Digital Marketing and the Shift in the Retail World
Digital Marketing and the Shift in the Retail World

Digital Marketing and the Shift in the Retail World

Omni-channel presence, personalization demands, and continuous improvements in the use of shopper data produce new challenges for digital marketing in the retail world. The battle for the favor of customers is getting more and more complex. Time to look behind the facades and draw a vision of the shift in retail, that is to be expected. It should be worth while, as tedious labor can bring a sweet reward in the end, when retail media is rising and bear new, exciting business opportunities.

It is few weeks ago now, that one of the essential gatherings of the marketing industry has passed by. The Digital Marketing Exposition and Conference in Cologne – short DMEXCO – has become one of the leading events in this area. Every year again it creates a huge excitement, which is starting to culminate in the next big hype after the .com hysteria. A good reason to look back and search for the next challenges, which have been addressed especially in the retail sector.

A Place where Digital Transformation gets Tangible

Ever and anon DMEXCO has been an exciting place to be. This entrepreneurial atmosphere arising from a mix of “meet the solutions” and “listen to the leaders” creates an feeling of being at the pulse every time again. While visiting DMEXCO several times now, I have never regretted to be there.

This year, it significantly had changed my mental world.Throughout the last years both, the exposition and conference, have been growing immensely (in 2015: 881 exhibitors, 500+ speakers, and more than 43k visitors marked a new record, putting DMEXCO in the center of global digiconomy). This is the reflection of the metamorphosis of a new industry. While starting off as an incubator in the early phase, yet it is showing off with innovative capabilities and disruptive business ideas, arising from the manifold of new digital opportunities.

Getting a grasp of digital marketing trends at DMEXCO


Although having a lot of impressions in my mind from this years visit, last year more than that seemed to be a turning point. That time the industry was wondering about the value, that all the offerings around digital marketing should bring to them. Companies arising from an initial hype – social media was the beacon of hope – had to admit that their business models did not work out (even the leaders like Facebook were struggling in proving their business ideas). It felt like industry would have some fundamental doubts about this brave new world. While e-Commerce was gaining market share, the margins had dropped-off. Only the big ones were supposed to survive.

Even though. I can remember a conversation, where the founder a small, successful start-up in retail explained, that digital is only one part of his world and he thinks that benefits from digital would only arise, if the digital and the real world would be seen together. This was interesting at that point as it showed that some people at least had some visions. But the substance seemed to be missing to be able to believe in this future.

Now. Retail industry has taken over the lead this year. Executives are going public with new visions and strategies. Elaborate videos are being produced, presenting to the digital community what is going to be expected from them. Exhibitors are polishing their booth. Size and attractions on the stands are growing rapidly. Also messages with regards to content have been removed. Instead, it gets back to pure presence. Exhibitors need to show that they believe in the visions and are there to support the trends with new approaches. It is about to take part in a movement, where no one can tell exactly, where it will end. Even more since visions are being transformed into innovations and investments already (in the US Target announced, that they will invest 1 billion dollars to become ready (!) for the digital transformation). And this will be only the start.

Besides a big buzz around digital transformation, one statement has burned into my memory from this year’s conference. Paul Caine from Bloomberg Media mentioned in a session about media ownership: “We have to get our eyes away from the dashboards back to the (customer) story”. When stating this, he wanted to express the urgent need to take care about what the digital world will offer to consumers. Consumers are expecting benefits from sharing their data with organizations. They are disappointed when they recognize that data is used for optimizing margins only. The consumers will have to be involved. It is thereby a request for creativity. Digital is about humans!

Challenge 1: Integrated Omni Channel Strategies

One dedicated statistic has dominated the conference. It has been mentioned in three sessions I attended to throughout the two days – even though I was attending only to a small fraction of all sessions. It was the number of people who make use of their smart phone or tablet when watching TV. Nearly half of smartphone or tablet owners use their devices while watching TV. A fact, that underpins the change the society is undergoing.

Marketing and media agencies preferred to separate the world into channels. There are channels for mass communication (like TV), channels for personalized messages (like email), and channels for locations based messages (like mobile). Depending on the campaign and the message agencies decide on the channels and content. They spread messages across the channels, whilst many organizations still operate with dedicated budgets for channels.

Consumers stop to think in channels. The generation of shift is bringing it’s own understanding of channels with them. The millennials take over. They are growing up with the multitude of digital channels and do not understand the concept of different channels anymore. The educated consumer wants to make use of the most appropriate channel.

The local channel will put the spot in the consumers, their various needs and missions.

Store concepts have to consider this. Marketing activities have to consider this. Consumers will honor these considerations. It will change the way we look at retail and marketing today.

Probably this is the most challenging change retail has to take on. If digital transformation is a synonym for a trend, it is presumably the conversion of a channel-centric setup into a omni-channel world. Presence and consistency across all channels is something the consumers will expect. It is digital and tangible at the same time.


Recommended Session @DMEXCO: dmexco:visions // The dmexco Summit: Bridging Worlds – Finding the way to the consumer

Challenge 2: Personalization for Relevance

You might agree when I say that personalization is not that new anymore. For many years personal data is used to address messages, to understand needs, to optimize businesses. Retailers make use of this information for a personal touch in their communication, for reward and acquisition programs targeted to the shopping behavior of the customer, assortment considerations and campaign plans based on customer behavior. But is this relevant for the customer? My shopping experience still is not as exciting as I probably would have thought few years ago.

The retail industry has realized that what they might call personalization has not been expereinced by consumers so far. Customers are expecting more from them. Shoppers let retailers and marketeers participate in their shopper experience by sharing data for a while now. There has been a promise that they will get back a personal shopping experience.

It is about to bring back the data to the consumers. New concepts have to be created, which will let consumers participate in the usage of the shared data. Consumers want to be involved. They want to have the full attention. And retailers start to recognize and respond to it. The MediaSaturn holding for example has presented an amazing video. It shows their idea on shopping experience in few years (the video of the presentation at DMEXCO can be found at YouTube) . And this is what consumers want to see!

This future is still to come. Recently Germans chancellor Angela Merkel remarked that Germany has to rethink its rigid position towards personal data (see Reuters: Merkel urges Germans to put aside fear of big data). The whole industry would suffer from missing trust and miss this important link. It becomes obvious that this future is now to come and it is important to participate. The results will be honored by the consumers.

Recommended Session @DMEXCO: dmexco:media // The Media Intelligence Debate: The Digitally Distracted Consumer

Challenge 3: Advanced Analytics Applied

Predictive Analytics, Artificial Intelligence, Deep Learning – when taking a tour through the halls of the exhibition, these have been keywords, which attracted many visitors. One could get the feeling that soon the world is not going to work anymore without them. And there is a good reason for the buzz.

Retail and marketing will need tools, which help them to implement the digital transformation. The industry is coming up with new visions and ideas which need to be transferred into solutions. Advanced analytics is one of the few areas, where everyone is sure that it will be part of the solutions. All approaches and methods mentioned in the context of advanced analytics are about to turn Big Data into something meaningful. And they are working for themselves.

Advanced analytics will help to measure the business. They will help to understand better underlying mechanics as they will provide a better diversification of the results. They even will be able to predict the impact of certain activities. But they will not predict solutions to problems and challenges of a changing world.

Advanced analytics will have to work on well-defined systems. The better a system can be described by measuring parameters, which affect the response, the better prediction will work out and the more precise the insight on underlying patterns can be. But there are natural barriers.

Moods, feelings, emotions cannot be tracked constantly. Biases and simple heuristics making up most our decision cannot be converted into rules. But they make up about one third 30% of the external factors influencing our decision.

Even more important will be the impact of change on the analytical capabilities. Any kind of analytics is based on data, whereas data always represents the past and the present. It is possible to detect the changes and discover the gaps, but it will not relieve us from getting creative when we want to change the story.

It starts to get a common agreement, that advanced analytics will help us to understand the business better, but it will not be a substitute for executing the business. Every executive or director, who lets his eyes stroll around to understand his business, will be in advantage over those, who firmly adhere to their dashboards and analytical teams and strives for 100% automation. This accounts also the other way round. Advanced analytics will be an indispensable tool in the future. The best will be those who can combine this with ease.

Recommended Session @DMEXCO: dmexco:data // The Role of Data in the Attention Economy

Get it Right: Retail Media is Rising

Customers want to have the full attention. As attraction is tightly coupled with attention, customers will actively look for those places and offerings, where they get the most attention. This sounds pretty straight forward. The implementation into business will be much more complex.

Marketing remains a form of interaction with customers. But media campaigns have treated customers as consumers for a long while. Literally this one way interaction is consumed. Customers call for attention. They expect marketeers to listen to their needs and preferences. Understanding needs and preferences becomes even more relevant now.

The most evident and most reliable place to get in interaction with customers stays the point-of-sale. Here customers place a strong statement about their needs and preferences. Every transaction contributes to a better understanding of the customer. While interests and wishes might stay vague, transactional data will deliver a base profile necessary to avoid common pitfalls.

Retail, as owner of the point-of-sale, has the compelling advantage of owning the relevant data. It is the retailers, that will be able to deliver the basis for personalized customer interaction.

Digital Marketing will offer huge opportunities

It comes at hand, that retailers will look for setting up retail media channels in the near future. This becomes obvious, as retail data sharing is already a good business on top of the consumer business. The digital transformation will speed up the development, as digital channels can be established much easier and omni-channel models will have to ensure access for customers. And retailers will give the guarantee, that one can meet the customers – including physical presences at best.

Retail media will bear a win-win-situation for retailers and vendors. The combination of customer knowledge and shopping communities will allow an personalization of customer experience, which will bring vendors to the pulse of retail and create new revenue streams for retailers. But the real winners will be the consumers, which will be able to shape their shopping experiences as the industry will be able to listen to them.

Retailers just have to get it right. They have to find the right way to start listening to the customer. And they need to find the right enabler for the strategies.

Makes sense?