, never happens in life  

[00:38:45] Tom: yeah, the two things there, I would, I would say it's one, it's really hard to get people to move to self service in the  

[00:38:52] Tom: retail media world because we wanted to on the product side, we really wanted to, and we knew, but how do you get a seller to  

[00:38:58] Tom: say like, I don't want to, you [00:39:00] know, 

[00:39:00] Peter Bond: if you ask any retail media network that offers full service and you ask them off the record, what they'll say is, I hate full service, but it's the only way I can get the work done to do this. They are all clamoring. For the ability to make APIs available, lean on companies like Flywheel and other agencies to do the work on behalf of the brands they do not want to be in, and it's funny because when, when I know in my, in my other persona at Flywheel, when I go talk to, um, when I go talk to brands about, hey, listen, you're, you're doing, you're doing, uh, retail media on Lowe's and Home Depot. 

[00:39:47] Peter Bond: You should let us do that. Well, no, I don't want to have to pay you for that. I said, yeah, but you're paying a fee for full service. We can do it for you. We'll charge you less than what they charge you for full [00:40:00] service. And you'll get more value because we've built a tech stack that can do things that they don't do for you. 

[00:40:07] Peter Bond: Concepts like intraday bidding strategy, right? But they're all just so The shopper marketing teams are so hooked on the full service that some of these retailers, they can't get out of it. They're like locked into it and it's doing a disservice to their advertisers 

[00:40:26] Todd: We saw  

[00:40:26] Peter Bond: getting a better  

[00:40:27] Todd: go through the same cycle. You know,  

[00:40:29] Peter Bond: they just have to get out of  

[00:40:30] Peter Bond: that.  

[00:40:30] Todd: right coming from that world that we had the same problem of the elaborate full service campaigns that people 

[00:40:37] Peter Bond: They don't want it. They don't want it.  

[00:40:39] Todd: but  

[00:40:40] Todd: you get  

[00:40:40] Peter Bond: want to be out of that business.  

[00:40:41] Todd: It's the way you justify a quarter million dollar IO or a half million dollar IOs. 

[00:40:45] Todd: You go do some custom campaign thing, right? It's 

[00:40:48] Todd: the it is it. No pun intended. A brutal flywheel to get stuck on one 

[00:40:53] Peter Bond: absolutely is. Meanwhile, the biggest challenge, beyond the challenge of scale, [00:41:00] and beyond the challenge of the fact that the dollars are coming off the trade and not the brand. Meanwhile, the big juggernauts, notably Amazon, you know, every time they have another unboxed event, they announce yet another series of enhancements. 

[00:41:19] Peter Bond: That just keep pushing them further and further away from an innovation standpoint. I mean, 

[00:41:24] Tom: And you talking about the ability to offer clean rooms at a low 

[00:41:29] Peter Bond: I would say Amazon Marketing Cloud, the preeminent clean room in the industry. The fact that they've opened up a publisher cloud that have allowed other publishers like Peacock to plug in and offer their inventory. Why do they, why would Peacock do that? Because they understand that the measurement tool in, in Amazon Marketing Cloud is going to give the brands what they need. 

[00:41:51] Peter Bond: to understand the value and the return from advertising on Peacock. I firmly believe that most, if not all of the major streaming [00:42:00] services within 18 months will plug into Amazon Marketing Cloud just for the purpose of knowing that their inventory performance can be accurately measured to the satisfaction of the brand and that'll keep dollars flowing. 

[00:42:14] Peter Bond: So, they do that. They offer multi touch attribution measurement. So no longer do you have to Live with the alchemy of traditional marketing mix modeling, which just really undervalues retail media. You can actually start to understand not just first touch or last touch, but what are the contributions of every touch in the process and where is the best return coming. 

[00:42:33] Peter Bond: So they just keep adding on to this and, and I remember talking with one retail media network person. He was, at the time he was running one in the in the Metro New York area and he said, I, I can't keep up with them because I can't, I can't invest in a platform and amortize it across the 300 stores I have and the revenue they generate. 

[00:42:58] Peter Bond: And I said, so stop trying to [00:43:00] beat them. I said, if I were you, I'd fly out to Cincinnati. I'd knock on the door of 8451 and I'd say, I love what you've built. I noticed you're missing a geography. It's called the Metro New York area. That's what I have. And if I plug my geography into your network, yeah, I'm going to have to share some of that margin, but I'm going to get my geography tacked on to every single Kroger, Precision Marketing, retail media campaign that happens, and I'll make up the money much more in the pure pennies than I will in the percentage that I make from the revenue that I'm charging. 

[00:43:33] Peter Bond: You're going to do so much better that way. And  

[00:43:35] Peter Bond: that's what,  

[00:43:36] Peter Bond: that's  

[00:43:36] Peter Bond: what, has to happen. 

[00:43:38] Todd: one thing. It'll be fascinating to see, which is we've seen sellers from traditional all. Publishing start to show up in retail media,  

[00:43:46] Todd: I think, in part, just try to sell brand on endemic dollars.  

[00:43:49] Todd: But 1 of the missing pieces is exactly what you're talking about in terms of that deal is you need the publisher BD people, the biz dev people who are who do these deals every all day in the  

[00:43:59] Todd: [00:44:00] publishing to start showing up like the people, the. 

[00:44:02] Todd: The publisher relations people at SSPs, the pub dev people  

[00:44:05] Todd: elsewhere, they do these deals left and right. And this is, this has been happening in publishing land for 10 plus years.  

[00:44:13] Todd: And so, you know, guys like Matt Barish out of New York is a great example of  

[00:44:17] Todd: a guy who's well known in that space. Like Josh Feller, who I used to work with at Outbrain, these people have done these types of deals and I can't believe they're not, you know, and it hasn't, they're not getting these calls yet, but they should be because  

[00:44:26] Todd: they know how to broker these deals and manage these relationships.  

[00:44:29] Peter Bond: They should be. Yeah, I agree with you. Yeah, it's still a bit of a wild west. They've got to get to the point where brands trust, but, uh, the measurement mechanism. But there's also, there's also a need on the brand side to really understand where retail media fits into their overall marketing budget. 

[00:44:48] Peter Bond: All too often, CMOs, I would argue, and major brands, they give responsibility for retail media to a more junior media person, or they give it to their [00:45:00] agency. And they don't fundamentally understand, really, what retail media can do and how to budget against it. And so, until they get their hands dirty, and, and, and, In what retail media is and fundamentally instead of, because I sat there at CAGNY, which is a consumer analyst group in New York conference. 

[00:45:21] Peter Bond: And I watched these CEOs one by one talk about what their initiatives were for the year. First and foremost, only two of the 30 companies presenting used the word retail media. Only one of them actually put it on a slide. Uh, you know, my kudos to Colgate Palmola for doing that. But most of them just used buzz terms and mostly talked about their brand power. 

[00:45:42] Peter Bond: They didn't talk about personalization, they didn't talk about their, their, their engagement strategy with consumers, their CDP. They didn't talk about investing in retail media. Every single advert, every single showcase that they did on that [00:46:00] stage was around a linear television advertisement. They're still mired in how we did things in the 20th century. 

[00:46:08] Peter Bond: That is not how we connect with consumers. If your goal to grow your business is to place a Super Bowl ad, you're spending a lot of money and you're not really connecting with the consumers that you need to and you're not building a long term relationship with them. And that is, that is a big problem. 

[00:46:27] Peter Bond: Most of those CEOs, only one of them put up a CMO. It was, uh, Kenview. No, two of them did. Kenview and, and, and Elf Beauty. They put up their CMOs. Everything else was just brand, brand, brand, brand, brand. And all they talked about was, what they didn't talk about was the fact they've got declining volume because of the pressures of inflation and the growth of private label. 

[00:46:51] Peter Bond: But they all talked about how they are going to hit their EBITDA numbers. Well, if you're not growing your revenue, and you're saying that you're going to hit your EBITDA [00:47:00] numbers, The only way to do that is to cut cost, and the best way you cut cost is you cut headcount. And that's what's coming this year for a lot of these CPGs. 

[00:47:10] Peter Bond: They are going to be cutting a lot of heads because they're so focused on hitting their quarterly EBITDA commitments, or their dividend, that it's, it's going to be the undoing of, of their investment in innovation, their investment in the growth channels where they actually are growing. Which is primarily e commerce. 

[00:47:30] Peter Bond: A lot of, a lot of things going on in the industry right now. 

[00:47:33] Tom: Well, I want to thank you, Peter, for giving us, um, I don't think we could have done this, uh, with anybody else. You are a great sounding board for all of our questions. And you really do have, um, a lot of insights that people need to hear. So we will be sharing this out and, you know, we hope you do too. You guys have an. 

[00:47:52] Tom: Uh, something like 35, 000 people. Um, I think that may be because you, you work with the CPGs, a bigger, bigger companies out there than the [00:48:00] ad tech companies, maybe, but either way, it's an impressive thing that you guys have built at the CPG guys, and we're just really happy to have you on 

[00:48:07] Peter Bond: Gentlemen, I'm, I'm honored to be on. I, as I told you, I discovered this podcast over, over the break. Uh, it is, I'm a total wonk about this industry. And you guys were talking my language. So, I got completely immersed in it. I wish you well. 

[00:48:23] Todd: Awesome. Thank I I want to make sure people, we will promote this. Because I think it's important that as a community, We'd be in the habit of trying to acculturate all of our people in the industry of learning through podcast listening. 

[00:48:38] Peter Bond: Because it's not about listening to one, it's about getting in the habit of learning through this mechanism. And if we do that, everyone will benefit who's doing this. So we're really glad to welcome you into this community of podcasting in this, in the CPG space. We wish you well and we're rooting for you. 

[00:48:57] Todd: Thank you. 

[00:48:58] Tom: much. 

[00:48:59]