The Hidden Crisis in Retail Media: Why Your Ads Are Selling Products That Aren’t on Shelves | Ask An Expert

Foreign.

Hello.

Welcome to another exciting and elucidating episode of the Omnitalk Ask An Expert series.

I'm one of your co hosts for today's interview, Anne Mazinga.

And I'm Chris Walton and we are.

The founders of omnitalk, the fast growing retail media organization that is all about the companies, the technologies and the people that are coming together to shape the future of retail.

And now, Chris, I was really, really excited when our partners for this told me about the topic that we're going to be covering today.

Because retail media, as we know, is the darling of the retail world right now.

Would you agree?

Would you agree, Chris?

Yeah, I think so.

It's pretty top of mind for most retailers and the talk of the town at most industry conferences we attend.

And yes, I would agree with that.

Yes, a hundred percent.

Well, so obviously we know the revenue that retailers are generating from retail media networks are feeling all kinds of new innovation and brand partnerships.

But what we learned from this partner is that there's a major bottleneck that's just starting to emerge and it's threatening the future success of those retail media programs.

Retail media, Chris, is being sold to brands, but as of late, and most importantly, brands haven't been able to keep up with the demand, leaving store shelves empty, customers disappointed, and all of that investment in retail media networks wasted.

So we've called in the experts.

We're going to dive deep on this topic with Director of Customer Success Joy Spiotta and Senior Product Marketing Manager Jenya Lawson of SPS Commerce onto the show today.

Joy, Jenya, welcome to the show.

Joy, how are you feeling about being on your first Ask An Expert series here with Omnichannel?

I'm super excited.

I'm happy to be here and excited to talk about the topic.

So thanks for having us.

Yes.

And Jenya, welcome.

Thanks for having us.

Yes, we're really excited to have you.

Big, big topic, as we mentioned earlier in the intro, on the minds of a lot of retailers and brands listening right now.

Yeah.

And I mean, I really had no idea that that was a thing that was happening here, that the brands weren't able to keep up with the pace of the demand with the retail media network.

So.

But before we get started, just a quick reminder for those watching live on LinkedIn, please ask your questions of Joy and Jenya at any time via the chat session window in LinkedIn on the right hand side of your screen.

All right, Joy and Jenya, before we get to the questions, I'd love for each of you to Share a little bit about your career backgrounds and what you both oversee in your roles at SPS Commerce.

Jenya, let's start with you.

Sure, Chris.

So I actually started in kind of a unique industry.

So I started out in restaurant marketing working for Parasoli.

So you guys might know locals for the Twin Cities might know like Filio, Chino, Latino Manny's, which is still around.

I spent some time working in advertising.

Shortly after that I actually took a an opportunity at Target in their media department.

So that comes in pretty well here.

So they are, they were known as Target Media Network.

Later they had rebranded and currently they're called Roundel.

And so that was my first hand look at how media and supply chain should actually work together, but they often don't.

So I worked on the account management side, focusing more on the creative.

So between Target and brands like Lego, Google, and then ended up in sps.

How about you, Joy?

What's your background and what do you oversee?

I came to SPS about eight years ago now, but prior to joining SPS, I worked in retail for 20 plus years.

So my background is pretty merchandise planning and supply chain focused.

I started at Lohman's and then worked for J.

Crew, Bloomingdale's, the Children's Place.

And then my last stint in retail was at Toys R Us in the Babies R Us divisions.

So heavy merchandise planning and supply chain background there.

And then I joined SPS eight years ago, which was really a wonderful transition for me.

But one of the things that's super cool is that my team spends a lot of time working with customers who did what I did for most of my career.

Right.

So we're really working with those customers to understand sales and inventory data that the retailers provide suppliers and helping them use it a bit more effectively.

Right.

So turning those insights into action, making smarter, faster decisions.

So I'm in customer success, but on our POS analytics side.

Wow.

I imagine we have a lot of friends in common when you look at your resume and where you've worked.

And so after the, after we get done with this interview, I'm going to play the name game with you for a few.

Yeah, that would be awesome.

That'd be great.

I'd love it.

Well, and Jenya, I'd love for you to dive into, just really quickly, kind of set the table for us.

Who does SPS Commerce typically work for?

What do you do with them?

Joy kind of started to tease that a little bit.

And why is this a topic that's near and dear to the hearts and minds?

Of you and of your customers.

When you're actually ordering something online or, you know, it just shows up at your.

At your house, right?

So there's actually a lot of coordination that's happening behind the scenes with different retailers, suppliers, warehouses, three PLs, you name them.

All of these different companies are trying to coordinate.

And so we're basically the ones here at SPS that help all of these companies talk to each other.

So instead of everyone using different systems, constantly miscommunicating, because every company has their own way of doing things, right.

We're the ones that are helping them stay in sync with each other.

So if you're Target keeping the shelves stacked, or you're the brand making the things that Target is selling, or you're even moving things around, we're the ones that are helping you to make sure that they're getting where they need to be.

So pretty much we help the whole retail supply chain act together instead of against each other, which is why that's.

So helpful when it comes to retail media and making sure that the stock, the stores are stocked and things are on the shelves.

Definitely, yeah.

So why is it.

Why?

So I mean, and you mentioned that at the outset, so I'm curious, Jenny, why is that?

Why is there a big bottleneck between, you know, the suppliers and retailers when it comes to retail media?

So it's.

I'm glad that you're asking this question.

It's such a messy question to ask.

But picture this like you're scrolling through your phone, you see an ad for something, right, that you actually want.

And then you think, great, I'm just going to grab it this weekend or maybe I'll just add it to my cart right this second.

And, you know, you do that, but all of a sudden you get to the store and it's an empty shelf or, you know, it's out of stock online.

And so that creates an awful experience for customers.

So you're on the website, you see that it's out of stock.

And the thing is, you literally just saw it advertised, but it's no longer there.

So this is happening just between suppliers, retailers everywhere.

And retailers are out here building huge media businesses.

So they're selling the ad space to brands, everyone's making money on the front end, but then the customers shows up to either the store or maybe like through the e commerce website, and they can't actually buy anything.

And so it's a.

It creates such a frustrating experience.

And I mean, think about it from the brand's perspective, right?

So they're paying for these ads that basically can't convert because the product isn't even available.

And, you know, another thing that's really wild is that it's not that people are bad at their jobs between the agencies or the suppliers, it's that really nobody's actually talking to each other.

So the media team is over here, like, hey, we sold this campaign.

It's a huge win.

It's going to go live next week.

Meanwhile, the supply chain team within the retailer isn't, you know, aware that there's going to be a surge in demand or even the merchandising team.

So they're doing their own thing, really trying to secure inventory with different brands and then making sure that they'll have inventory is very challenging.

So that's when things really do fall apart.

Everyone's pointing fingers.

Media says, you know, merchandising is saying, hey, it's not in our product mix.

Or supply chain is saying, like, hey, we actually were not told about this campaign.

So the thing is, when I was at Target, they were actually really, really great about this and they got it right.

So they understand that you can't really separate media strategy from your ability to actually deliver the product.

So your inventory is your media strategy.

You can't really promise something in an ad if you can't put it on the shelf.

So unfortunately, there's still plenty of retailers out there that are not really getting this, clearly, and they're treating it as really separate businesses and it's creating awful customer experience across the board.

Got you.

So you said.

So basically, I take away a couple of things from what you said.

So the first thing is there's a push that there's an actual push towards retail media in general, which is getting advertisers to, you know, sell ads and place ads throughout the network.

And that's.

That's fueling the demand for products, which is creating out of stocks.

And then there's this, the lack.

The second part is there's a lack of communication between the merchandising groups and the advertising teams inside these retail organizations, which is also leading to ads being placed on items that potentially shouldn't be placed because the inventory stock isn't there.

So those are the.

Those are the two points I take away.

The interesting thing for me is, like, I can remember just this past weekend, I was having a conversation with my old boss at a retailer who will remain nameless, but you could probably guess from my background, and all of our loyal album tech fans will know, they were like, they Got served up an ad and they were like, I thought we solved this problem a few years ago.

So it makes me think that you're like, yes, there's something here.

There's some meat on this bone of like the fact that everyone's rushing towards retail media without knowing the downstream implications on the customer who's clicking or going into the store to buy.

Am I summing that up correctly or is there anything else you'd add there?

Totally, I would say there's, there's huge implications when it comes to planning and just making sure that you also have as many of your, you know, teams involved in that planning process.

And then as a supplier, a brand, you're keeping in touch with all of those different contacts within the retailer.

I think that's what's really going to be point to having a successful retail media campaign.

Jenna, let me ask you a follow up question on that too.

Like in some degrees, like, how hard is this?

Because like, couldn't you just flip a flag to say like, don't run an ad if the item's not in stock?

Like, is it, is it that simple or is there like a connection point that I'm missing here?

I think, you know, the fact that there's so many different systems within a retailer that they use so many different dashboards, all of that kind of stuff that they're managing, that's where that disconnect happens.

And then every single retailer could either be purchasing a product that they run all of their, you know, get all of the insights on, like how much inventory of something that do I actually have in stock.

Some retailers are so advanced that they actually have their own systems that they've built.

Right.

So you, you can't have access to that.

Like me as a supplier, I would not have access to that proprietary information.

Others, you know, they're still a little bit behind the times with connecting all of that and being able to provide that information to their brands that they're working with.

Well, and I, I'm wondering the same thing.

And Joy, I'd love for you to just break this down for us.

Like Jenya mentioned a couple things, but what are some of the tactics that retailers and brands right now are deploying and what's actually working?

I mean there, there are some stop gaps it sounds like that they're able to do, but like Jenya said, not, not all the suppliers might have access to that.

They, they don't know how to work within those confines of, of a system that's built to just, you know, put a Put a finger in the dam.

What are you seeing that's working?

You have to be in stock, right.

And you have to have that optimal inventory to support whatever is on ad.

And then with that, how do you know how much you are going to sell?

You need the historical data to really be able to plan for that demand.

And that can be challenging, especially if the ad is on multiple places or you know, there's not clarity around the ad.

Sorry, Joy, just a quick question because.

Because the historical data could be like when you're running an ad in a weekly circular or you're running an ad on a T, like a TV ad.

It's not going to be apples to apples across all the digital media.

Okay.

Right.

It most likely the historical data will give you some guidance, but you're going to have to use your intuition to figure out the differences between what's actually happening or what you're planning on and what happened historically.

Right.

So you can only use that as guidance.

So you're planning your demand based on this little bit historical information that hopefully you have.

And then from there you want to be in stock.

So you have to plan your optimal inventory level with all of that.

You want to make sure that the retail and the supplier, the brand are aligned on all of that.

Right.

So what's the demand going to be?

What's the.

How does the inventory need to be planned?

And not just inventory in total, but in different distribution centers.

Right.

So from there you want to make sure that the product is shipped on time and in full.

Right.

So you know the quantity that you think you're going to sell, the inventory that you need to support that.

And then you have to make sure that it's shipped on time and in full.

And that's where that scorecarding can really help to really make sure that you're understanding not only did I plan for this appropriately, then I received it appropriately.

You know, there could be additional factors, Right.

Because it's advertised in one retailer, the demand could go up in other retailers for that.

And so you have to kind of be really creative about those plans that I talked about, those demand plans as well as the inventory plans.

So you have to have the right data and you have to have the right tools in order to kind of figure out what is your best guess at what's going to happen so you can support it with the inventory.

Joy, are there any like crazy stories that you're hearing because the, the virality or the interest of in some of these products, like it's, it what you just talked about makes sense, but it seems like it's moving so much faster than that.

Like, do you ever see retailers that are trying to shift inventory back and forth?

Or like, how are they, what are like the temporary solutions that they've come up with to try to do this and where are the issues with that?

I mean, I think that there's probably always some sort of an issue.

Right.

You're not going to be 100%.

Right.

And so there has to be flexibility.

You have to hedge your bets a bit.

And then there's things that you can't plan for.

Right.

There are things that go viral and you have no idea.

And you could have never, with all of the historical data that I spoke about, you could have never, ever predicted it.

And then you just have to react as best as you can and use your resources to try and figure out how you can fill that demand.

Actually, Jenny and I were talking about an example that I had from when I worked at a department store a long time ago and Sex and the City, Carrie Bradshaw wore pearl necklace.

Like, I think it was a three strand, it was a multi strand.

And I was watching it on tv.

And then the next day we sold out everywhere.

And I was the planner for that area.

And I'm trying to figure out how do I get more inventory, how do I stay on top of it?

It's wonderful because you sold all of your inventory.

Right.

So that's kind of what you want to do.

But there was so much more demand that we wanted to fill that we did eventually.

But there are certain trends like that that you just, no matter how hard you try, you can only chase it so much.

And that stresses, I imagine, the importance of getting back to, you know, everybody kind of working from the same database, understanding in real time where products are, what kind of availability they have based on, you know, how quickly they're going to need to respond.

Jenya, anything that you'd throw in here based on what Joy just said?

Yeah, I mean, back in my time, you know, working in retail media, there's for sure opportunity to like really tackle some of those contingency plans.

That's a big thing that we would always bring up in terms of, you know, the, from the retail side with our brands is, hey, what are you going to do if there's the product that's going to go out of stock?

Do you have a plan for that?

Being proactive about those types of conversations, I think is so important.

And that's really going to set you apart both as the Retailer and as the brand that's wanting to advertise and participate in media campaigns, thinking about how do you share the information with them, how do you get everyone on the same dashboards or on the same reporting tools so that everybody can actually proactively see all of those different inventory lines levels, the supply chain performance that's happening, merchandising can actually see those demand spikes and actually see that in real time.

And that's, it's a challenge, but that's definitely a huge opportunity that I see today.

There's two issues here.

There's the, the store side inventory levels, which is all about planning and collaboration.

And then I remember if Jenny or Joy, you mentioned, or maybe you both did that, then there's the real time nature of the retail media network too, and digital, where those ads are just coming at you in real time, they're getting placed and there has to be a coordination of the inventory on that in those particularly because you never want to advertise something that's out of stock.

That's just, that's just not a good thing to do.

So I'm curious, Joy, like, how do you think about that difference and what are the things SPS is working on with their clients to, you know, help improve the dynamics across those two dimensions?

I mean, I'd say, you know, working with customers to be that trusted advisor.

Right.

Like the collaboration that we talked about a bunch today already, that really starts, in my opinion, with data and building a relationship between the brand and the retailer so that it's a partnership between them.

They're balancing each other to make this work, it's profitable and it's the best case scenario for both of them.

And so for me, that that really starts with a supplier or brand becoming that trusted resource for retailer and then for the retail, I kind of think of it as them being, you know, communicative as possible and allowing the brands or the suppliers to really help in terms of managing the business.

That would be probably the best case scenario in terms of really being able to support how these ads can fluctuate.

But go deeper for me on that, because in the digital space, one thing that's particularly, you know, a part of that space or operating retail in that space is that there's only so much you can communicate.

A lot of it's happening behind the scenes through automation and different technological systems.

So what are the things that you found work, well, you know, in your, in your coaching or your tutelage of the retailers and the brands working together that you think helps Them kind of manage it, you know, without the human intervention as well.

Well, I mean, if you are planful in terms of knowing that these ads are happening, right.

And we know that there's going to be some fluctuation, I would say one thing would be having the reporting and dashboarding available to you so that you can quickly see what's happening within the business.

You're not spending time trying to pull reports and wonder what's happening.

You're seeing the trends so that you can react as soon as possible.

Right.

And that really takes being planful about how you want to look at your business and how you want to read this ad and see how it's doing so that you don't have to do that real time, you can do that in advance and then real time, you can react.

So that would be one way and that's more related to, you know, the sales that are coming in from an ad.

And then I think the second way would be the scorecarding.

Right.

Really understanding what from a supply chain perspective you have coming in, where it is in your supply chain, how quickly you can get something.

And all, all of that could be available within some supply chain metrics that help you understand how to react, where your inventory is positioned across distribution centers or other places so that you can pull in inventory if needed to support where you might see so you can react better.

Because as planful as you want to be, you're going to have to react.

Right.

We know that that's there.

So if you have the tools in place to do that, it makes it easier for you to be able to react well.

And Jenya, I'm curious because you've been on both sides, the client side and now you're on the support side from sps.

There has to be data that's coming back after the brands have made this invest this retail media investment that's showing like we put this much money in, but what was the uplift in sales?

It wasn't what we expected or whatever.

Like how is what Joy's talking about being processed and how are things being changed on the retailer and brand sides accordingly in order to kind of make this work better and avoid these kinds of problems.

Yeah, I think transparency is like a huge thing and understanding different ways of reporting.

So retailers will have their own ways of saying that this, you know, this ad was really, really performed really well for us.

Yeah.

So many impressions.

Yeah, yeah.

It gets so many impressions.

You know, like we saw this much sell through or whatever it might be.

But for me, as A brand, like, I need to be prepared for that.

Like, to me, it's like, I spent all of this money and, like, did it actually, you know, it's, it's just one product.

Why can't I have more of a product assortment that I can, like, feature and like, how can I actually be a proprietary, you know, vendor potentially at this retailer?

So there's a lot of education that has to happen, and I think having transparency and just like, very, very strong reporting capabilities is going to be the, the way that retail media can actually move the needle forward and create these partnerships that are strong partnerships with their vendors, which will have these vendors or these brand suppliers coming back and wanting to purchase.

So you have to invest in these different partnerships with your retailers because, you know, they kind of expect you to.

But at the same time, like, you want to separate those marketing dollars to become a trusted vendor and partner so that you can start seeing, you know, your investments grow in your product and become that, you know, professional there, you know, like, with this brand to actually be able to sell good product at these retailers and then, you know, participate in other retailers potentially.

So hopefully that kind of makes sense a little bit more.

But, you know, if I'm, if I'm successful with Walmart, you know, I might be successful with Target and any other, you know, retailer that's out there as well.

Right.

Well, just, it makes sense then to get your, kind of get your house in order so that you're ready to adapt regardless of who the retailer is that you're partnering with.

You know, if you're one of those brands, and oftentimes you don't get the choice as to whether or not you're going to be investing in those retail media programs either.

It's kind of like, if you want this, you're gonna have to invest this much money in retail media, so it makes sense to invest in that.

What, what can retailers and brands and the people in our audience listening right now, what can they do today that can start to help them get their house in order?

That can help them kind of make sure that their products are ready or that they are, are in a process to start working off of the same databases as both brands and retailers?

Yeah, I think having the conversations between, you know, the retailers and all of the individuals that are at those retailers is going to be the key, providing that education so retailers can really support the brands and collaborate with them by coaching them and providing that transparency and guarantee that the product will be there, you know, when the ads get served.

So that's super important to do.

And then for suppliers, it's really to stop treating supply chain and marketing as very separate problems, but really seeing that as more of like a holistic strategy, just end to end for your business.

It has to be part of those conversations regardless.

And so that's actually where SPS Commerce has a lot of great individuals who've seen like so many of these different problems play out from inventory planning that doesn't sync up or you know, with the media calendars, to suppliers that actually have great products but maybe poor forecasting.

So it's having those conversations and just being prepared and having a lot of education around this topic and not being really afraid of tackling it with your.

Retailers that that makes sense.

And Joy, I'm curious from your perspective, what you'd add in there.

But then also the con, having the conversations, the transparency, it all makes sense.

Is there data that you're bringing to that conversation that you know you're pulling out or how are they, how are the, the customers of SPS kind of leveraging that database to, to have those conversations?

What kind of information are they pulling in so that everybody can quickly kind of grasp where we're at and what needs to change?

Yeah, I mean, I think it's, it's a little bit of, of what I mentioned earlier, which is like having that historical data, which we know is not going to be apples to apples like we talked about, but utilizing that along with what is the expertise of the retailer and the brand, right?

To say, what do we think is going to happen based on this historical and based on what we know and then being as planful as possible about and having the data available ahead of time.

So preseason, right, to plan for it, but then in season or while the ads going on, not really in season, having the tools available to know exactly how it's performing and what your levers are so that you can react.

Right?

Having a plan in place for being able to react.

How do I get more inventory?

How quickly can I get more inventory?

What are my supply chain metrics and do I know how long things take and, and where I can get them from and all of that.

So it's a plan to go in, but then it's also a plan that you can react to so that you can try to catch as much of the demand as you possibly can enjoy.

Is that, is that a, is that a plan that's collaborative for the most part in, I'm curious, in practice, like, is it collaborative or is it, you know, something that the Retailer basically takes onus on to say, like, look, you know, if the ads in stock, we're going to pull it, or if the product's out of stock, we're going to pull it from all online ads, as an example.

Or, or, you know, there are probably other parameters that the retailer is probably saying, you know, if it's not going to meet these conditions, we're not going to advertise it.

Like is.

Is who.

Who's leading that conversation, really, at the end of the day, it's got to be the retailer, right?

It of.

Yes, it is absolutely the retailer who is leading that conversation.

But I think that where there's collaboration between the two is best case scenario.

Right.

Because then the things like we're pulling this ad don't have to happen, hopefully, because there was enough collaboration and communication up front to make sure that what is being advertised is the right product, is what the customer wants, but it's also where we can fill the demand.

Yeah, but in the digital world, like, it's almost impossible to make that happen.

Like you're going to be running ads where things are out of stock and so you've got to be able to have that connection ahead of time.

Jenna, were you going to add something there?

Yeah, I was going to say when I was at Target, we would always have the option to have a second version of an ad run.

So it would be.

That's part of those contingency plans, especially seasons, like holidays.

Right.

Like Christmas.

You have to be so ready for that.

It was, you know, like alerts would get set up too.

So like Target had their own ways of seeing that if something goes out of stock.

The other thing that is really, really cool that Target actually does, and I'm sure other retailers do this too, is on their actual E commerce pages, on their website sites, they will hide products that are out of stock to avoid creating those bad experiences for their customers.

So I'm sure other retailers do something similar to that, you know, or they'll, they'll provide a different, you know, substitute or something like that.

So just making sure that you're always putting that customer first and thinking about that full customer experience is super important, both from a retailer's perspective to have those customers coming back as well as the suppliers, you know, making sure that they have that trusted relationship there.

Right, yeah, that's good clarification because that's how I was thinking, like you almost have to have that approach in the digital space because the digital space just moves so quickly.

All right, well, well, thank you Both, thank you so much for joining us today.

If people want to get in touch with you and, you know, learn more about SPS commerce, to potentially have them help you out in this conversation around retail media, what's the best way for them to do that?

Joy, what's the best way for people to get in touch with you first?

Probably LinkedIn is the best way.

So just Joy Dash Spioto would be awesome.

Send me a message and I'm happy to connect you to the right person to SPS or just chat about this topic or any other retail topic.

Awesome, awesome.

And we happen to be on LinkedIn, so that works great.

Jenna, there you go.

Same here.

So, Jenniel Lawson on LinkedIn, and I'm happy to connect you with any of the retail pros that I used to work with too.

So.

Yeah, right.

You know a lot of folks, you know a lot of folks in the space, both on the supply chain and the retail media side, as you said at the outset.

So.

All right, well, that wraps us up.

Up.

Thanks to everyone for submitting your questions live and especially to Jenya and Joy for of SPS Commerce, for sitting down with us today to answer all the questions that you pose to them.

And as always, on behalf of all of us here at omnitalk, be careful out there.