Beyond Redemption: Digital Shopper Marketing 2.0

1 Blog: smartretailmedia.com Twitter: ShopperMedia

April 13, 2011

1/26/10 2 DRAFT 2 More: www.smartretailmedia.com

Intro to Speakers

•Dan Frechtling VP Client Solutions

•Joe Battoe VP Shopper Marketing

What do these 4 images have in common?

First Digital Video Game 1952

Digital + Gaming?

Digital + Gaming!

Digital + Film?

First CGI Animal 1986

Digital + Film!

Digital + Publishing?

First New York Times homepage 1996

Digital + Publishing!

Digital + Mobile?

First mobile phone 1983

Digital + Mobile!

First Generation (1G)

Re-creates

Simulate a paper game with pixels

Provide desktop news content

Enable a phone to travel

Make animals look photo-real

Second Generation (2G)

Creates

Let players become the controllers

Merge fantasy and reality

Add new experiences to news

Complete any e-task with one handheld

What does this have to do with digital shopper marketing?

Digital Shopper Marketing is Starting a 2G Transition

Adoption

On this trajectory: • E-Circulars • Digital Coupons • Social media • In-store media • Targeted display • Mobile vehicles • …

Examples today

Adoption

Today (approx)

On this trajectory: • E-Circulars • Digital Coupons • Social media • In-store media • Targeted display • Mobile vehicles • …

1. Understand 2G digital shopper marketing

2. Know how to use it more effectively

Objectives

Media reviewed • E-Circulars • Digital Coupons • Social media

1/26/10 17 DRAFT 17 Blog: smartretailmedia.com Twitter: ShopperMedia

2G Principles

right offers to the right behaviors

2G Principles

auto-adjusting campaigns

2G Principles

helpful product/ service suggestions

2G Principles

value realized in fewer steps

2G Principles

right offers to the right behaviors

Different Interpretations (Anagram Example)

HERE COME DOTS THE MORSE CODE

Naval communicator Layman

DIRTY ROOM DORMITORY

College student Parent

LIES – LET’S RECOUNT ELECTION RESULTS

Winning candidate Losing candidate

1G E-circulars

Prompt people into the store to buy more. • Feature weekly or seasonally promoted products • Promote launched or re-launched items • Localize product presentations based on store traits • Accentuate underperforming departments • Organize content for pre-trip searching and list making

2G E-circulars

Use targeting to more naturally stimulate purchases

• Expand purchases of popular products • Cross-sell complementary products • Re-activate lapsed product buyers • Align with individuals’ purchase cycles

2G E-circular Case Example S

Offers Penetration (%)

Post Email vs. Pre Email Sales Impact Example: 10 recent categories

Source: DS-IQ

Cheese

Self Care

Canned Soup Ice Cream

Cereal Bars

Soda Eggs

Chicken

Pet Food

0% 20% 40% 60% 80%

Average lift from personalization:

1G Digital Coupons

Turn around the mass-coupon paradigm Pros: • Flip the model from push to pull, as shoppers log in or opt in to offers • Provide basic targeting e.g., past activations, clickstream, and banner/geo Cons: • Don’t distinguish individual buyers • Don’t personalize by product or increment

2G Digital Coupons

Serve the right offers to the right shopper behaviors. Examples:

• Attract new buyers by selecting and targeting those most likely to try • Expand current buyer consumption by increasing frequency and units • Re-activate lapsed buyers such as brand switchers or category defectors

Stopped buying

Occasionally buys

Buys novelties (but not pints)

Source: DS-IQ

Campaign redemption rate

2G Digital Coupon Case Example 1

Frozen entréecategory buyer

Brand buyersfrom othercategories

Identifying shoppers most likely to try

Frozen dinner

1/26/10 30 DRAFT 30 Source: DS-IQ

Before During

>1 units per purchase

(avg 4.1)

Before During

Every 6

Every 2

Increasing loyal shoppers’ buying rate

Purchase frequency (mos)

Single serving meal

Source: DS-IQ

(avg 1.8)

An email and mobile coupon program for a major grocer increased trips per week 12%

Pre-campaign

Pre-campaignDuring campaign

Control

1/26/10 32 DRAFT 32 Source: Catalina Marketing

1G Social Media

Self-expression, instantly broadcast

• Express affiliation with brands more broadly • Automate word of mouth immediately • Opt-in to news from preferred brands • Join groups with shared affinity

2G Social Media

Use targeting to engage passions

• Reach emotional loyalists • Engage them in an event they care about • Enable them to share and self-express • Add special insiders-only perks

Source: YOU Technology

2G Principles

auto-adjusting campaigns

1.Optimizing segments

2.Optimizing offers

Differing Outcomes (Optical Illusion Example)

8.7% 9.5%

Heavy buyers(2 units)

Light buyers Lapsed brandcategorybuyers

Brand adjcategorybuyers

Categorybuyers

Affinitycategorybuyers

13.4% avg

Expand brand buyer

consumption

Convert category buyers

Generate non-category

buyer trial

14.3% 13.5%

$.75 $.75 $.60 $1 off 2 $.50 $.60

Segments

2G Optimizing Segments

Source: DS-IQ

2G Optimizing Offer Values

Web coupon program for ConAgra and national retailer

12% cost/unit

improvement

New Buyers

Save $2.00

Save $1.75

Winner

Result Test Values

Source: DS-IQ

What Kind of Personalization?

3 approaches 1. Let shoppers select the kinds of

offers they wish to receive

2. Apply collaborative filtering or similar techniques to suggest what similar shoppers have chosen

3. Use individual purchase history to recommend the most relevant offers

Enough Talking About Marketers

2G Principles

value realized in fewer steps

1. E-circulars 2. Digital coupons

helpful product/ service suggestions

Offer Relevance

Loyal Mach 3 user

Timing and brand elements enable relevance

Right time Wrong brand

Schick Hydro

Current brand

Gillette Fusion

Right time Right brand (upsell)

Relevance Surveyed

“It made me buy the product about a week sooner than I would have…and I’m not sure I would have otherwise bought the two, but I

did, because it was relevant to my life.”

SwitchBrands

TrySomething

PurchaseMore ofSpecificProduct

Stock Upon OffersReceived

Source: Catalina Marketing

% of shoppers participating in a 2G program who said the offers made them:

1/26/10 43 DRAFT 43 Blog: smartretailmedia.com Twitter: ShopperMedia

Simplicity of E-circulars

Principle Availability Pre-selection

Delivery Browse hundreds of images or search by category

View relevant offers pre-selected and ranked

Simplicity of Digital Coupons

Principle Pull, not push Saving steps

Delivery Find offers, print out, and bring to store

Load-to-card and set up mobile reminders

Targeted right offers to right behaviors Dynamic auto-adjusting of campaigns Relevant helpful product suggestions

Simple realizing value in fewer steps

Examples today

Further Guidelines

Principle 1: Go beyond redemption. Principle 2: Don’t jail shoppers in static segments or zones. Principle 3: Look for ways to bet after the race has started.

More about digital shopper media: Blog: smartretailmedia.com Twitter: ShopperMedia Corporate: ds-iq.com

Dan Frechtling dan.frechtling@ds-iq.com

Joe Battoe joe.battoe@ds-iq.com

Beyond Redemption: Digital Shopper Marketing 2.0

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