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This article was originally published by WSJ.

Omnicom Media Group plans to spend $20 million on advertising in podcasts distributed by Spotify Technology SA under a deal covering the second half of this year, the companies said.

It isn’t the first plan for significant spending ahead of time for the fast-growing podcasting industry. iHeartMedia Inc. has been handling much of its podcast sales through upfront negotiations for almost a year, according to Conal Byrne, president of the company’s iHeartPodcast Network.

But advertisers typically sponsor individual series when it comes to podcasts, where advertising is growing rapidly but remains relatively small. Marketers are projected to spend $863.4 million on advertising in U.S. podcasts this year, up from $678.7 million in 2019, according to the Interactive Advertising Bureau and PricewaterhouseCoopers. By comparison, ad revenue from digital video in 2019 was $21.7 billion, the IAB said.

“It’s a big deal, a very big deal versus what we’ve done in the past,” said Catherine Sullivan, chief investment officer at Omnicom Media Group North America. Clients spent several million dollars through Omnicom to advertise in podcasts in 2019, she said.

Omnicom Media Group, part of advertising-agency holding company Omnicom Group Inc., is increasing its podcast investment now partly because audiences continue to grow and partly because technology is making the ads more targetable and measurable, Ms. Sullivan said.

“We know that audio works very well at increasing consumer attitudes and driving action, but we believe that adding addressability to the podcast format may increase metrics even further,” she said.

The deal also calls for collaboration on research and a first crack at new shows for Omnicom Media Group clients, which include McDonald’s Corp., PepsiCo Inc. and AT&T Inc.

Big media and technology companies have been trying to capture more of podcasts’ growth for themselves, and to accelerate it.

Sirius XM Holdings Inc. is nearing a deal to buy E.W. Scripps Co. ’s Stitcher Inc. podcast unit for around $300 million, The Wall Street Journal reported this week. The company last year struck an exclusive deal for podcasts from Walt Disney Co.’s Marvel Entertainment.

Spotify last month formed its own pact for superhero podcasts from the DC unit of AT&T Inc.’s Warner Bros. Entertainment Inc., plus other fiction podcasts using Warner Bros. properties. It also has acquired podcast producer Gimlet Media Inc., podcast publisher Anchor FM Inc. and the sports-and-pop-culture publisher the Ringer, which makes many podcasts. It is planning a criminal-justice podcast co-produced and co-hosted by Kim Kardashian West, and recently won exclusive rights to the popular podcast from Joe Rogan in a licensing deal the Journal reported is worth more than $100 million.

Podcasting’s rise has been slowed in part by fragmentation and the lack of digital marketing tools such as addressability, said Dawn Ostroff, the chief content and advertising business officer at Spotify. “There’s not even a unified metric by which podcasts are being looked at by advertisers,” she said.

In January, Spotify introduced a method of letting advertisers know how many people heard a given ad in a podcast, rather than through the common method of counting downloads for an episode, and to insert ads in podcasts that have already been recorded. The technology, Streaming Ad Insertion, also provides insight into the audiences reached and marketing outcomes, Spotify said.

The spread of ad technology and better measurement will encourage larger ad buys in podcasting, but it is still early going compared with other digital media, said Zoe Soon, vice president at IAB’s Consumer Experience Center of Excellence.

“Those are all things to crack,” she said.

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This article was originally published by Warc.

In today’s current climate, there’s no denying that e-commerce is big business. Online retail is exploding in penetration and basket size as shoppers are choosing or forced to be isolated.

With this sharp rise in e-commerce, acquiring consumers’ attention has never been more challenging given there’s endless distractions available at a swipe of a finger. In this environment, brands are competing not just for consumers’ wallets, but for their minds. So, how can you grow your brand online in such a competitive landscape? And what will drive that growth; bringing in new to category buyers or improving frequency and basket value of existing customers? Let us explore this in more detail.

When analysing Byron Sharp’s book ‘How Brands Grow’, mental and physical availability are front and centre of his argument. Sharp believes that brands grow by reaching new customers, so marketers need to target as widely as possible and ensure that brands are readily accessible – both mentally and physically – in all buying situations. He argues that a key aspect of a brand’s success, particularly in increasingly competitive spaces, like online, is a brand’s ability to be mentally and physically available for consumers.

It could be argued however that e-commerce, much like shopper marketing, lies far more in physical availability – the breadth and depth of your distribution in time and space. For instance, any brand in a physical retailer would still need to consider how best to maximise value at the point of sale; how can they optimise towards the customer buying a bigger variant, such as a multi-pack, or additional products in a weekly shop. And loyalty schemes, such as subscription services, are an extension of this.

But when it comes to building brand loyalty, Sharp is critical, primarily because it is not a measure that advertising can impact; that frequency of purchase is symptomatic of penetration. He believes that most buyers will be light infrequent buyers. But even with this being true, it is not to say that innovative buying models, such as subscription services, aren’t valuable for those that might be heavy buyers. In reality, even they can be disloyal to a particular brand, so finding ways to lock consumers into a single brand for their category purchasing is still smart. And this, is just part of improving physical availability.

Coincidentally, as WARC has previously reported, the thrust of the Dirichlet laws (which describes variation in individuals’ loyalties across a category-buying group) is that brands compete primarily in terms of mental and physical availability, and this determines the brands that customers are loyal to. Market share will change if a brand secures additional mental and/or physical availability. This may come about as a result of superior marketing or through some innovation that leads to real changes in loyalties and, hence, brand growth.

So, what is mental availability? This is about priming a consumer to disproportionately favour your brand in a buying occasion. In ‘How Brands Grow Part 2’, Sharp and Romaniuk talk about the importance to focus on the consumer entry points or ‘need states’. These can be broken down into five categories:

• Why are you buying a product?
• When are you buying the product?
• Where are you buying the product?
• With whom are you with when buying the product?
• With what are you buying the product with?

In short, it’s about knowing what the most common (and less common) entry points are to your product category to then increase the mental availability for each one. To do this effectively in e-commerce, it is critical for brands to combine both direct and indirect selling channels. This can be through a combination of traditional omnichannel retail strategies as well as new models for growth such as voice, social and visual commerce.

Consequently, direct selling has never been more important for brands as it allows them to collect first party data, manage the brand experience and improve customer lifetime value (CLV). Indeed, we are increasingly seeing brands pivot into direct to consumer (DTC) selling to be able to flex their e-commerce model to customer changing behaviours. It also allows brands to effectively up and cross sell products to increase basket size and deliver incentives to encourage more frequent purchasing. PepsiCo in the US for example, has launched two DTC websites during the pandemic where shoppers can order an assortment of its food and beverage brands for themselves, or as gifts to friends and family.

In fact, Romaniuk and Sharp cite that online brand loyalty is possible because of a range of functional aspects of the online shopping environment. These include searchable brand lists, saveable shopping lists and baskets and automatic recommendations and decision aids that remind consumers of previous purchases and encourage repeat purchase.

Simultaneously however, the reliance on retailers is not going to disappear for selling online. As a result, brands need to be building sustainable partnerships with retailers, pure-players and marketplaces so that they can not only deliver commercial gains for the collaboration but can also co-fund performance media and marketing activity to entice consumers to buy their brand from that specific retailer.

With retailers’ digital shelf becoming so algorithmically driven, brands need to understand how both commercial and marketing factors affect their shelf ranking within the retailer’s digital shelf. Brands can collaborate using ‘clean rooms’ to access their platform and analyse the clickstream data to identify need states and shopper motivations.

And with research from Unliever suggesting that over 71% of online shoppers go directly to retailers like Amazon to start their shopping journeys, it is business critical to have access to these key data points, to manage the auction and ensure products are in the top three positions within a retailer’s listings.

At OMG Transact, we have evolved the proven concept of brand growth through mental and physical availability and now talk to clients about improving their digital availability to maximise the breadth and depth of their distribution in time and space online. The evolution exists as we see e-commerce requiring a true, data-led approach to understanding algorithmic shifts in shelf ranking, testing frameworks for improving visibility and unlocking insights around shopping behaviours. This in turn can fuel new to category acquisition as well as increase frequency and basket size for greater loyalty.

The balance between acquisition and loyalty will always be tricky. Brands therefore need to find the equilibrium of understanding their customer, motivations and need states whilst also being mindful of the value that a customer provides over their lifetime relationship.

By understanding the customer experience and measuring feedback at all key touchpoints, brands can start to understand the key drivers of CLV and really drive business growth online.

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This article was originally published by Econsultancy.

Gemma Spence is CEO at OMG Transact, Omnicom Media Group’s ecommerce specialist practice.

The UK is the world’s third largest ecommerce market behind China and the US, accounting for $101bn in 2019 alone.

But Amazon holds almost 40% of the European market and more credit card details than any other company on earth which makes their data and shopper-led approach more personalized and tailored than the rest.

Therefore, to be able to compete on a level playing field, companies must use technology to enhance their logistics, seamlessly combining offline assets such as stores and supply chain with online front-ends such as apps, webstores and media. Having a well-oiled omnichannel approach to services is key and will likely result in a refreshed business model with growing sales.

So, here is your 7-point survival guide to ecommerce in 2020.

1. Align your ecommerce approach with wider business objectives
Start by defining your ecommerce goals based on your wider business objectives. If your key focus is around growing distribution and volume, then operating through retail partners or distributors will be critical for success.

If you are more focused on owning the whole end-to-end consumer experience coupled with higher margins, then a direct to consumer (DTC) approach would be more fitting.

In some cases, a combination across direct and indirect can work but, for this, a focus on category and portfolio management is key. Nike is a good example of a brand that effectively splits its portfolio across brand.com and retailers, with its higher margin lines exclusive to its own brand platform and lower margin, volume driving lines also available on retailers. Andy Campion, Nike’s CFO said in an earnings call in 2017 that fulfilling demand through Nike.com generates nearly twice the revenue and significantly higher margin on each transaction than through the wholesale model.

2. Build your combined approach through insights around your core audience
Always start with your portfolio and the core audience you want to target. Based on whether you are selling direct through your own website or indirect through retail sites, it will be important to align your audience with identified core shopper profiles.

From this, you can build out affinity categories and audiences in order to up-sell and cross-sell. For example, if you are selling high end vacuum cleaners and you know your audience is likely to be home owners, try targeting audiences that are in the market for home care products. Clear separation and guardrails around audience and media channels is key to avoid any cannibalisation or cost inflation.

3. Build a balanced investment plan to help you reach your sales potential
Depending on your routes to market and your trading channels, it’s key to develop both a top-down and bottom-up investment plan that underpins your financial and sales targets.

Using your portfolio to sell direct and indirect, you can combine your average transactional value (ATV) and historical sales data, to model out the investment and promotions required to achieve your sales and revenue targets.

4. Build a channel-wide and retailer-specific media and merchandising plan
The growth of ecommerce means brands need to develop future-facing marketing and media strategies to stay ahead. Partnering with retailers through mutually beneficial agreements is key to maximizing visibility with cost savings attached. Having a fully-integrated marketing plan will ensure that your brands’ promotions and activations are aligned and factored within the retailer calendar, including events such as Black Friday or Prime Day.

5. Get your retail hygiene in order
Are you set up for success? Before starting with any activation, it is important to audit your retail health to make sure you have operational excellence in place to fulfill the orders quickly.

It is also important to look at the elements that are important to both you and the retailer.com such as repeat out of stocks or lost buy box which are essential for maintaining sales effectiveness.

6. Optimize your content
A critical component for ecommerce success comes from the content you have in place, covering both functional and inspirational content. Retailers all have very specific algorithms that look at both commercial and relevancy factors when weighting and ranking products within their search results page.

From a product detail page perspective, it is important to make sure that all your content is feature- and benefit-led. It needs to be optimized using keywords that shoppers use to discover your products based on the algorithm in place for the retailer. It should have simple hero images and pack shots with integrated rating and reviews to provide an additional level of trust.

For higher transactional products, it is important to provide richer content to help guide the up-sell and cross-sell as well as give that additional layer of information for larger value goods. For example, video can be crucial, with research from Hubspot indicating that consumers who watch product videos are 79% more likely to purchase.

7. Layer on biddable and co-funded media to convert the shopper
Once all these fundamentals are in place, you can start running biddable media solutions to drive purchases across core and affinity categories. By developing an audience and seasonal-based approach that draws on promotions that are running both in store and online, you can improve conversion dramatically both from repeat purchase customers and attracting entirely new shoppers.

Samsung for example, effectively leveraged co-funded media to convert the shopper. The brand needed to cut through a competitive, cluttered media landscape to drive awareness of its Galaxy S8 smartphone in five EU countries. By leveraging the multiple touchpoints across Amazon, Samsung was able to reach potential customers in a holistic, cross-screen campaign with custom elements. Amazon, for example, offered the smartphone via a special midnight delivery with Prime Now. It also reached a large audience through homepage takeover, Amazon Fire Tablet and Fire TV devices, programmatic in-stream video, a campaign landing page and accompanying cross-screen media on and off Amazon. The campaign resulted in 665 million impressions across mobile, desktop, Fire TV and Fire Tablet and drove a ROAS of €6.35, more than 2.5 times higher than its EU benchmark.

In 2020, a brand’s success in ecommerce will be the consequence of getting all the little things right beforehand, be it back-end logistics, knowing your customer and your overall approach to market. It’s truly integrated, it’s your retail DNA. It’s old school, in terms of getting the basics right and new school, by staying flexible enough to adapt to changing consumer behaviors and market trends.

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This article was originally published by MediaPost.

In the last five years, the big holding companies have invested more than $12 billion to acquire and build out their big data management arsenals, according to a just-released report from Forrester Research.

But the big payoff won’t come until the holding companies fully integrate those assets into their creative agencies, Forrester asserts. Only then will the agencies be in a position to significantly move the needle for clients and, as a result, remain relevant themselves.

“It’s time to bring the creative and the machines together, giving CMOs the data-driven execution they desire and agencies the new capabilities they need to maintain relevance,” states the report, entitled “The Agency Data Platforms That Will Power Creativity At Scale.”

The report commends the holding companies for building their data assets. Those assets help brands target audiences with scalable campaigns, bolster CRM capabilities and strike a balance between performance and privacy.

But by and large the data platforms to date “miss the creative mark” per the report. “Despite potent media activation capabilities like identifying, segmenting and engaging audiences in paid channels, agency data platforms have yet to connect to agencies’ creative development process,” the report asserts. And that’s frustrating for client CMOs, it adds.

The report details but doesn’t grade holding company data management efforts to date. But to its main point—creative integration—it does call out Omnicom’s Omni platform as offering “the most creative integration of agency platforms to date.” And it’s the only platform among the holding companies assessed that the report designates as “implementing” creative integration. Other platforms are said to be “forming” or “developing” their creative integration strategies.

And it will behoove all the holding companies to develop and implement such strategies as soon as possible for one important reason: “The next wave of sustainable growth will come when the creative workforce amplifies agencies’ and clients’ tech investments with a powerful creative/machine partnership.”

The report advises clients to work with their agencies to create pilot tests. And it urges CMOs to invite their IT and data science colleagues to their next agency review, “instead of falling for the slick slideware of the pitch.”

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