11 Keeping an Eye Out for Future Ecommerce Trends - Tim Curtis and Erik Martinez Dec 30 2021

Erik Martinez: [00:00:00] Welcome to today's episode of the Digital Velocity Podcast. Today, Tim and I are going to do a happy hour chat where we're just going to share some things to think about in 2022. We think everybody is tired of hearing words and phrases involving pandemic or supply chain issues, and while those are very real and important topics to discuss because they impact our businesses and customers every day, we also need to keep an eye on the future and move forward with initiatives that deal with other opportunities or challenges affecting our Ecommerce environments. So, Tim, headed [00:01:00] in 2022, what do you think should be a top of mind topic for our audience to think about?

Tim Curtis: We've chatted a couple of times and there's a couple of things that have percolated to the surface, and one of them that I think for me has become a bit more paramount just because I'm hearing more and more CMOs talk about it and the pressure they're under is the rising cost of digital media buying. It's on a trajectory that is worrisome, and when you combine that with some of the challenges in terms of privacy and the clamping down on the data share, for example, Apple iOS 15.

You're really seeing CMOs being put in a position that they're going to have to think differently. They're going to have to evaluate digital spend probably more scrutinous than they have in the past. It's a dangerous place to be, let's put it that way, when you're seeing the costs continue to increase and you're beginning to see a dip [00:02:00] in the efficacy of some of those conversions.

That to me is maybe something that CMOs aren't seeing on the horizon. Maybe some of them are, but those that are are feeling an incredible amount of for something that a portion of it, at least, is outside of their control. So, for me, that's really what I would say, has become number one just was not something I would have said would be on my list actually, and to see that kind of continue to go up and up and up in terms of importance, I think, we would be a miss not to mention it's heading that direction.

Erik Martinez: Yeah, and, you know, I will second that because we do a lot of Google advertising for our clients and we just see it in click costs. Click costs keep going up. Competition keeps increasing and it is really environmental. It's not something that we can directly control. So, I completely agree that that is a very worrisome cost, and here's the interesting part. There are new mediums of [00:03:00] advertising that are still relatively low cost, but as more and more people see high costs in Google, because that's going to be a big piece of your budget, now you're going to start going into some of these places. This year I've seen the effects of OTT...

Tim Curtis: Yeah. Yeah.

Erik Martinez: ...advertising, or digital radio. You know, what's really interesting about that, Tim, and I don't know what your thoughts are on this, but what we're seeing with those mediums is they can reach a very specific audience, but it's really incredibly difficult to measure value back to your business.

Tim Curtis: Right. Yeah. That's the key, and that's where if you're sitting in a position on the brand side as a chief marketing officer, as a director of digital, or whatever your title, that's a problem for you because you're going to be outlaying a lot of cash and the ability to account for that cash is going to be very, very difficult and that just [00:04:00] doesn't play well with the C-suite. It doesn't play well with the investor community. It sort of breaks the norms of expectations. The expectation is that, hey, if you're going in a direct consumer channel, like an Ecommerce brand, you're going to be able to account for that and so, part of it is awareness. You know, we just can't seem to rely on those same click and conversions, et cetera, when you're dealing with something like OTT. It's just different by nature.

Erik Martinez: Yeah, and I think to take this a little bit further, we were talking before the show, that there is this heavy reliance on using AI and automated bidding processes to manage campaigns.

We know that the kids coming out of college, your future employees, don't necessarily know the ins and outs of the industries that they're working in. They know how to work the technology, but they don't necessarily know how it all works, how to [00:05:00] segment data and dig and dive and figure out where those inefficiencies are and improve them, and I think that's going to put additional pressure cause I think it's just going to raise costs. I think those automated bidding strategies and Google being the premier example of that.

Tim Curtis: There's a reason, and I want to be somewhat cautious here because I don't want to paint with a broad brush stroke, but there's a reason that Google, for example, wants you to go to a totally automated bidding strategy. We talked about this in our episode with Phillip Mejia.

When someone is pushing on doing an automation, the unintended consequences of that, of going totally automated, is that the lack of independent oversight is gone. So, right now, that independent oversight is oftentimes in an agency position where there's an agency that's maybe working on your behalf, helping with this complicated digital advertising landscape. We know that's a very vital role that's been [00:06:00] filled. Sometimes, in companies, you'll have an internal person who's trying to sort of mimic that same activity, but when you look at brands that have engaged that automated bidding strategy, it's certainly a mixed bag at best, and in many cases, what you really see, at the end of the day, is somewhat of a slippage of the efficacy of those ads.

The machine is only as good as the machine can be and there's a lot of nuances to a particular business and a particular product, and you have to account for those and the machines just aren't at that level. They haven't been at that level and I think it's going to take much more time to get at that level. There would be those that argue otherwise, but when you engage with brands and you see the specifics that brands are trying to do, it's a problem, and with the experience that you and I both have, you know, this isn't our first rodeo, we've learned to be cautious, and we've learned that we need to keep a very close eye on what's happening with our media spend.

If there is a criticism [00:07:00] of those that have come later or younger in the process, they just haven't been exposed enough for the need to do that. You and I both have worked with brands in the last two years that have had some very, very painful lessons on switching in their digital media to a totally automated environment and we're quite frankly, I would say that universally shocked, at the impact of how the business, and not necessarily in a positive way. So, some of them have rolled back from the completely automated and filed that under lesson learned. There's bright, shiny objects out there and plenty of people that are pushing in that post-COVID environment, they're now pushing for more of this automation, more of a hybrid business model. There's some truth and some benefit to that being in place, but man, when you're talking about digital media, oh, you better think twice about that.

Erik Martinez: Yeah, I agree, and this really plays into a theme that not only we heard on our [00:08:00] podcast, I've been hearing on other podcasts, the idea of being intentional, being very proactive about what you're doing. The way my brain plays that out, Tim, is really having a planning approach. One of the planning approaches that we've been deploying here at Blue Tangerine is ready, aim, fire, and I added measure to the end of that because we need to be able to look at what we're doing and measure the result and understand did that effort work. Which, in order to do that in these complicated environments, we were talking about OTT and even digital display has an element of old school TV advertising where, yeah, we know the audience that we're reaching better, but the attribution of the dollars and the value and the impact to my brand isn't as clear and without a clear measurement plan, [00:09:00] without understanding what that media can and cannot do, without creating a tactical plan that looks at all the elements of how we're going to use that media, where we're going to use that media and then executing against that plan, how are you going to measure it? How do you know it worked? We need to be able to prove that not only to ourselves, but to our executive committees or the boards that we work for or ownership.

Tim Curtis: Well, I would take it even one step further. When you work with so many brands and we have the luxury of working with a lot of brands, right? I would take it one step further and say, it's rethinking your approach. Many of them would say we are thinking about our approach, and I would say, okay, well, let's rethink it with another level of intentionality.

So, at CohereOne, I've been brought in on some clients to specifically rethink the strategy that has been in place, and the [00:10:00] strategy that had been place was architected for a lot of reasons and it served its purpose well. Are there opportunities to refine it? Sure, sure, there are, but what they're beginning to see is that the leap from pre-COVID to post-COVID is so different that in many respects they're recognizing, and certainly what I would say is the brands that have figured this out, the forward-leaning brands, they're like, you know what, we need some outside objectivity here.

So, that I've come in to help rethink, for example, is that really the way we want to do that? What if we did X, Y, and Z and sort of whiteboard because it's very difficult to think differently when you've been exposed to one model and one model only. Is it fair to ask a group of employees who have been putting a lot of time and effort, and doing a good job, might I add, is it fair to ask them to push water uphill and really rethink something from a completely different model?

That's a tall [00:11:00] ask, but you're right in that we have got to raise the level of intentionality on what we're doing. We certainly at CohereOne, we've been doing that ourselves about ourselves. We have sort of reconstructed our model and it's working quite well for us, but it was disruptive to the business to really rethink that.

When executives think long and hard on this subject, I don't think you're going to find very many that would be in opposition to little bit of a whiteboard session to really rethink things. You're absolutely right, it just is kind of baffling to me that it's sort of taken the pandemic, the shutdowns and everything else for some of these concepts to finally take hold. I mean, they've been there for years. They're not new concepts, they just got greatly accelerated during COVID-19 and now they're scrambling to get up to speed. That's why we have winners and losers.

Erik Martinez: Well, we're doing the same thing at Blue Tangerine that you guys have gone through at CohereOne, which is rethinking our business [00:12:00] model and putting new things in place, better processes and being more intentional about everything that we do, right? Not chasing every opportunity that's out there. In order to go faster, you have to go slow for first. You have to be deliberate, and when you have a plan, you can move actually quite quickly because everybody knows what their role, what their part in the play is supposed to be. You don't have to think about it and then I'll have to make it up as they're going along and you're going to get better results overall when you take that approach.

So, Tim, that's two topics. Do you have another one?

Tim Curtis: It's sort of like a bowl of spaghetti because all of these things are somewhat related. So, let's try to pull these things apart if we can. So, for the listeners, I serve as a chair of a privacy committee for a Washington DC, lobbying group, and we lobby on behalf of the industry [00:13:00] for, in this case, for privacy, federal privacy. As everyone knows, there's a myriad of state privacy laws that have cropped up and have really affected the way that businesses operate here in the states.

So, for example, the California Consumer Privacy Act. We're all familiar with that. We know how that has impacted business and things that we're kind of watching for now, and then we have, CPRA, which is now the California Privacy Rights Act, which is a refinement of the California Consumer Privacy Act. It's really just a veritable word salad, an acronym salad here. Those changes coming from Sacramento have put in place a cascade or a wave across the country. You have, for example, Virginia, putting privacy ledges in place. You have Colorado, here's one of the latest.

It's becoming a much more important topic of conversation because those privacy changes, not only the regulations are making businesses have to change the way that they operate, [00:14:00] but it's having an impact on, let's say the digital advertising community, in sort of attempting to keep ahead of these privacy changes. You know, we see the third-party cookie essentially going away by 2023. That's when Google's announced they'll phase out a third-party cookie. That's great news for privacy advocates because that's a major win.

Again, a lot of this is targeted to the digital community because of the breaches and just the amount of insights people were gaining from just click and browse activity. So, that's all well and good, but that's just beginning. For those of you who have not really focused on the California Consumer Privacy Act, there's a lot of really interesting things in there that I think we're going to have to kind of take a wait and see in terms of how the courts are going to interpret some of the specifics, but really there's elements that is changed into a highly sensitive [00:15:00] personal information. So, there's almost like another level or another category where your health information, your precise location, maybe inferring your activities, and there's all sorts of elements from that, that are sort of playing out.

Boy, that's a beast. That privacy part is a beast, and again, the changes that we're seeing in the digital advertising community are a direct result of this privacy movement, and we're going to continue to see that. For brands, yes, you're going to have to work on making yourself come into compliance if you're not, but also you have to really understand that all the rich data that you used to enjoy and could be employed in your digital targeting is really changing. So, it's going from known clicks, and this is a broad-brush stroke, but going from known clicks to inferred activity. Those of you who operate on any realm of modeling or understanding propensity to buy, that is a [00:16:00] huge chasm and that is something that will have major, major implications on brands that they're not really even thinking through, but it all started with privacy. So, we have to talk about privacy.

There is federal legislation, there are several different proposals have been floating around Capitol Hill, obviously, it comes as no surprise to anybody that Washington has not been able to get much accomplished with some of the other bills that they've been debating, but this privacy legislation piece is something that, from a federal perspective, is beginning to take on more steam.

So, we're going to watch that, and hopefully, we'll be in a position to help shape something that will win from a privacy perspective, but we'll also be based in reality. Oftentimes, there's a lot of hyperbole surrounding privacy. For me, that's a big one. It's not going away. It's just getting bigger.

Erik Martinez: I think that's hugely important. I think my next one is really about hiring and the first three episodes on this podcast, [00:17:00] were about hiring digital talent. I gotta tell you folks, it's going to get harder. Think about this. What the pandemic did to us was basically put every business in the forefront of digital. Think about how you order from a restaurant today? How many of you actually go to the restaurant or do you just order online, pick it up and bring it home?

Tim Curtis: Or you have it delivered to you? Yeah.

Erik Martinez: Or do you have it delivered to you? Our behaviors have changed and suddenly the need for digital talent, which was already high on our list. Right? Acquiring good, knowledgeable talent was already high on our list. The pandemic has pushed this really to the forefront.

Tim Curtis: Yep. Think about that for a minute, Erik. You just made a great point. If you take a look at the grocery business, which has been arguably the most offline business model that has been around for decades. Think about what's changed in the pandemic? How many people [00:18:00] are ordering their groceries digitally? It's a much, much higher percentage than we've ever seen before. That's a fantastic point.

Erik Martinez: And quite frankly, it's way more efficient for all of us to do it that way. Not necessarily for the grocery stores, but the war for talent is going to heat up, and if you do not have a plan for the types of people, and roles, and positions you need in your company, you really need to develop one in order to make sure that you can get the best possible talent.

What that really means is I'm looking for athletes. Think about the way a pro sports team goes and acquires talent. They aren't always looking for position players. You know, pitchers, catchers in baseball, quarterbacks in football, but for any other position on those fields, they're really looking for the best possible athlete that they can shape and mold in their system, and then they develop that athlete to play that role on their team. I think [00:19:00] that in our businesses, we need to have that same mentality of identifying the best possible athlete. They may not have the deepest knowledge or experience, but as you're looking at your talent pool, look for the best possible athletes that can play multiple roles within your organizations or develop into multiple roles within your organizations. Be very strategic about it and I think you'll end up with better results.

Tim Curtis: The flip side of that is retention. Retention of the employees you have is going to be all that more important. None of us want to feel like, and I'm going to use this as an example, none of us want to feel like cellular companies customers. You're a customer, but you're getting a better deal to flip and go to another carrier, but if you're the customer of that carrier, you may not be able to hold that same great deal that someone who's coming into the brand for the first time gets. Nobody wants to feel like that. Right? That's the last thing anybody wants, but we do have to be mindful of that, the fight to retain talent will also be [00:20:00] huge for us going forward.

Erik Martinez: Yeah, I agree, and, you know, I think culture matters within your organization. Whether you are an in-office organization, or a remote organization, or a hybrid organization, culture matters. People want to feel like they are part of something and you have to work very hard to make them feel and have them be part of the team. One of the things we have just started here at Blue Tangerine, we took our team and we divided it into seven cross functional teams.

So, one of the challenges we have is that we are a digital marketing organization on one hand, and we are a website development shop on the other hand, and we really had a challenge bringing our development and marketing teams together. You could hear it in the management meetings when we were talking about the development side and the marketing side and how the marketing folks are way more engaging and socially adaptive than our developers. I don't really actually [00:21:00] hold that belief. I really believe that we just need to create the mechanism.

So, we tried something, we created some cross-functional teams. Each team has a purpose within the organization, and one of those main purposes is to. Just come up with ideas on ways to improve the business. I can tell you that the initial round of ideas, we've got more ideas than we can execute in the next five years, and the top rated ideas are all bottom line impactful, and we're going to start working on implementing it. The best outcome of this was we got engagement from everybody in the company, and we got people who wouldn't necessarily engage with each other because they were on the other side, working together. That's a much better team experience for us and our employees and the environment that we want to create within our organization. Now, this is still an experiment and we'll see where it plays out, but I think we've already seen some tangible benefits of people [00:22:00] going, hey, I now know you and I'm willing to talk to you right when I have a question.

Tim Curtis: Yeah. Well, it sounds like you're being intentional. You're solving for something by being intentional about it, which I think is the entire ethos of 2022, is just being intentional.

I would say the last bit, and this is probably one that, even in my own team, I don't think we necessarily have full alignment on this concept yet, but, I see it, I'm pretty adamant about it, the marketing and sales data, and the operational data. So, your customers, the promotion file, how they're being hit by emails, by print pieces, catalog, or direct mail, digital ads being served, et cetera.

That and the sales information and then the product detail pages information, including margin on a product, all of that. I think we're living now in a world where because of the dynamic environment in which we're operating, I just don't see people being able to not aggregate that data into a singular source [00:23:00] anymore. I see that we're going to have to move more towards a database environment. Many listeners will say, well, aren't we already in that data-based environment? Well, not really. I would say the majority of companies are still operating, you know what we would call a flat file environment, where they may have a marketing file over here for the print side, and what they're doing for Google and Facebook, maybe it's over here on this side. Their email file is a little different and they're not really necessarily feeding item level information, including margin on product, into the calculation, and I just think that ship has sailed.

Yes, it's going to be challenging to make that change, but man, at what point in time do you make that change if you don't make it now? I mean, what more do you need to push you into making that change? It's going to change the way you staff, it's going to change the way you market, but you will be doing it in a far more intelligent manner than you're doing now.

The clock is just running out. [00:24:00] We've got to get people into an environment where they can take advantage of a more dynamic and then marry that dynamicism with your channel information, and make informed decisions based off lifetime value, based on return by channel, and really set yourself up for success. You just will not be able to do that if those data pools continued to be largely siloed. So, that's my soap box issue. That's probably my last one for the day, but it's one I'm pretty passionate about.

Erik Martinez: Well, I'm going to add to that cause we are working on a project with a client right now, we have been working on exactly what you're talking about. We are bringing all that data together and we started this project two years ago and we're now, we're just now, folks, almost two years later, able to look at some of the things that Tim just said. We're looking at profit by channel. We're looking at margin by channel. We're looking at some of these things in order to make better decisions [00:25:00] about where to invest the marketing dollars. Where's the best opportunity for return? Where's the best opportunity for growth within those businesses? Again, going back to being intentional, it's going to take some pining and it's gonna take some time and, you know, the first step that you have to do is just go take an inventory of all the different sources of data that you need to do your job. Then figure out what that date is connected to, or not connected to and work on bringing it together. That's really step one. If you are able to do that, then the outcomes will be fantastic. So, I'm not even going to add another idea to this.

Tim Curtis: That's already going to be tough to get all those in. Yeah.

Erik Martinez: Those are major initiatives, but we wanted to leave you guys with some thoughts on things to think about and work on in 2022, because we want to come out of 2022 and 2023 even stronger.

Tim Curtis: And what better way to do that than during [00:26:00] happy hour.

Erik Martinez: So, enough for the beer talk today. Thank you for taking the time to listen to the Digital Velocity Podcast. I'm Erik Martinez.

Tim Curtis: And I'm Tim Curtis

Erik Martinez: Have a very happy holidays and we'll see you next year.

Tim Curtis: Thanks so much.