2021 is a year of upheaval, marking a turning point not only for consumers but also for marketers and retailers. The Coronavirus pandemic has not only significantly changed all our lives, but also fueled online commerce and new omnichannel concepts. The evolution is ongoing: To meet changing customer needs, retailers must continue to reinvent themselves, and do so beyond the point of sale (POS). At the same time, the digital advertising industry is looking for sustainable alternatives for addressable advertising online, without relying onthird-party cookies
“Commerce is at the heart of all these developments. It has a completely new significance within the digital ecosystem,” says Corinna Hohenleitner, Country Director DACH at Criteo. She spoke with Matthias Weth, CEO of SYZYGY Performance, and Max Melching, Vice President Online Marketing, Data Intelligence & Marketplace at Douglas, about the new role of commerce and the rise of commerce media as part of a DMEXCO Masterclass. From their different vantage points, the three experts shed light on the changes and trends they are currently monitoring in the market, how a commerce media approach is enabling retailers to meet the new demands, and how other players like agencies can best equip themselves for continued business success in the digital future.
The “new normal” in commerce
Consumer shopping behavior has changed dramatically over the past one and a half years due to Covid-19. In the process, ecommerce sales have risen significantly. The German ecommerce association bevh, for example, reported ecommerce growth of 20 percent a few weeks ago. Although restrictions have now been relaxed and people can go to stores again in many places, the change in consumer behavior seems to be lasting. Many have come to know and love online shopping as convenient and reliable. As a result, they want to continue buying some products online in the future, or even take more purchase decisions online. For retailers, these changes offer great potential, but they also mean more competition and greater pressure on margins.
Corinna Hohenleitner makes three predictions for the future of commerce. She says the need for sensible omnichannel concepts has once again increased significantly. That’s why POS has to find its role in the customer journey anew, she adds. “There are already several exciting concepts that show us how we can dovetail the advantages of online and offline more strongly in the future,” Hohenleitner states. Not only the role of local stores, but the role of the retailer itself is developing, she adds, with a trend toward marketplace models that sustainably engage both shoppers and brands. “Looking at the advertising industry,” says the Country Director DACH at Criteo, “we see that commerce is in pole position for personalized advertising. It has a closeness to consumer needs other industries can only dream of. This has enabled the rise of entirely new disciplines, such as retail media. The retailer becomes a holistic partner in this process.”
The basis for all these developments is first-party data, especially from the commerce sector. It is the most valuable first-party data available in the market.
The changing role of commerce and the rise of commerce media
Fueled by all these developments, we are seeing the rise of an entirely new discipline: Commerce Media. A new approach to digital advertising that combines commerce data and intelligence to target consumers along their entire customer journey and drive results for advertisers and media owners.
For Matthias Weth of the Performance Marketing agency SYZYGY, there are three very clear trends emerging in terms of changing customer targeting, particularly in commerce. “First, we’ve seen completely new user groups and also new industries go online all at once, accelerating digitization.” A second trend the CEO sees is increasing verticalization and fragmentation: “Whereas 15 years ago we served a handful of platforms for our customers, there are more and more.” Further, it is apparent to him that younger generations now expect their brands to think digital first and have a native online experience. As a result, SYZYGY Performance is receiving more and more mandates for D2C (direct to customer) strategies, and the credo of “quality over quantity” is becoming more important in consumer targeting.
Douglas has transformed itself into Europe’s most successful beauty platform over the past few quarters, proving itself to be one of the pioneers in the use of commerce data. “Two of the biggest drivers for us are the app, which is the center of our interaction with the customer, and our selective partner program,” said Max Melching. Trends such as social commerce, live shopping, and digital try-on can take place in the app.
Melching states that using the selective partner program as a marketplace has provided Douglas with “the sweet spot between an open marketplace and a traditional shopping store, where D2C can be done, but we still retain a lot of control over what happens on our platform.” In doing so, Douglas has been able to transform relationships with other market players, manufacturers thus became partner program members. The biggest learning for the VP Online Marketing, Data Intelligence & Marketplace at Douglas also lies in how best to serve consumer needs as they develop. Douglas, for example, has experienced many digital first-time buyers throughout last year and sees a trend toward consumers wanting to experience retail products digitally.
How marketers gear up for addressability
No conversation about the role of commerce can be meaningfully conducted without also addressing how the advertising industry can prepare for the future of addressable advertising. There is agreement throughout the industry: the future belongs to first-party data. It not only enables users to be identified, but also opens up exciting new ways of addressing target groups, for example via commerce media.
Matthis Weth is positive about the future in this context. He observes that we are still in the “test and learn phase” and that many interesting approaches exist, but also that little has been truly optimized for the market yet. For this reason, SYZYGY Performance naturally remains “engaged and in exchange,” but also recommends one thing above all to its own customers: stay calm. Weth sees a renaissance of tried and tested targeting options such as contextual targeting. SYZYGY Performance itself is currently starting to use analytics-based incrementality tests again and is gradually expanding its targeting with them. In this context, strong first-party data and partners such as Douglas and Criteo are highly relevant for the agency, he says.
For Max Melching, too, the key to success lies primarily in first-party data. Douglas itself is “blessed” in this area and has not only online data, but also historical data from their stores and the widely used Douglas loyalty customer program. The consolidation and activation of all this data in a DMP is crucial for Douglas itself and forms the basic building block for its own Retail Media business.
Regardless of specific approaches, the three commerce experts agree that it is important not to rest on one’s laurels during the small respite granted to the industry before third-party cookies no longer remain an effective way to address consumers online. Rather, it is essential to become active now, to try out different things, to refine approaches, to generate learnings and to create the technical prerequisites so that the elimination of third-party cookies won’t come as a great shock to us in two years.