We are here at eTail Palm Springs and seeing and hearing the latest and greatest in e-commerce and retail.
Retail media plays a critical role, but are advertisers wasting money without realizing it? Many brands are spending big on retail media ads—but how many of those customers would have bought the product anyway?
Today, I’m joined by Ben Dutter, Chief Strategy Officer at Power Digital, a leader in data-driven marketing strategies. Ben has helped brands optimize their retail media investments by focusing on incrementality—ensuring that every ad dollar spent is driving actual new revenue, not just cannibalizing organic sales.
About Ben Dutter
Marketer, tabletop game designer, and ethical vegan. Ben oversees strategy at Power Digital and leads the fusepoint team.
Resources
Power Digital Marketing: https://www.powerdigitalmarketing.com
eTail Palm Springs: https://etailwest.wbresearch.com/
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Transcript
This was AI-generated and only lightly edited
Greg Kihlstrom:
We are here at eTail Palm Springs and seeing and hearing the latest and greatest in e-commerce and retail. Retail media plays a critical role, but are advertisers wasting money without realizing it? Many brands are spending big on retail media ads, but how many of those customers would have bought the product anyway? Today, I’m joined by Ben Dutter, Chief Strategy Officer at Power Digital, a leader in data-driven marketing strategies. Ben has helped brands optimize their retail media investments by focusing on incrementality, ensuring that every ad dollar is spent driving actual new revenue, not just cannibalizing organic sales. Ben, welcome to the show. Yeah, thanks. Happy to be here. Yeah, yeah. Before we dive in, why don’t you give a little background on yourself as well as your role at PowerDigital?
Ben Dutter: Yeah, for sure. So I’ve been in sales and marketing for 18 years now. Started brand side originally. So I kind of grew up in understanding demand planning and the P&L from a retailer perspective. Eventually moved agency side and have been there now very happily and have been at Power Digital for about three and a half years now where I oversee our overall strategy as a company, as well as strategy for our clients in order for them to grow organically and inorganically.
Greg Kihlstrom: Got it. Got it. Great. Great. So, yeah, let’s dive in here. We’re going to cover a couple things here, but I want to start by talking about incrementality in retail media. First, for those less familiar with the term and even maybe just a quick, quick thing on retail media, you know, what is this and what are we talking about?
Ben Dutter: Yeah, I mean, incrementality as a concept is pretty hot right now, for lack of a better term. It’s really just a fancy word that marketers reinvented to describe true ROI. And so, you know, in the olden days, you just had ROI, and then somebody smart invented the term attribution. and we went down this 20-year rabbit hole of attribution and now that term has come to mean negative things for most people in the industry. So incrementality now is the kind of new version of attribution where we’re really trying to figure out what is something that actually was caused by marketing, what actual conversion or new customer or purchase was driven from marketing that otherwise would not have happened. How that applies to retail is there’s a lot of brands that are sold in various retail markets. They’re obviously like Amazon, but they’re also sold on Target and Walmart, etc. And those retailers have developed retail media networks too, where they actually expect or demand a Brand to spend some amount of money on the retail media in order for them to get placed in the store or online And in my experience, there’s a lot of problems with that which we’ll get into. Yeah.
Greg Kihlstrom: Got it. Got it Okay, so let’s maybe start with some of the challenges. How do brands? misinterpret Traditional retail media metrics and how does that lead to some of the wasted spend I referred to earlier? I
Ben Dutter: Yeah, I think a lot of cases we’re talking again about the difference between attribution and incrementality. And so, you know, when you look at whether it’s a paid advertisement on Amazon or even something that is taking place on another paid advertising universe, whether that’s within Walmart or Target or even on sites like TikTok and Facebook, they’re going to have their own method of tracking users and trying to backwards attribute some kind of credit to that interaction, that ad that they saw. And most retail media buyers today are really limited in terms of they’re only looking at what that retail media network system is allowing them to track. So if I’m selling on Walmart, I’m looking at my ads on Walmart, I’m looking at the attributed return on ad spend in Walmart, and I’m making decisions based on what, frankly, what Walmart wants me to make decisions based off of, and I have less visibility and less control over it. So in many cases, what we’ve seen is Those retail media dollars are not accretive to the business at all. They don’t actually generate any net new revenue. They’re just a way for the retailers of the world to kind of pad their media budgets.
Greg Kihlstrom: Yeah, so, I mean, you kind of answered this, but just to clarify there, you know, ROAS, you know, Return On Ad Spend, as you mentioned, certainly it’s a way that many advertisers measure success. So you’re saying, you know, that’s not necessarily like just looking at ROAS is not necessarily going to indicate success or not?
Ben Dutter: Yeah, the classic example is if I’m bidding on specific search terms within Walmart, let’s say, and I’m paying money to Walmart for a very specific SKU or model to come up in an advertising context, a customer goes and searches for, you know, seven prong power coupling in black or whatever. the likelihood that they did not have that very specific product in mind is extremely low. And so whether they saw that ad or not, they would have made that purchase anyway. And so for advertisers, they’re seeing high attributed ROAS, for example, in terms that are actually very unlikely to have caused the customer to buy. And that money would have been spent better elsewhere. Something that’s maybe a more generic category term like power supplies or something like that, rather than the specific model number that the brand is searching for.
Greg Kihlstrom: So then, I guess to move to talk about accurately measuring incrementality, what are some of the key signals that a brand should look at to determine true incremental value?
Ben Dutter: Yeah, the easiest way to look at it is from a combination of science and math. And so I’ll break that down. So science is really based on the principle of test and control groups. Pretty much every industry outside of marketing has relied on test and control groups. for measurement forever for the last hundred plus years. It’s really only marketing that has gone through this very tech intensive route to try to work around an experiment type place. And I understand the why, but a true scientific level of measurement is required. And the simplest one is just turn things off. You know, a pre-post test of things being on versus things being off. There’s a lot more complex and smart ways to do that. with different geo holdouts or different audience holdouts and things like that, which I won’t bore everybody talking about, but basically you’re turning things on in some group and you’re turning them off in some other group and you’re comparing the total impact in both groups. So that’s the science side. The math side is a little bit more of a mature ecosystem within marketing land, which you may have heard of like marketing mixed modeling or MMM, right, which is really just a way to infer through math equations, essentially statistics. We did some activity like we’ve spent some money and we got some kind of outcome from that we got conversions or we got revenue from it and Through that data modeling you’re able to not prove but infer cause and effect between Media, so I recommend for any kind of retail Merchant or anybody who’s selling on retail media whether that’s Amazon or Walmart or whomever to try their best to do both a Math and science approach to make a more informed budget decision So do you see I’ve heard there’s like camps of like the MTA the like multi-touch attribution and the MMM
Greg Kihlstrom: Is it really so binary or, you know, what are your thoughts on that?
Ben Dutter: Yeah, I think, look, I understand measurement is really complex right now. And I think that it’s there’s a lot of angst in the community about what to do. I think part of that angst, though, comes from a over-complication that’s largely unnecessary and what I mean by that is the purpose of a multi-touch attribution or any really granular precise attribution tool is under the guise of this concept of performance marketing that we all have ascribed to the last 20 years which is to say I can make mini little micro optimizations of keywords or ad copy or these kinds of things. And that’s going to make or break the difference of my campaign. And what we found is that it doesn’t really make that big of an impact, that level of granularity. Now, if you’re a massive brand, and you’ve exhausted all of the kind of broad strokes marketing that you can do, if you’re Nike, then something like an MTA I think is useful because it allows you to eke out those last couple percentage points of a program. But if you’re a smaller brand, say you’re doing less than a couple hundred million dollars of revenue a year, I don’t want to look at MTA outside of any kind of maybe intra-platform optimizations like my Facebook Red ad versus blue ad, sure, I can look at MTA for that, but for any budget decisions or any business strategy decisions or allocations of how much I’m spending or where, I would stay away from MTA altogether.
Greg Kihlstrom: And I mean, maybe this is going to show my bias, but I mean, isn’t that also, I mean, we’re omni-channel consumers, right? So it’s like we’re not only on, I mean, most people at least aren’t only on one channel. They’re on, you know, depending on what stats you see, like between three and eight or something per purchase. So is that, does that also play into it?
Ben Dutter: 100%, yeah, and it’s even more complex than that when you consider in things like mental availability or time consideration to purchase or category entry points, a lot of these more kind of academic concepts that are becoming more prevalent now in performance marketing land because people are realizing that I can’t just win in the search engine result and expect that to drive my business. I have to actually build a brand. I have to build brand awareness. I have to be in multiple places at once. I have to have a certain amount of reach and frequency in order for a customer to remember me. All these things have a big impact on how effective marketing is overall. The analogy I like to use is marketing is a recipe. It’s not a buffet. You can’t just pick the things out that you want. They all work together and a delicious recipe is the sum of its parts.
Greg Kihlstrom: Yeah. I mean, in a way, it’s We used a lot of math to kind of get back to some of the fundamentals of branding, right? 100%, yeah.
Ben Dutter: It’s a very funny cycle that we’ve been in. I keep calling it the 20-year detour, but this is what marketing was before the digital era, and we kind of forgot a lot of what that is, and I think it’s becoming more mainstream again.
Greg Kihlstrom: Yeah, yeah. So let’s talk a little bit about optimizing the strategy. We talked about some of the challenges as well as some of the approaches for measurement. Not all retail media platforms are going to drive equal value. What are some of the key factors that brands should consider when choosing the right channels?
Ben Dutter: Yeah, absolutely. I think it comes down to, again, consumer preferences, number one. At the end of the day, all businesses are here in the service of their customer. And so if you have an audience segment that prefers to buy at Target, that’s going to have a very different kind of response in your marketing. if you lean into that and you are very available at Target compared to if your audience is more of a Walmart buyer or your audience is more of a Best Buy buyer or whatever retailer it is. And so knowing your audience and what they actually prefer from a consumer journey standpoint is really important. So that’s number one. Number two is all obviously just like the P&L component of it too, right? Every merchant has different requirements. They have different sell-in and sell-through targets. They have different expectations on how many points they take off for wholesale versus resale and all those things factor in and so Classic example is a lot of brands I work with are hesitant to sell on Amazon because it takes so many points off of the top and it’s a lower margin. But I’d rather get 5% of a billion dollars than 100% of a million dollars, right? So having the distribution option is a massive availability for a lot of brands that they’re not taking fully advantage of.
Greg Kihlstrom: Yeah, how do you look at brands like diversify, you know, like how much How much should they put in retail media versus having a more diverse spend and to drive incremental growth?
Ben Dutter: Yeah, it’s really interesting. What we’ve seen is that as brands open up more distribution channels, so when they’re sold in more retailers and in more avenues for customers to buy, overall marketing effectiveness goes up. And this corroborates a lot of the research that’s been done since the 60s around physical availability and distribution is a very important part of marketing, right? If you’re sold in many, many stores, the likelihood that you sell more goes up even without marketing, right? That’s just consumer behavior. And so what we’ve seen is that, let’s say that you’re an e-commerce centric brand and you’re doing $50 million of revenue a year, you’re probably mostly spending your money on Meta and Google, maybe a bit on TikTok, something like that. What we found is when that $50 million a year brand goes into Amazon or goes into Target for the first time, they immediately see a spike in the incremental ROI that their same media campaign is getting almost dollar for dollar. And so I would say, rather than trying to invest in different media tactics to start, make sure that you actually have good distribution to start. Your actual revenue channels are solid. But let’s say that you’re a bigger brand. You’re pushing three or four hundred million dollars of revenue a year. You’re in all the big players. You already you have brick and mortar stores. At that point, it’s really looking at traditional brand marketing things that are going to be as mass reach as possible, because at that point, that’s really where you want to maximize that. brand awareness and that mental availability because they’re going to find their way to you anyway. You already have all the revenue streams dialed in. So it’s really at that point becomes how do I get the most efficient reach and frequency that I possibly can within my audience.
Greg Kihlstrom: And so. You know, another constant pressure is making sales in the now, you know, hitting the numbers, so to speak, monthly, quarterly, whatever frequency that might be. How would you recommend that brands look at that, you know, short-term, like, got to get the ROAS, got to get the sales, all that, versus, it sounds like incremental can be a longer play in some instances. How would you, you know, recommend that a brand approaches that?
Ben Dutter: Yeah, it definitely depends on the situation of the brand and, you know, how much cash runway they have. You always have to protect the mothership, right? So if the business is distressed and there’s concerns about profitability or cash flows or things like that, then definitely you want to look at what are areas that I can eke out that little bit more of demand capture or that little bit more of efficiency. But if you are in a spot where your margins are healthy, you’re not worried about you know, debt or anything like that, your solvent, then I do think you should try to forecast out, you know, what is my four quarter plan? What is my 12 quarter plan? And really kind of build that out a learning agenda to get there because every channel is going to have a point of diminishing returns, both from the marketing side and from the revenue capture side. And you have to be able to predict that with some level of accuracy. So I think in the short term, it’s definitely about what are some levers that I can pull in marketing that drive incremental response. for that 5% of my audience that is actively in market right now, and a lot of that does come down to media execution. Like, am I actually doing the right tactics? Do I have the right creative? Am I spending enough money to saturate that audience and being enough of a headspace? It’s hard to describe all that over a podcast, but that’s where the art of media planning and optimization comes in from. But for many brands, in my experience, they’re actually over-invested, and they can cut 25, even 50% of their media, and there’s no negative impact at all, and that money would be better spent in R&D, or product innovation, or customer service.
Greg Kihlstrom: So as we wrap up here, you know, one want to look ahead a little bit here. Certainly there’s a lot of talk about future stuff here at ETL. What are you seeing, you know, like what’s next in retail media? We haven’t even talked about AI yet. So, you know, I think we have to. It’s a requirement. You know, what are you seeing kind of coming down the pike?
Ben Dutter: Yeah, I think that with AI and with retail media and really even zooming out in the larger kind of brand and marketing landscape, there’s a broadening of these kinds of tools that before were cost prohibitive. or skill prohibitive to be able to be approached. Something like media mix modeling, we mentioned before, MMM, used to be very unapproachable for most brands and most entities. And now there’s a lot of great open source resources out there that if you have the effort to sit and learn it, you can, but as a tech cost, it’s low. So I think with AI, we’ve been able to see this democratization of traditionally legacy enterprise Fortune 500 type of techniques. And so I’m going to see more and more sophisticated and more and more agile brands be able to take advantage of technologies that were not available to them before.
Greg Kihlstrom: Well, Ben, thanks so much for joining today. One last question for you. I like to ask everybody before we go here, what do you do to stay agile in your role and how do you find a way to do it consistently?
Ben Dutter: Yeah, I actually have a big belief that the two most powerful things in business and leadership are the simple checklist and the one-on-one chat. So one thing that I do, we have about 900 employees at Power. I want to try to have as many one-on-ones with people of all levels of tenure that I can. It actually takes up about half of my calendar is one-on-one chats with teammates and clients, because I’m always open to new ideas and their feedback and their crowdsourcing of 900 plus brains is significantly better than any one person can do. And so that has always kept me, I feel agile and on the edge.
