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04/28/2022

4 Connected Commerce Challenges Brands Must Overcome

FUTURE FORWARD

In a Future Forward session on May 17 in Chicago, Skai’s Nich Weinheimer will look at how brands are rethinking traditional strategies in favor of connected commerce marketing. For more information and to register for the in-person event, visit the Future Forward website.

The digital landscape has changed dramatically since 2019. With e-commerce penetration still 35% above the pre-pandemic baseline, retail media has exploded, and spending is estimated to grow from $30 billion to $100 billion in the next two years.

According to the 2022 State of Retail Media Survey conducted by Skai and BWG Strategy, 80% of the marketers surveyed plan to increase spending on retail media advertising in the next year; 20% of these respondents plan to increase spending by more than 26%. Spending on search and social shoppable ad formats is also on the rise, up more than 20% in the last year alone.

New privacy regulations have led more and more brands and retailers to seek marketing solutions that give them ownership over customer data. The future of commerce marketing is data-driven, consumer-centric, full-funnel, measurable and omnichannel.

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skai future forward
Nich Weinheimer

To succeed in 2022 and beyond, brands must implement a connected commerce model that unifies data-informed strategies across all digital advertising channels to drive sales and better connect with customers. But there are four significant challenges standing in the way:

Challenge No. 1: Managing Multiple Retailers

Retail media is now the third largest digital ad channel, and all the major online retailers (including Amazon, Walmart and Target) are joining in or expanding their offerings after blockbuster retail media earnings are being reported.

This is a paradigm shift for consumer brands that used to invest in dual advertising streams: digital advertising to build awareness among consumers before they stepped foot in a store, and in-store shopper marketing to nudge consumers at the point of purchase.

Now that brands can use retail media advertising to influence online shoppers, marketers have many more decisions to make: Which retailers serve which functions across the customer buying journey? How does each retailer’s platform differ in functionality, measurement and opportunity, and how can we best compare and contrast them all? How much of our budget should go toward each retailer? How can our paid search and paid social ads complement our retail media advertising? And how should we balance our own direct-to-consumer channels with these?

The retail media budget flexibility that 75% of survey respondents enjoy suggests that the answers to these questions are always in flux.

Traditionally, brands have managed and optimized each advertising channel individually. Developing omnichannel strategies and tactics that integrate all advertising together is much more complex — especially since each retailer has its own "secret sauce," or distinct advantages, that marketers must understand. For example, Walmart’s retail media offering reflects the organization’s strategic initiative to grow e-commerce, so brands are well served to capitalize on that using tactics that may not work as well with other retailers.

Challenge No. 2: Finding the Right Technology

One way to streamline an omnichannel strategy is to have the right technology in place. But that’s easier said than done.

Consumer brands that plan to evolve toward a connected commerce model need three things from their technology provider: rich, relevant data connections, for better decision-making; high-performing, scalable technology that can grow with the brand; and custom solutions that can integrate with a brand’s existing data feeds for a truly personalized experience.

Most technology providers in this space have point solutions that lack omnichannel integration, deep data and customization, meaning brands will soon outgrow their offering. While 53% of the survey respondents don’t currently use a third-party tool to manage connected commerce execution, almost 70% plan to evaluate and/or acquire one in the next year.

Challenge No. 3: Hiring Talent

Implementing the right technology is a big hurdle on its own. Finding people with the expertise to manage that technology is even harder, especially considering that survey respondents identified eight different teams that may oversee retail media investments. That’s because experts in this field need to deeply understand each channel, e-commerce as a whole, emerging trends and data analytics in order to develop and implement a strategic digital marketing plan that delivers on KPIs.

If hiring this talent in-house is out of reach, brands can outsource it to a partner — but both the partnership and the technology need to be coordinated for best results.

Challenge No. 4: Understanding and Acquiring the Data for Success

There are two data acquisition challenges brands face. The first is consumer data. As Google and Apple limit access to third-party data, brands must pivot to rely on their own first-party data for audience segmentation, behavioral targeting and campaign performance insights.

The other data problem that brands face is even more complicated. There are many factors that influence retail media advertising success — including product stock levels, demographics, ratings or reviews, share of voice and competitive intelligence — that don’t influence the paid social or search ad campaigns that brands are used to. Just identifying the relevant data sets is a challenge; accessing that data is even harder, as many retailers don’t share it.

The biggest challenge of all, however, is knowing how to use this data to make better marketing decisions. Connecting this data across all marketing activities is key to gaining insights into strategies’ performance. It’s impossible to access comprehensive data if paid social, search and retail media investments are each managed independently.

The Solution: A Data-Driven Omnichannel Platform

Skai recently enhanced its omnichannel platform to resolve the challenges brands face when moving toward a connected commerce model. Designed to grow alongside customers, Skai’s platform is flexible enough to be used as a point solution today while marketers build toward a future fully connected model that takes full advantage of the platform’s capabilities.

About the Author: Nich Weinheimer, GM, Strategy, at Skai, brings to the table more than a decade of experience in digital advertising, e-commerce and retail marketing technology in venture-backed startups in Seattle. He spent the majority of his ad-tech career helping grow companies like AdReady and the Amazon-integrator, Mercent Corp., now a division of CommerceHub. Building on expertise developed integrating major brands and retailers onto Amazon’s Marketplace at Mercent Corp., he started an Amazon Consulting firm helping brands run their businesses and advertising on Amazon’s complex marketplace. Later, after launching his own brand on Amazon, he joined forces with BuyBoxExperts to lead their Amazon Advertising business, supporting top-tier brands’ PPC and DSP efforts on Amazon. He joined Skai to help lead the e-commerce business unit, pointing the industry-leading search technology toward the erupting Retail Advertising opportunity. He holds a bachelor's in Music Theory and History from Whitman College.

FUTURE FORWARD: In a session on May 17 in Chicago, Skai’s Nich Weinheimer will look at how brands are rethinking traditional strategies in favor of connected commerce marketing. For more information and to register for the in-person event, visit the Future Forward website.

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