Roundel's Shawn McGahee and EMarketer's Sarah Marzano - How Consumer Behaviors are Reshaping Commerce

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0:50Shawn McGahee: That's salesforce.com slash consumer goods. Hello and welcome to the CPG Guys podcast set at the intersection of commerce and tech. Your hosts, Sri Raja Goplin and Peter V.S. Bond, explore how brands and retailers engage consumers in a digitally driven world. And now, here are the CPG Guys. Hello and welcome again to the CPG Guys podcast. I'm your co-host, PVSB. I also moonlight as head of industry and client engagement at Flywheel, the commerce acceleration division of Omnicom. My co-host is the co-founder of Think Blue Consulting, the father of pop stars Ria Raj and Cat's Eyes, Lara Raj. Their fans, of course, call him Papa Raj, but to me, he's my BFF Sri.

1:38Shawn McGahee: This past June, Sri and I attended the Cannes Lions International Festival of Creativity. Today's episode is a recording of a conversation that took place at La Résidence, our home on the Riviera. More on that in a moment. To our audience, if you're getting value from these conversations, we have three quick asks. First, subscribe to the CPG Guides podcast on whatever platform you're listening on right now, whether that's Spotify, Apple Podcasts, Amazon Music, or anywhere else you get your podcasts. Hit that subscribe or follow button so you never miss an episode. Second, leave us a rating. It takes a couple of seconds and it makes an enormous difference in helping other CPG and retail media professionals find us.

2:17Shawn McGahee: We built this community, one listener at a time and a five-star rating is the single best way you can help us keep growing it and third follow us on linkedin between episodes we're publishing thought leadership industry analysis and content you won't find anywhere else all built for the cpg and retail community you're already a part of search cpg guys on linkedin and hit follow or just click the link in the digital show notes of this episode subscribe rate follow these three simple actions help us bring you more of the conversations that matter. Today's episode came from an activation we hosted in partnership with eMarketer.

2:52Shawn McGahee: The panel is called The New Rules of Discovery, How Consumer Behaviors are Reshaping Commerce. It features moderator Sarah Marzano, Vice President and Principal Analyst for Retail Media and Commerce Media at eMarketer. Sarah is joined by Sean McGahee, Senior Director of Performance and Insights at Roundel, Media Design by Target. Now let's get to the conversation.

3:18Sarah Marzano: I'm just really excited to have this conversation, Sean. You and I have known each other for most of the time. I've been covering retail media, and I've always appreciated your perspective on the industry and where it's headed. I also think it's a fitting way to close out the program, given Target's position in the retail media landscape and the role that Roundel has played. So let's start with consumer behavior. It's a theme that's come up multiple times during all the sessions today. you are a retailer and you have visibility into millions of consumers across categories, lifestyles, and shopping occasions.

3:47Sarah Marzano: From your vantage point, how are you guys seeing consumer media change and evolve? Where are you seeing threat or any of the opportunity?

3:55Shawn McGahee: Yeah, happy to share. I just want to thank you for having me. Thank you for seeing me watching for the time. I think to answer this question, it's really important to be specific because I guess as Carvey, we have access to hundreds and millions of shoppers. And many of those shoppers are shopping at other retailers as well. They're not necessarily distinct. But when they are at Target, they are distinct. Like shoppers, when they are in our environment, are there for reasons that they are choosing not to be an Amazon or a Walmart or a CPS or any other retailer that are choosing that moment. And so what we're seeing in consumer decay here is really specific to our shoppers.

4:31Shawn McGahee: And one of those things is really a pursuit of holistic value. And so our guests do not necessarily come because they're exclusively looking for the lowest price. They're looking for a basket that includes, let's say, lower price staples, but also something trendy or a creator that they follow on social media that might have an exclusive release within our stores or willingness to pay or kind of gifting themselves in this specific area. And so the basket overall is looking for value, but that value has a lot of different flavors and iterations. It's just quite a sick experience is also a part of that value.

5:12Shawn McGahee: And for us, we're seeing the emotional experience having more value than just a bunch more experience. Like the baseline of your children's stock, you know, like the cashier is nice to meet. They're like the bare bones at this point. And so when a guest will come to Target, they're coming for a break. they're coming up because they know it's going to be clean and that the aisles are going to be wired right there and that's a part of the experience that's part of the value that they're seeing. I would also say we're seeing kind of what we're calling like discovery fluidity and you know when we can if we can talk about all the funnels collapsing and all the stuff right but for Atari guests specifically we're seeing things like the shop, the digital and the in-store experience merging.

6:00Shawn McGahee: Three out of four Target shoppers have the app in their hand when they're in the aisle. And that the channel-based thinking doesn't really serve our guests because then discovery is incredibly fluid. And so we're taking those insights, we're applying it to Roundup, we're leading into new products. We're seeing within our media that if you add new at Target to your agreement, the sales performance goes up to 2%. We're leading into our digital fulfillment opportunities to aid in that fluid discovery. But I'll just reiterate that. It's a tremendous data set of tremendous shoppers that we're able to see it for.

6:44Shawn McGahee: But we recognize that it's a specific, unique to Target experience.

6:49Sarah Marzano: Yeah, I think you hit on so many fascinating components. But I love to see the coming back to the fact that shopping at Target is kind of a special experience, right? It's a fun experience. It's kind of famously that way, and what a wonderful asset to sit on, right? Everybody jokes about going into targeting, I think, spending far more than they've been to, not for bad reasons, right? Because they discovered things they didn't know they wanted. So that's great. It's such an asset for you all to lean into. A theme that has surfaced a few times today, and I think not just because I can't shut up about it, but because people are actually interested in it, is the way that retail media operates on top of retail.

7:22Sarah Marzano: Now, you're coming up on about exactly a year in-house at a retailer after spending a really impressive stint over at Google building up their commerce media capabilities. So now that you've had the offer to be able to see retail media from the inside and one of the industry's largest players, what have you learned? What surprised you? What do you think the industry is broadly appreciated yet?

7:44Shawn McGahee: I'll try to be brief. as you mentioned, I come to Roundel having created Google's Retail to Your Practice. I pitched that it should be somebody's job at Google to do retail media stuff. There should be someone's job. So I got the opportunity to create that job and lead that business for about four years. I knew what everyone was doing in that seat and decided to join Roundel because of I am the captain of the market is undervaluing the unique scale data that Target has that's differentiated across the retail media industry. And the thing that I see is that we are still undervaluing the retailer data, the shopper data as an industry.

8:38Shawn McGahee: Speaking specifically to Target, we're talking about 100 million shoppers. We have a free loyalty program. So we don't have a model for cash transactions the way other networks have to do because it's tied to your mobile number and it's free. We have a cross-category view that very limited retailers have. And so we can give you insights in the full basket and not just on a specific category's performance. And we are truly on a channel where other retailers' digital customer and their in-store customer are completely different customers. But for us, as I mentioned, 74 % have the app in their email.

9:15Sarah Marzano: That's amazing.

9:15Shawn McGahee: I'm the captain of picking up something from drive up and then parking and going inside the store. And so we have a very unique on the channel perspective. And even with us in Browndale, the majority of our conversations are measurement and targeted. And there's so much more you could be doing as far as creative messaging testing, new product discovery, new product frameworks. You really should be coming to your retailers as key testing ground for what you want to do from a national standpoint around messaging and product packaging. There's like a bazillion things we could do. And we are still underestimating that.

9:55Shawn McGahee: We're primarily using it to close the loop and measure. And we do some high starting.

10:00Sarah Marzano: Sounds like some exciting things.

10:02Shawn McGahee: That's why I'm here.

10:03Sarah Marzano: The cash transaction piece is fascinating. I imagine that gives you more granular visibility into certain demographics and geos that are really difficult for other retailers to get to in that precise way. So that's fantastic. But also your notes around being a true omni-channel retailer. Teem me up to the thing I wanted to ask you next, which I think as an industry, we've come a long way in terms of recognizing that our customers don't think new channels, right? They think I'm making a purchase from Target. Maybe I visited the social site. I visited the website. But I went to the store and I visited the order of online.

10:31Sarah Marzano: Right? And they're just saying that was a target experience. Even though we're sort of a marketplace industry recognizing that's how consumers behave, both brands and retailers and agencies sometimes still tend to organize teams, budgets, and strategies in these silos. So why do you think that gap persists and how should marketers? What needs to be done to actually change this?

10:54Shawn McGahee: Change is hard. I think this is the main thing. And there's a lot of infrastructure and process and inertia that has been built around the channel framework. And it's hard to just let all that go, to go truly guest-first channel agnostic. Me, as a drone girl, we find ourselves on being a guest-first design-forward retail media network. And so for us, that orientation, it's built into our ethos. And so it just kind of, we are living that value day in and day out. But we have, like, sympathy because a lot of these things were not filled with a similar ethos. It may have been, hey, reach out to me this high.

11:38Shawn McGahee: Let me throw some tags on my site and start monetizing. And now the margin of that channel was more important than the experience of the shopping customer. but I think we've had the benefit of having that ethos squarely, even how we've gone the market has been more a raise towards here are where our guests are and so that's where our media is going to be to be helpful towards that experience and not just here's where our margin lies and so we're going to double down on this channel or that channel for that purpose but you know we'll be talking about this at Canada next year or now getting more guest focused, getting out of the silos but that I think the strategy comes before the infrastructure, if you're strategically approaching that, where you can talk about that.

12:27Sarah Marzano: I think the complexity of sort of embedding a strategy or a core value set in a large organization, to be understatement, being able to start from that foundation is so crucial and important. I think part of Randall's story as well has been a willingness to expand and test in new environments. A couple of panels ago, we were talking about how retailers are the first users in terms of investing in some of the newer services. I know off-site media, some of our target was an early mover, and so you have a core pillar of your offering. You've been quite outspoken about how you're experimenting with emerging AI-powered discovery experiences.

13:05Sarah Marzano: Let's take this back to the organizational culture. How do you think about identifying opportunities worth leaning into before the rest of the industry has fully figured them out? how do you make sure you're keeping your eye on the foundational components? You're not letting these new opportunities become distractions.

13:22Shawn McGahee: As I mentioned, it's a better strategy that we're guest first. I think as you talk about why we were first to market when it comes to off-site, I think the industry overall is 21 % of the mix is off-site and we tend to lean about 30 to 35 % or any of your mix is off-site because through our knowledge of the guests, that's where they were. That's where they were discovering products and so that's what we needed to be even as we talk about open ai chat gpt we were actually the first retail media network to have an offering um within chat gpt it wasn't because a we have to say ai five times because they're market um it was fundamentally because we saw that target traffic from um open ai was growing 40 every month and like it's just a fact that the increase in traffic that we're seeing our visual experiences were coming from that channel.

14:13Shawn McGahee: So we need to be in that channel to help with that discovery and to drive the guest experience in that space. Maybe we could be more operationally rigorous than we have, but it's a lot to our strategy. The strategy says, we are guests first. This is where the guests are. This is where we're going. And then we are very willing to test, fail forward, and move and align with that guest first approach.

14:40Sarah Marzano: We had Liz from Outworks on stage earlier, and she mentioned not letting perfect be the enemy of the good, right? So that feels really salient here as well. When it comes to testing these new AI, just every environment, what are you doing for grants? Are they receiving them that you're moving quickly? Are they begging you for a chance to show up that way? Are they terrified of what's coming? Is there a mix?

15:00Shawn McGahee: I haven't talked about this. Especially I'm on the measurement side of our business, right? So I get all the conversations around your CPMs and your cost and if it's sufficient, but how effective is this? you're like, oh, we want to assess this thing at OpenAI. They're like, we don't care about VPN. Just get us in there. Overnight. They don't care. But I do think that the interest in the energy in this space, delivering a willingness to experiment, and then our story of we're not doing this because it's in bad, look at this guest insight that's telling us this is the right thing to do, has garnered a lot of brand and advertiser interest.

15:39Shawn McGahee: And it just makes me laugh at the amount of rigor that happens in most other channels and then just the general caution to the wind approach that we see in this approach.

15:52Sarah Marzano: How exciting to have that willingness to just hold hands and do this together. How will you measure success?

15:58Shawn McGahee: Right now, with the early stage that we're in with that activation specifically, really it's around can we meet the the yield and the demand that we wanted to need. And I would say these platforms are also tested. So it's not as scale from an advertising standpoint as we would like. And so the primary purpose right now is can we get more visibility in that channel as KPI and more point. And then we are a very incrementality first organization. We have a suite of incrementality solutions that we use to triangulate what's actually dropped to the bottom line. And we're including that in the mix. look like we not only ever see how the challenge you can see drive it to the results, but what is it?

16:41Shawn McGahee: Add across our whole channels.

16:43Sarah Marzano: Yeah, that'll be so exciting to hear more about as you guys continue on this journey. Something that sort of also keeps coming up, and I think we're going to hear more about it this week, is that marketers are trying to keep up with this extraordinary pace of change, right? And you've alluded to this a few times through our conversation, but I wonder what you see the role of retail media organizations playing in helping brand partners separate signal from noise, point in the right direction, stay really efficient in terms of where they're putting their efforts?

17:09Shawn McGahee: Yeah, I think Jake encouraging it by saying that you can come to a retail partner to separate say open notifications. As I mentioned, right now, as a lot of advertisers are running into retail media, it's for the purposes of, let's say, a seasonal campaign or a specific moment or they want to be on the digital shelf and so they're doing search ads and TPA, like product listings and things in that space, but often they're not coming to their retail partners. We have this hypothesis. We want to understand what message is most likely to convert a shopper and recognizing that we're not talking about a panel of 10, 20, 30 million.

17:49Shawn McGahee: We're talking about 100 million real-life people buying stuff. And that we can go to that as a data source to answer those questions. and I don't think we get those type of questions at scale in the industry. But again, I think it's being guest first. It's leveraging the full value of that shopper data as opposed to just measuring the end of campaign results for a seasonal push.

18:15Sarah Marzano: Yeah, I think that's a fantastic perspective, right? Because retailers are a pragmatic bunch, right? You're looking at what moves products, what corrects results. And as you harness the power of your data, right, you become even more valuable in terms of someone to turn to. I love that. I'm going to give you one more chance to have the last word here. The very last word, but I don't know. You're going to have trouble talking now. We're the last panel. All right. If there was one thing you want everyone in this room to walk away, having top of mind. One hot take. Yes, one hot take. We'd love it.

18:45Shawn McGahee: I will say channels change, tech changes, the canned buzzer word of the year will change at the end of the day. We're trying to move products off shelves. We're trying to influence human beings to choose one brand versus another. And so centering on the customer experience is the thing that will assist. I think I'm proud of how Round Nail is leading me in a very best forward approach. But as we all leave this room and hear a thousand pitches on every set, you know, it's important to remember that. If it's not a shocker at the heart on whatever we're talking about, then it's not.

19:29Sarah Marzano: Coming back to that start. I love it. Thank you so much, Sean. Thanks, everybody.

19:36Shawn McGahee: To our listeners and the over 46 ,000 followers on LinkedIn, thank you for doing what you do every day, whether you're building brands, driving retail partnerships, deploying technology, or shaping the future of commerce. You are the industry we cover, and this podcast exists because of you. If today's conversation sparked something for you, a new idea, maybe a fresh perspective, or just a reminder of why this industry is worth showing up for every day, share it, tag us, tell a colleague. The more voices we bring into this community, the sharper all of us get. Until next time, keep pushing the conversation forward.

20:12Shawn McGahee: I'm PBSB on behalf of my co-host, Papa Raj. This has been the CBG Guys Podcast.

20:22Thank you.

20:52Shawn McGahee: entity does not constitute an endorsement or recommendation by CPG Guys LLC. The views expressed by guests are their own, and their appearance on the program does not imply an endorsement of them or any entity they represent. The views expressed by CPG Guys LLC do not represent the views of their employers or the entity they represent. CPG Guys LLC expressly disclaims any and all liability or responsibility for any direct, indirect, incidental, special, consequential, or other damages arising out of any individual's use of, reference to, or inability to use this podcast or the information we present in this podcast.