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Jun 28, 2018 | 6 min read

Economy

Have you met 'Trade Marketing 2.0'?

Alexandre Mahe

Director of Performance & Innovation


FABERNOVEL DATA & MEDIA
Although we might imagine that the online advertising market has been sewn up by just two operators, Google and Facebook, supermarkets and other chain stores have not thrown in the towel yet. They too are making their play for the online advertising market. This being a recent phenomenon, some have fallen behind the curve, not least because this industry requires the use of a new model for creating value, as do the brands who are looking to make their mark through advertisements. This represents a whole new era: Trade marketing 2.0.

Ad networks and retailers are getting up to speed

Consumers are changing their habits and operators such as Amazon, Alibaba and WeChat have revolutionized the way payments and deliveries are made, customer relationships are forged and advertising is put out. All this has transformed commerce. With this as their context, long-standing supermarkets and other chain stores are working assiduously to form new alliances with web giants to make what they offer more attractive to consumers. For example, relationships have been forged between Auchan and Alibaba, Walmart and Google, as well as Monoprix and Amazon in more recent times. But big-name stores are not stopping there, and rightly so. Who could disregard the astonishing results of Amazon’s advertising product offer and its $2.7 billion turnover (a figure that almost tripled between 2016 and 2017 and which is set to keep growing in the coming years)? When you compare the audiences and turnovers generated by online advertising’s two leading companies, Google and Facebook – thanks to their billions of users they make $95 billion and $40 billion in ad revenue respectively – it is easy to see that Amazon still has a lot of room to grow with its 1.1 billion unique users every month.

Just like this Seattle-based giant, retailers are organizing and developing their own online advertising services. Auchan has Imedia Center, Casino has RelevanC, E.Leclerc has Conso Régie and Carrefour has Carrefour Media. We all know how effectively major-name brands’ ad networks have monetized their physical stores through catalogs, gondola shelving units, CRMs and so on, and they are now turning their sights to online opportunities. Their first tactic has been to transpose their traditional resources into this new realm. Inserts in catalogs become purchased advertising space and gondola shelving units become banners on websites which allow brands to directly target customers as they shop. However, their key strategy revolves around their biggest asset: their data. With their millions of customers identified in stores and millions of online visitors, retailers possess an incalculable amount of data. This data is special because it is highly granular. Because 80% of a retailer’s customer base has a store card, it is possible to know each client in precise and accurate detail, with a hold on everything from the brands they buy to how they like to make purchases, how often they do it, where they do it and so on. This means that brands looking to advertise have access to an immensely valuable resource which allows them to minutely target high-value customers visiting not just online stores but other websites too. Because retailers are ad networks in their own right and have access to key areas of the market as well as automatic marketing, they are able to interface with any website with space to monetize where a target audience is to be found.

Finally, as for distribution, the objective at the heart of forming a value-generating business model is to guarantee that all CRM data are online-friendly, to achieve that all-important holistic perspective on a customer, and to help develop advertising spots.  

Trade marketing 2.0: A strategic opportunity for brands?

Trade Marketing 2.0 & activation

While supermarkets and other major stores are gaining an important advantage from trade marketing, there are no fewer advantages for brands. It allows them to roll out campaigns with all kinds of objectives, from branding to bottom of the funnel opportunities. So how can they do this? It is achieved by targeting ultra-relevant micro-segments identified in terms of purchasing habits or favored consumption channels. This is done when transactional data confirm that these micro-segments are interested in the brand in question or they have a strong inclination towards a type of product. For instance, a cosmetics brand selling a new range of products for colored hair will target anyone who has already bought colored hair shampoos, while a bank looking to promote savings accounts designed for young parents who want to put money aside for their children will target buyers of diapers and formula milk. What makes this such an effective strategy is that it is used on retailer websites set up to facilitate purchases – making it particularly useful for brands that sell via these outlets. However, it is still effective elsewhere, on any web platform that monetizes ad spots and which attracts the target audience.

Moreover, Trade Marketing 2.0 is opening up the way for omnichannel strategies. Given than nearly 70% of a brand’s consumers will visit its website before going into stores and that the ROPO effect (research online, purchase offline) is even stronger in supermarkets and other chain stores, brands that want to advertise have to intensify their communications strategies across all channels. Big-name brands can deploy trade marketing operations that start online before moving into stores. A key example of this kind of approach would be geo-located promotional campaigns in which consumers with colored hair, for example, find out online that a one-off promotion is available in their local supermarket.

 

How Far Can Omnichannel Strategies Go?

Consider also the potential for measuring impact. This is the Holy Grail for brands distributed by retailers and with only minimal direct contact customers, for whom it is difficult to establish the real ROI generated by online campaigns. This barrier is erased by transactional data, as they allow sales to be viewed and analyzed. By comparing in-store purchases with samples of consumers who visited the premises during the course of a campaign and who have been either exposed or not exposed to the ads in question, it is possible to calculate by how much sales have increased due to this new form of trade marketing. Implementing trade marketing 2.0 for a leading brand of spirits immediately demonstrated that the campaign had had a positive impact on in-store sales, with sales up 86% for the key product and 13% overall among targeted customers.

 

Trade Marketing 2.0: A strategic foresight resource

Finally, trade marketing 2.0 offers a way to better understand consumers and get a view on how relevant a brand’s product range is, allowing its users to better approach their strategic target and meet that audience’s needs.

Let’s consider the example of a brand selling budget city cars with a strategic target of women aged 25 to 35 living in small and mid-size towns. Using retailers’ data, it is possible to figure out that this audience tends to buy ready-meals and loves the makeup brand L’Oréal Paris. This makes it achievable to create and activate tailored content that will make the target a profitable one, but also to work on setting up a partnership with a makeup brand to better penetrate the audience in question.

Similarly, by understanding how consumers use products, it is possible to assess how relevant a range is. Take the example of a canapé cracker maker that wants to launch its new potato chips in a mini format. Distributor insights might show that the brand’s customers also buy soda and mini-format snacks. This strongly suggests that it would be justifiable to launch a small-format range, as this will meet brand consumers’ needs. 

Trade Marketing 2.0: Governance issues

While there is plenty of evidence that the first trade marketing 2.0 operations have been effective, there are governance issues to consider. Because trade marketing and media purchases have traditionally been kept apart, 360° trade marketing strategies have not developed as fully as they could. Brands looking to advertise currently approach key account managers with questions about traditional trade marketing, while marketing managers deal with partner ad networks and media purchases. This is why interactions and synergies need to be developed between both departments, so that there is real consideration of how online trade marketing can be integrated into general negotiations with a distributor. To do this, marketing teams must be made aware of the commercial stakes involved and there needs to be onboarding around online issues for key account managers. This will help them optimize negotiations and extract the very best out of 360° trade marketing campaigns.

Are you interested in these issues? Would you like to know more about Trade Marketing?

Contact Alexandre
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FABERNOVEL DATA & MEDIA

is a multi-specialist performance agency committed to transform the digital complexity into pure performance. Expert in traffic acquisition, transformation optimization and data treatment and analysis, FABERNOVEL DATA & MEDIA identifies and activates the most suited and innovative solutions for its clients.

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