Riding a Generational Shift of Data, Attribution, and Marketing Leadership, with Rachel Tipograph, Founder & CEO of MikMak

Transcript

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Peter Crosby (00:00):

Welcome to unpacking the Digital Shelf where we explore brand manufacturing in the digital age.

Peter Crosby (00:16):

Hey everyone. Peter Crosby here from the Digital Shelf Institute. The cookie has finally crumbled. Consumers are shopping and buying everywhere they darn well, please. Brands and retailers are fighting over margin more fiercely than ever before. Rachel Tipograph from her role as founder and CEO of MikMak is in the center of this generational maelstrom of the Shifting Rules of Commerce. And she joins Lauren Livak Gilbert and me to share her view of the trends that will matter in the next 18 months or so. Buckle up. It's going to be an exciting ride. Rachel, welcome back to the podcast. We are so excited to have you on. Just delighted. Thank you so much for doing this.

Rachel Tipograph (00:57):

Yeah, happy to be back. Thanks for welcoming me back.

Peter Crosby (01:01):

So budgets are tightening profitabilities on everyone's radar, and so really that requires brands and retailers to work together more collaboratively, to operate more efficiently and with an omnichannel focus. And at Mack you do a ton of research with brands about what is happening across different categories, and we just thought this was a good moment, particularly with joint business planning and everything coming up. We just thought it'd be great to talk to you about kind of the power dynamics between retailers and brands and where things are today and what you're seeing on the horizon. So what's going on out there?

Rachel Tipograph (01:43):

Oh man, you're asking me the hard hitting questions

Peter Crosby (01:46):

Ready to go?

Rachel Tipograph (01:47):

Yeah, probably because no brand manufacturer or retailer will comment on this.

(01:53):

Listen, I still think that we're in the retail media or commerce media, gold rush, whichever vernacular you want to use. And what I mean by that is there absolutely is an unfair power dynamic that exists in the industry, which is that retailers are distribution channels are essentially the lifeline for brand manufacturers. And so if a retailer says Jump you as a brand manufacturer, typically say how high? And then if a retailer walks into your office and demands 20% year over year increase in retail media spend, you want to ask the question, what will that do for my business? What are you going to guarantee that I'm going to see 20% year over year incremental growth in my business? But brand manufacturers don't feel comfortable saying that because the retailer is their lifeline. And so unlike Meta or Google when they walk your office, it's just pure media.

(03:02):

They're not the lifeline to your business. And as a result, you actually can have a true objective partnership and you can fairly negotiate on both sides of the table. That doesn't exist in retail media today. I truly believe that's going to change. I do believe that regulation is going to move in, but we all know that that takes time. And my guess is we're probably still two years away from that in which you see the FTC start to regulate some of the things that exist in the industry. You might even see some of these huge companies have to essentially separate their core retail business from their retail media business.

Peter Crosby (03:50):

Oh

Rachel Tipograph (03:51):

Wow. I personally believe all those things can happen in the next two years.

Peter Crosby (03:59):

And at the same time in the next two years, Rachel, do you see the next layer of retail media retailers start to come online and be able to compete for a piece of that pie? Sort of what we've seen happen in other retail markets that there's, when we talk about retail media these days, a lot of what comes to mind is the Amazons, the Krogers, the Walmarts of the world. Do you feel like there's going to be more democratization of retail media networks? Not to say necessarily that what will make those attractive and all that, there's still the whole sort of competitive piece to work out, but do you see at the same time kind of more places, more ways for brands to be able to access those networks and manage them easily enough to have some alternatives, I guess is where my head's going a little

Rachel Tipograph (04:58):

Bit? Yeah, I mean there's a reason why the same retail media networks come up in conversation every single day, right? Amazon, Walmart Connect round L 8, 4, 5, 1, and then Instacart a little bit, DoorDash a little bit, Uber Eats, and then outside the US you're really talking about Car four. And the reason being is that brands need scale when it comes to media, otherwise the CPM is way too expensive for their model to work. And so that's what's really held back, I believe the mid-tier retail media networks is that they can't compete for scale. And then the offering is also typically not robust enough. They lack real time reporting capabilities and the ability to do CRM matching, just all of the feature parody that someone might expect given what Amazon Walmart Connect, Instacart make available, they'll expect that at Dollar General, they'll expect that at Publix and it's just not there and the scale's not there.

(06:14):

So my personal belief around the mid-tier retail media network offerings is that they're going to have to join together. And so there's really, I would say not two to three main suppliers in the aggregated retail media network space. So one could argue the trade desk that they've aggregated all of this supply. The second could be Criteo and the third could potentially be like citrus add. And then there's other examples, but they're smaller and they're more bespoke in alcohol. In the US there's a mid-tier player called bottle caps. And so these are players that have recognized you're just not going to be able to make it work. If you go from mid-tier retailer to mid-tier retailer, you actually need someone who can aggregate the supply. So then again, you can make the CPM model work. That's what I think is going to happen. I think there's an opportunity to do more of that internationally. It's way more fragmented internationally, and it's just really hard for brands to scale their retail media. But outside of that, I think there's interesting players like in the credit card space because just the amount of purchase data that someone like an Amex or a Visa or a MasterCard can see, but I think it was United who launched a retail media network at Cannes. I was like, give me a break. This is just getting stupid.

Lauren Livak Gilbert (07:49):

I sat in that panel and so many people raise their hands and ask so many questions and they were just kind of like, we're figuring it out, we're figuring it out. It'll be interesting to see the personalized ads on screens and following you through all your flights.

Rachel Tipograph (08:03):

I think the next current challenge that brands are finally waking up to is retail media existed obviously within the owned and operated channels of the retailer. So amazon.com or walmart.com or a physical Walmart store, but then they max out again on supply. And the only way to bring down the CPM is you got to have more supply to sell. So what do they do? They moved off retail.com and they started to move into programmatic and social and CTV. I've been saying this forever, but finally, brands are saying this. They're waking up and they're realizing they're triple, quadruple paying to hit the same audience over and over and over. And so I think that's also the next sort of wave. We just went through this wave, which I think the IAB did a nice job with, which is like, let's have more transparency and metrics. Let's have more apples to apples comparison. I think the next wave is brands saying we cannot quadruple pay to reach the same Walmart connect audience over and over and over. And we at MNC m try to help brands understand that, prevent that from happening. But I think that's going to be the next dialogue because I'm starting to hear it more and more from brands

Lauren Livak Gilbert (09:25):

And data I think is a really big part of that too. Right. Do you feel that if you're a mid-tier retail media brand, you could get ahead by saying, Hey, we're opening up the doors to the data that we have to help you understand how you're seeing an ROI or what you're getting out of this investment. Do you think that that could be a shift? I've heard from a couple of retail media networks that they're testing that out to say, Hey, if we give you the data or give you the insight, will you work with us and can we have a broader reach? What are your thoughts about unlocking that data challenge?

Rachel Tipograph (09:56):

Yeah, I definitely think that's a competitive value proposition. If you're going to supply basket level transaction data, maybe even names email, that's very compelling. But the next thing that's going to happen is scale. If they feel like they're only reaching 50 million American households, they're going to say, it's not worth this bet when we work with the biggest brands in the world at Mick back. And you have to be able to show a brand manufacturer how you're going to reach at least 150 million American households. And so I think that it's all going to come back to that to make it work for these really big brands, maybe for more mid-tier brands or challenger brands or new skews that are coming to market. They'll be okay with more of a groundswell approach, but I just constantly see the conversation go back to scale

Lauren Livak Gilbert (10:51):

Because budgets aren't increasing year over year. Sorry, go ahead, Peter.

Peter Crosby (10:54):

No, no. I was just going to say, and going back to the original sort of question around power dynamics here, well, it might be true that brands sort have to play and negotiate those terms. What we are finding, and I'd love Rachel for you to tell me if this resonates with you. We're seeing first of all, retailers really starting to invest in the quality of the product pages that are the target of those ad campaigns and realizing that the quality of those pages have a ton to do with the ROAS on the ad spend. If the ad spend sends it to a sub quality product page that doesn't resonate with the ad that people saw, conversions aren't as good as they should be because there's only a few toggles to be pushed here. And so I feel like what we're seeing is an improvement and dedication to collaborating more automatically on product content, data and page quality.

(12:06):

So we're seeing that certainly at the highest retailer level, but now we're also seeing brands saying, I'm not going to pay any more in ad spend until you improve the quality of our product pages. Particularly I think we're seeing more and more of that at the mid-tier retailer as well. Don't even try to get anything out of me if your pages have one photo and two bullet points or something like that that was written two years ago. So I'm seeing a lot of pressure around that destination page being worth the spend as well as the audience reach. And I'm wondering if you are seeing any of that as well.

Rachel Tipograph (12:51):

Yeah, absolutely. I mean, if you think about what M cmec does is we really are enabling commerce and offsite channels like social, programmatic, CTV, streaming, video search, brand websites. So in those environments, we actually enable the brand to be in complete control of that landing page experience for exactly what you're describing. The first principle of media is creative matters. Creative is what's going to get someone to stop scrolling. The second is the objective that you put in your media. I want to make people aware that I exist versus I want to convert women 18 to 34 to buy this product. And then the audiences that you're targeting against, those are sort of the three levers that you're playing with to drive someone from impression down to whatever action you want them to take after that ad impression. So then once they take that action, if you send them to the world's worst landing page,

Peter Crosby (13:59):

Then in

Rachel Tipograph (14:00):

Then in many ways, your media was useless. So it's a natural evolution. And if you look at the social platforms and you think about the ad formats and sort of how they came out with different formats, it was around, I want to say I was still at Gap, so it was around 2012 or 13 when Facebook launched the ad format canvas, and it was this whole idea of helping brands own that landing page experience because Facebook was getting dinged that, Hey, we're sending all of this traffic to pepsi.com and then everyone's bouncing. And so then Facebook recognized, oh, we got to help brands really optimize that landing page experience. So now you're seeing the retail media networks go through the same thing that the social platforms did.

Lauren Livak Gilbert (14:53):

So Rachel, you mentioned social, so it's really when it comes to all the different channels that the brand has and the consumer has to consume that content, all the lines are really blurring, right? No, Hey, I'm going to the store, I'm buying a product, I'm scrolling through Instagram and I saw it, I'm going to the landing page. So where are you seeing the impact of offline sales in different categories based on all these different channels that shoppers are shopping on?

Rachel Tipograph (15:15):

Yeah, so I mean at mnc Mac, 50% of our customers are products that are available at grocery stores. So as soon as the pandemic boom was over, it was very clear that we have to figure out a way to help brands understand the impact of their online investment, whether it's digital, social, programmatic, CTV, you name it on offline sales because online sales is going to represent, let's just say overall sub 30% of total revenue for products that are available in grocery stores. And so what we did at Mack is we partnered with Rcna very similar to some other players. They own the majority of club store loyalty data in the us and we found some pretty interesting benchmarks through the first year of our partnership. So what we found is, hey, when you're a mass consumer product company, think like chocolate toilet paper, just like a necessity and you're readily available everywhere.

(16:19):

We typically would see a 1% sales lift somewhat sometimes upward of 3%, but 1% was good for those products when you started to think about more higher consideration products. So think about poultry or premium soda or cell, so just like these things or premium home care, like organic spray, whatever it might be, that's where we would see a 5% offline sales lift. And then when you started to get into more expensive items, so think like a hundred dollars bottle of champagne or a television or a net new product that was coming to market that was true product innovation, that's where we would see upwards of 15% offline sales lift. So the impact is there, but it's really important to understand the benchmarks within your category so you don't have unrealistic expectations of what is possible. But when you think about 1% offline sales lift and just, let's pretend you're selling toilet paper, that's pretty massive for your business.

Lauren Livak Gilbert (17:30):

What about the alk bev industry? I know that was a big shift with Covid. I feel like maybe it increased during covid and then after Covid maybe kind of decreased a bit. Where did you see a shift in Al Bev?

Rachel Tipograph (17:43):

The big shift has actually been this year. So MikMak started working with Alcohol Brands in 2019, and that's when we really great timing. So I mean the brief story, because it's a fun story for probably all your listeners. There was a guy who worked at Patron, that's a brand that Bacardi owns, and he saw me speak at a conference. And up until that moment in time, most of Mack's customers were beauty customers because just think about where e-com penetration was in 2019 versus alcohol. And so I was doing a L'Oreal case study on stage, I think it was a Facebook event. Adrian Parker, who was the VP of marketing was in the audience. He tweeted me and he said like, Hey, what you're doing for beauty, can you do for alcohol? And then I DMed him and I'm like, can we get on a call?

(18:34):

And then through that I learned about the three tier system in the US and how brands like Bacardi, Diageo, Anheuser-Busch, et cetera, cannot send traffic to retailers because of prohibition, and they actually need a solution like MikMak to send the traffic to retailers. So all these alcohol brands in the us, they actually cannot participate in retail media without MikMak. So we now have 80% market share in alcohol. And that really started in 2019, thanks to my friend Adrian Parker. And so from 2019, really up until January of this year, it was growth, growth, growth, growth, growth, even continued growth after the pandemic. There's a lot of headwinds right now that exist in the alcohol industry, but the big headline is it has slowed. And in fact, we have seen conversion rates in alcohol drop by 50% between 2024 and 2023. Wow. And so there's a few things that are contributing to it.

(19:46):

One is taste preferences have really changed in the us. So essentially tequila, whiskey, Mexican beer, if you're those things and ready to drink, if you're those four things, you're selling product. If you are not those four things, no one is buying you. The second is a lot of these brands have major supply chain issues, very similar to other categories, but as a result, shelf space was given away to often new entrants into the category. And so they're also struggling to get back on shelf right now. The third is inflation and overall pandemic spend. So people were willing to spend on premium alcohol, now they're trading down. And then the last is overall wellness. Gen Z is drinking less. Ozempic is absolutely having an impact on alcohol. The general American consumer is being more conscious about their overall alcohol intake. And so MikMak also works with a lot of na, so non-alcoholic beverages, and we're seeing those take off, but all of that is leading to headwinds in the alcohol industry.

Lauren Livak Gilbert (21:05):

Wow, that's so interesting because I feel like it took a while to you continued growth after Covid, right? To see the decrease. Now I've seen a lot more non-alcoholic brands, so I don't drink, and so I actually really enjoy it, right? Because there's all different things to drink. But to your point, I also have seen a lot of them advertising on social media and talking about it and having influencers talk about it. And so Gen Z, and I think the new generation Gen Alpha is probably going to be much more focused on how they consume those types of drinks. And I'm finding that they're activating a lot of their marketing more on social channels to target that generation.

Rachel Tipograph (21:44):

Yeah, absolutely. I mean, just like other categories, product discovery happens in social, and that being said, still in alcohol and just overall beverage and food, discovering things in physical environments is absolutely a key part of the customer journey. So restaurants, bars, stadiums, all of that is still happening and taking place.

Peter Crosby (22:08):

Rachel, we've talked a lot about throughout every one of these threads, just how important data is to allow brands to target effectively to understand what their return is, to find and understand their consumer. And for so many years, the key to that, understanding the consumer and knowing whether you are reaching them were cookies and the ability to be able to have that data get all sort of tied together. And it's been crumbling for a while, but it does feel like we're now in the crumbled state. And I'm wondering where are you seeing brands go to really keep dialed in to where their consumers are, how they travel across channels? What is the source for that that you see now and into the future?

Rachel Tipograph (23:07):

Yeah, so I mean, there is a huge shift that's currently happening in the industry. So at most attribution and overall ad tech has been based on cookies. And it's this whole notion that you used to be able to put a Facebook pixel on a checkout cart and then report back if the sale happened, and if not, go retarget the person until they end up buying the product. Apple woke up one day and realized that companies like Meta and Google were building multi-billion dollar ad businesses in their hardware, and they weren't seeing scent of it. And so Apple decided to fight back, and they changed the whole nature of how data is being monetized from automatically opting in to your data being monetized to now automatically opt out. So if you look at the Wall Street earnings of Meta and Google in 20 21, 20 22, it was bleak because it totally undid the effectiveness of their ad products.

(24:16):

They moved quickly. I would say Meta did a way better job than Google to figure out the path forward in a Clickless environment. And then you started to see the earnings tick up again. But with all of this being said, a whole generation of consumers and business executives like the three of us have grown up in this world. That was deterministic attribution. This entire notion that, Hey, I am Rachel Topograph, I was served an ad on Facebook, it could follow me all over the internet until I buy and report back on the purchase. So that whole idea of one-to-one attribution personalization that we all believe in. Now, that is all technically possible, but it is no longer easy to do because companies like Apple Meta and Google don't want to play nice with each other because they're all competing for the same ad dollars. And so as a result, I believe that the entire industry is now going to have to move towards probabilistic attribution, which is not a novel concept.

(25:29):

It's actually what media mix modeling is where you have enough data and you build a model to indicate what you believe total possible sales could be. It's actually the way that Rcna operates and Nielsen IQ and even a bunch of the retail media networks because no one now is able to provide you with a hundred percent attribution data and a hundred percent certainty. So your question was what do we think is going to happen? I think one, we're already seeing something that is happening, which is people feel like the attribution signals have weakened in environments like social and programmatic and Google search, and as a result, they've reallocated dollars to retail media because they think that they can have stronger attribution there. I just did air quotes. The second is that you're starting to see a whole new wave of the future of media mix modeling.

(26:28):

So the challenge with media mix modeling is that it's always looked backwards instead of looking forwards. And it also usually took six months of grunt work between brand media team, the finance team at the brand and agency partner, maybe even a consultant to build these really robust models that tell you at a very high level aggregate level, if you should put a dollar in TV out of home social, but not granular at a channel campaign creative level. And so you're going to start to see a whole new generation of companies and technologies come out to market to really do forward looking, real time, medium mix modeling, Mik Mac definitely being, I think, a player in that space. And that's where I think the industry is going to head. And again, it's not because these things aren't technically possible, it's because these companies don't want to play nice with each other

Lauren Livak Gilbert (27:24):

From a media mix modeling perspective. I mean, that's really challenging for brands. Now, to your point, I remember being involved in it when I was on the brand side. By the time we had a model, we had to redo the model because it was inaccurate. So I think another challenge, I'd love to hear your thoughts here, is also how they're actually going to execute that in the brand. It's hard enough to get retail media on the same page to get sales and marketing and finance and decide on where the budget is coming from. Where do you see that kind of media mix modeling fitting in and them being able to execute quickly to be able to do that? It's just a very complex new skill that they might not have. So are you thinking you work with an external agency, they collaborate and they plug into your retail media? Just love your thoughts on that.

Rachel Tipograph (28:11):

Yeah, I think that there's going to be a next generation of software products that are ingesting your data from retail media, Nashville, digital media forecasting data, competitive data. And it's a model that's really owned between finance and media, and it operates in real time. Now, per your point that it is actually a massive shift for the industry. And so I think that the companies that are going to jump on it, the fastest one is obviously the SMBs because they're more nimble. But two is all the backed consumer good companies because every dollar has to be efficient and they're super analytical. And then I think it'll hit the next wave of big CPG companies. But as the next generation of talent moves into the CMO role, I always like to highlight my friend Diana Hasling, who essentially is the CMO of Colgate Palm, all of North America. Her background is E-commerce is retail media is shopper marketing is data and analytics. It wasn't brand creative. And so as you just see that next generation of talent take those CMO seats, I also think that's going to be a part of the change.

Peter Crosby (29:35):

Well, Rachel, it does seem like we always say that, but the shifts are big right now, and the adjustment to them will take time. But I love the generational shift that you're talking about in leadership. No offense to the prior generation, and I'm one of them, but I feel like this is a moment where technology innovation plus a raft of people that are more accustomed to the digital and data world is going to mark a big shift in strategies for a lot of these companies, certainly in terms of the way they think about how to build and grow their business, which is so hard to do right now. So thank you so much for all of these viewpoints across these questions, because what I think they add up to is that kind of shifting moment, particularly in the moment where profitability is number one, efficiency, therefore is number two, and a lot of that's going to be accomplished by automation and simplicity. Am I wrapping it up right? Yeah,

Rachel Tipograph (30:51):

You did a great job. You did a great job.

Peter Crosby (30:54):

Thank goodness. So what I would say is for anyone out there that's interested in digging into some of these areas that Rachel is talking about, mikmak.com, M-I-K-M-A K.com/resources has some of this great core research and thinking that is definitely worth digging into. So please go there for more information. Rachel, once again, just thank you so much for sharing these perspectives and insights with us. We're really grateful.

Rachel Tipograph (31:22):

Yeah, thanks for having me.

Peter Crosby (31:24):

Thanks again to Rachel for bringing her view from the center of the Commerce maelstrom. Keep up on all the latest from the DSI by becoming a member at digitalshelfinstitute.org. Thanks for being part of our community.