Relevance is Revenue: Gap’s Secret to Winning

0:00I get asked about brand versus performance all the time. You've moved on from that, right? It's the dumbest question, I gotta tell you. Brand is performance. There's no question that we have seen as the brands have become more connected to culture, that's where you start seeing performance outcomes happen.

0:21This episode of Frontier CMO was special. Recorded live with Damon Berger on stage in front of 100 CMOs at Google's Rethink Retail event in New York City. Damon leads marketing shared services and consumer digital experiences across Gap, Old Navy, Banana Republic, and Athleta. He's also had an incredible career spanning Disney, Fox, Mattel, and just brings a unique playbook to brand building and driving growth. Damon drops an incredible amount of insight around not just Gap's own transformation, but also branding, marketing, AI, and operating at the frontier. Please enjoy my conversation with Damon.

1:05Hello, everyone. Hello, Damon. Hi, Josh. Welcome to a special live recording of Frontier CMO here at Rethink Retail in New York City with a very boisterous crowd. It's fun. Yes, very fun. So I think I can start this off by saying thank you for being here, but also a really positive note. So I've done my research. Gap, Inc., 11 consecutive quarters of same-store growth. Congratulations. When you say it like that, it's pretty impressive, so I appreciate that. Thank you. And then at the same time, I was catching up on a bunch of your marketing programs, that cat's-eye video, the 80 million views on YouTube and counting.

1:4583, but who's counting? Now you sound desperate. And then in terms of your AI adoption, this is so much you're doing. So it just feels like the gap is back, baby, right? I mean, when you say things like that from being inside and doing the work and really being part of how much of a grind that reinvigoration is, it's really, it's humbling to hear those kinds of stats. So thank you. So tell us a little bit about the journey inside reinvigorating a classic brand. Like you've tried to recreate and make Gap hip, cool again from where it was a long time ago. You're doing it. How's it going? I think it's going well.

2:29I mean, I think there's kind of as you think about what brand reinvigorations look like across the portfolio of brands like Gap, Banana Republic, Old Navy and Athleta. First, how many of you have bought something from one of those brands? Can I hear it? Because we're on a podcast.

2:47So these are brands that are historic, loved brands. And I think to look at what reinvigoration looks like, we first had to go back and figure out what it was that people loved about our brands. And really refresh what that meant to this new generation. And if you look at a brand like Gap and you see the Cat's Eye video and Young Miko and the many, many other videos that the teams have done over in Gap, it's really about trying to look back into the DNA and think about what it was that people loved in the first place. music, dance, culture, those types of videos, if you remember for, I'm old enough to remember, but the khaki swing video and what it was to see what dance and art and cinematography could come together and create magic.

3:38That's really what we've done for a new generation, but really for the YouTube generation. And so that's the ideas. What is it that people love about us and really updating those brand codes for the new generation, but staying true to our DNA? So one of your credos, one of your mantras is relevance is revenue. What does it mean? So to us, it's part of the reinvigoration playbook is connecting to culture. And so to us, relevance is culture and thinking about when you can really think about what people love about entertaining aspects of our brands and entertainment in general and what creators create.

4:19Those are the things that ultimately add up to culture and being talked about by people without having to us having paid for those types of mentions. That's really where culture happens. And I think culture happens faster and on social and on YouTube more than anywhere else today. So if we're relevant on those platforms, then we end up generating revenue from that relevance. Does that apply to every brand everywhere? Every retailer? Yeah, I think it does. It's just, it's just, it's what modern marketing is today. I think that's right. I think it's what TV kind of used to be and being around TV and now TV has been replaced by social and will eventually end up being replaced by some of the AI aspects of what we're working on from a platform perspective.

5:02But right now to be relevant on social and is to be relevant everywhere. You've got four main brands, the Athleta, Bernard Republic, Gap and Old Navy. How does the relevance part show up in those distinct brands? Each brand is a little bit different. And each brand has its own kind of lane within the portfolio. For us, you know, Gap is about music and about that world of dance and culture. Old Navy is kind of more is more is Old Navy. And Banana Republic is travel, adventure. Athleta is about women's empowerment and movement. And so each one of those brands has a distinct lane to play in the portfolio.

5:41and how they show up in those different creative ways is what differentiates them in culture and in their own lane. So each one of those brands has a space to play in. And you've seen through the last couple of years the different creative expressions of where they can show up and where they have permission to play. And I think really that's what the work of the work has been is to define and differentiate those brands. So you're the SVP of shared services? Yes. Which is a really boring job title. We need to work on that. Yeah, it's a terrible job title. But I have a lot of sympathy and empathy because my prior role was a lot of like trying to work horizontally across vertical business units.

6:17How are you set up and what are you and your team actually doing for these companies? So we are in my group, we're kind of in charge of three things. The paid owned marketing of the company and the marketing transformation of the company. So we're not really busy. But a couple of the things that we're doing from a marketing transformation perspective is systems based thinking. So how do we think about what the outcomes are that we're trying to drive, who we're trying to drive them with, and how do we measure those outcomes and create flywheels at speed so that we understand how is creative resonating with the audiences that we want it to resonate with?

6:53How do we think about whether the outcomes we achieved are the right ones? And if not, then that information is just as valuable as achieving failure, is just as valuable as achieving success. If we can use the learnings fast and create fast flywheels to be able to be outcome oriented, that's really where the shared services aspect comes in. So whether we can take audience intelligence, turn that into the right channel planning, right video and creator strategy that then creates the right outcomes from a commercial perspective, and then understand what the measurement of those things are, and do it again and do it again at faster and faster paces.

7:32It sounds super easy. Super easy. Give us an example of something you guys have done with your shared services, which has really worked in actually improving performance and getting that sort of flywheel going. I'll say some of the AI work that we're doing is starting to really kind of take hold there. You know, I think that using a shared data foundation of the consumer, regardless of whether that consumer is in the U.S. or in a different geo, is about trying to take data to content, to activation, to commerce, and create one backbone so that all of those signals, no matter where you are and what geo you're in, those signals are constantly optimizing against each other.

8:12Do you have the right consumer that you're going after? Are you creating the right content for that consumer? Is it activating in media the way that you thought it would? And how do those commercial outcomes then tie together? And each one of those areas are optimizable between each other. So that single system is what we're trying now to create automation around, to create optimization around, and use the same philosophy and backbone across geos so that everybody is operating off the same consumer data with that idea of speed and the singular backbone. So apples to apples, oranges, oranges. I love that.

8:47It makes perfect sense. It also requires alignment on what the metrics are and business outcomes by everyone in advance, not cherry picking. Because then you can automate to the outcome that you're trying for, as opposed to a lot of the subjectivity of what it is you're trying to accomplish. Right. And in terms of your team setup, I get asked about brand versus performance all the time. You've moved on from that, right? It's the dumbest question, I got to tell you. I didn't ask. I get asked. I know. I know. That was why I went that way with it. I got to tell you, brand is performance. There's no question that we have seen as the brands have become more connected to culture, that's where you start seeing performance outcomes happen.

9:26So as the brands are getting more relevant, it could be any of your brands in this community that is so great to come together and talk about. But the fact is, as brand performs, you see ROAS outcomes, you see performance outcomes. ROAS is a number that finance loves. So you brought up the finance side of things. I'll tell you, our finance partners are world class, our best in class. We have a relationship where our finance partners are in it every day with us. Retail is detail. Retail is every day as a fight for us to win the consumer and to do what we're trying to do from an outcomes perspective.

10:05And I'll tell you, our finance partners are riding right along with us every single day. Do we need more in this channel? Do we need more in that channel? And how do we think about optimizing every single day to the outcomes that we're trying to drive, which is obviously ultimately sales? And that partnership is extremely strong. And I think for those of you who are kind of struggling with some of those things, make best friends finance. That's how that works. And I think that we've been really lucky because, again, our finance organization is world class. It's such a good point. And inside of Google Marketing, our finance lead sits within the marketing leadership group.

10:41Just talk about reinvigorating the gap in culture. 80 million views on YouTube. We know that drives performance, of course. How do you persuade or explain to a finance person who asks the question, look, all this views, all this activity, what does that mean for actual sales in my stores? Well, I mean, it's easy because you see the numbers. You see when you connect to culture, that connects to sales. And so when it's not as much of a convincing idea, I think probably two, two and a half, three years ago, that was probably a little bit more of an uphill battle for us to have as a conversation. But as those proof points have come, whether it's David Corden Sweat and Banana Republic, the Cardi B campaign we just did for Old Navy, Cat's Eye or Young Miko or any others, these are now a standard playbook for us.

11:31And so it's not about convincing anymore. I think it's about really where do we take those bets? How do we think about communicating what those bets are? and then starting to pre-establish some of those expectations up front so that we know when something is or is not within the guardrails that we're trying to establish of what actually culture drives and how it connects to sales. This is all assuming you've got a hit on your hands. Oftentimes, we will launch a program and it'll do okay. You know, there's some reaction. It's not as successful as we would like initially out the gate. And then there's a question, well, is this dead in arrival or do we need to keep funding it or do we need to do something else?

12:08How have you handled those moments? I mean, luckily, we haven't had too many of those. I will say that's not true. Now you're shutting off. We've learned if we, there's a little bit of a formula that's starting to establish. Even though we'll have these great moments where, you know, you see something like a cat's eye or a young Miko, and I'll take Cardi for the example on this one. We've learned that if you're going to create that moment, it has to have product front and center. So we've done some learnings through these different aspects of the different campaigns that we've created. But product has to be the thing that people love.

12:46It could be some celebrity that's part of it. It could be some influencer that's part of it or both. But if the product is in front and center, I think the thing about CatSci that was so interesting is that they're dancing in denim. And the fact is that denim can be uncomfortable. We are communicating that not only is our denim extremely stylish, but it's comfortable to wear because you can dance in it. And so there's a whole thing around how the product actually is expressed at the creative center of some of these campaigns that makes it so that it's actually resonating with the audience in the way that we want it to.

13:19We've learned that through time that we need to optimize to what the product expression is, and then we can create the creative around what that is. Young Miko was an entire sweatsuit world that we created, which is kind of counter to where it was in the year which was we released it in March I believe and March is starting to think of spring and pastels this was all gray all sweatsuits so we really were very particular about where does the product expression happen and how does that recreate a world of not only brand expression but ultimately sales. Okay so you did something there which reminded me of something you guys are doing which I think is incredibly innovative I don't quite understand it though, but you have identified your associates, the people who work in your stores as brand ambassadors, and you've incentivized more to create content about the product.

14:11Tell me more. So the employee creator program we just launched a month or so ago is about taking our biggest advocates in our employees and allowing them the tools to go out and create content on behalf of the brands on their own voluntarily completely separate from their normal jobs and having a an ability to have our biggest advocates create content on our behalf in a more authentic way in their voice whereas the brand may be a little bit more adherent to code the employees know our products know our brands and want to go out and create content and a lot of ways are already doing that and incentivizing them with the percentage of the sales on the back end and so i think we're one of the first major retailers to do this.

14:59And it's early days. I'd love to talk about maybe on a follow-up pod, we can talk about the results. But we're really encouraged by this because we launched the Creator Affiliate Program for the at-large Creator community about six, seven months ago. And we've had huge numbers against that, 150 million views, some crazy amount of earned media value. So we took the learnings from that and created that program for our employees. And so far, the response has been great. So what we should expect is in five years time, every retailer, everyone in this room is going to have sales associates creating content on their brand's behalf.

15:39If they're smart. Okay. They're smart and good looking in this room. Okay. Now you're pandering. Yeah. So let's just go a little back in the way back machine. So you worked at Disney. You set up Disney's first sort of content studio when you were 28. You're only 34 now. And somehow I should do all these other jobs in between. You signed one of their very first licensing deals with YouTube. You worked at Mattel doing digital engagement for a physical toy company. What have you learned from these roles? And just tell us a little bit about sort of your journey. It feels like you've been a bit of a square peg in round holes in these companies.

16:16That's a really nice way of putting it. What that Disney gig taught me is that as much as innovation is a key, you can't be too early about that stuff. And Disney was a magical place to work, as they tell you. And so I think this is one of those moments where innovation is great, but you have to kind of time it right. If you're too early, you'll miss the mark. If you're too late, you'll miss the mark. So how you time innovation is a really important one on that. Mattel is where I met Richard Dixon, our CEO. Barbie is queen. That's what I learned in that job. We were one of the first real big toy brands to lean into YouTube as not only a platform for creative content, but also to work with creators.

16:59And I think in the time that I was at Mattel, we went from number four to number one in e-commerce because of that strategy. and YouTube really was the centerpiece on how we built Barbie to then have the sequence around where the movie was then popular. Because at the time that I got to Mattel, Barbie was kind of not having a great moment. And so we had to attack some of those brand issues and get a new generation of consumers excited about Barbie so that we could lay the groundwork for then Barbie to be the success it was with the movie. I love that movie. It's a great movie. I just want to touch on Avatar because this is just funny.

17:37You worked on Avatar and just tell me what you were telling me backstage. So I had to market the first Avatar movie, James Cameron, with the Navi tribe. And I think you've probably all seen that movie. And not only did I think we're all going to get fired because it was a negative$550 million pickup. And we made something like$87 million the first weekend. And I definitely thought we were all going to get fired. But the fun part of that was they wouldn't allow us to use the blue people in the marketing. and I don't know how you market that fucking movie without showing those people but it was one of the most difficult things we can swear on this right this is okay we can and uh and so that was one of the most insane things I've been a part of to try to market that movie without showing the actual blue people so um yeah that was a fun one it's a great little story so you just said a minute ago it's it's not good to sort of rush in something for it's ready for the early part of your career What are your thoughts on agentic commerce right now?

18:38So we at Gap Inc were the first major retailer to partner with Google on Universal Commerce Protocol, which is now being used by many, many other large scale platforms if they're smart. And I think it's rapidly happening so fast that it's hard to look at where it is today versus where it's going to be tomorrow. I think we're still in the very early stages of figuring out how does Gemini create demand and then convert demand in the same thread. And I think there is going to be a lot of innovation and a lot of evolution of how that's going to work. But you've seen it all day. I mean, this is the future of how demand is going to be created and then converted based on the queries and the things that are happening.

19:23I think once we understand what the dimensions of some of those queries are, we are then going to be able to take that information and then create the right campaigns and the right understanding around how do we then create that moment where the query becomes, demand becomes conversion. And I think UCP is going to play a vital role within the middle of that. And UCP obviously is now starting to have some moments on YouTube as well. and so how do all those Google products now take demand and convert it is going to be the future of this and I think we're still in very early days on how we build that together.

19:57I definitely think we're in early days and everyone here in this room who's actually a retail expert knows more than this than I do. I still come back to humans and ultimately you want to feel especially with clothing the fabric in terms of how your clothes look and feel and so when it comes to clothing eugenic shopping, I think it's going to take longer. So maybe the other way to put this around is where are you placing your bets right now? Is it more important for gapping to crack YouTube and be excellent there in the next two to three years versus full tilt into eugenic commerce? I think you need to create demand in creative ways so that when that query happens and our brand is surfaced in that query, there's almost a kind of a pre-awareness, pre-consideration that you're doing.

20:40So in that moment, you're right. You do need to go in and feel the clothes and try them on. We did just do this thing with Google TV and did a try on experiment with Old Navy, where on the homepage, you could actually upload your own image and try on our clothes and see how they look on you. And still, there was a lot of engagement on that. So I think there's still a younger demo and, you know, a more native to online world that is okay with doing those things and seeing what that looks like and ordering it online and seeing how they fit on, you know, at home, probably there's going to be higher returns from that than there would be in store because you're not trying them on.

21:19So I think there's gives and takes for how those things are going to work. But this is the future and this is how people are going to consume this. Are they consuming it that way at that scale now? No, we have good early returns on what that Google TV try on product was. But there's still, I think, a lot of worlds to build and brands to build so that when you're in that query mode, you're getting to a point where, oh yeah, I know Gap, I know Banana, that's what I'm going to buy right now because we've already done that work so that the brand is built in that moment. So my sense is, and I see it from chatting with you, Gap broadly is doing a lot of things.

21:54What are you focused on in terms of solving your marketing problems right now for the mapping? We are a Google Cloud platform partner, as well as all of the different aspects of Google and YouTube that we are experimenting with. Google Cloud is going to be one of the most foundational partnerships we have at any part of our company. And I think what is interesting about Google and what the AI transformation landscape is going to require is a single data foundation for everything and everybody to operate off of. So that data foundation is the thing that is going to allow it for marketers and product people and everybody in between to have the same information about the customers together to then be able to create the context layers around how that data is utilized, both from a merchandising and from a marketing perspective, so that we're all grading ourselves on the same scorecard.

22:46Right now, a lot of that information is in disparate areas and disparate teams and silos. And I think really the promise of what AI technology is going to give us are what are those agentic layers that then operate off of the same context and the same data layers so that we are all in the same conversation together. And that that is the silo busting, the bureaucracy busting of this, the world that we're about to enter. And I think it's going to allow for people to operate at a much higher level to create strategic thinking from our employees as opposed to the spreadsheet filling and the, hey, we got to create a deck for this.

23:28And ideally, that's going to free up time for the best thinking that we have from our best employees. Yes, to all of that. I have two quick questions for you. And I haven't told you before, so this may be a little weird. AI is amazing. It's only getting better. What do you think AI is never going to understand about the retail business or about humans and buying clothing and that whole experience? I mean, getting dressed in the morning is inherently an emotional decision. Yes, it is. Right? There's no AI is going to do that for you and understand you. You know, I don't think AI is really going to understand what it means to be human.

24:02Getting dressed in the morning is an emotional choice, like you said. Do I look good in this? Am I excited to go out? Do I feel more confident because of what I'm wearing today? That's a human experience fundamentally that AI is never going to understand. They may understand some of the context clues. By the way, barrel jeans are in. You should be wearing more barrel jeans if you want to feel like you're in. But that's not necessarily how it goes. You know, I was at the store the other day and, you know, I was listening to this guy battle. Like, I only wear skinny jeans, but I know baggy jeans are in.

24:33I don't feel comfortable wearing baggy jeans, so I have to wear skinny jeans. That's a debate that AI is never going to understand. So I think that's where it falls apart. It doesn't understand the human experience, which is fundamentally human. And I think as much as AI creative is going to get better and the context layers are going to get better and the speed is going to get better, we're still fundamentally human. And I still believe that creative made by humans for humans is always going to connect better than what the AI machines are going to do for us. And that's something that we believe really well, really fundamentally at Gap.

25:08And I think that we believe in the human layers and the human people and the human employees more than anything that AI can do. Fist bump. Yeah, I'll second that. Okay, signal and noise. Rapid fire. Is this a signal or a noise? And this is intentionally binary. Argentic commerce will permanently erode brand loyalty. Signal or noise? Noise. Brand is paramount all the time. Okay. Employee generated content will drive higher conversion than celebrity influencers. Ooh, spicy. I'm going to give that a little signal. I think that we're starting to see some really great results from smaller influencers.

25:51And I think there's still obviously a lot of benefit to working with celebrities and being influencers too, though. Okay. So question for this room and for you. Signal or noise? The next generation of retail CEOs will come from marketing? Oh, signal all day. I see a lot of CEOs in this crowd, you know what I mean?