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The advertising arms of Disney and Kroger are combining retail media and streaming inventory in an effort to expand opportunities for brands to effectively reach audiences, and measure the impact of advertising on sales.
The news: Disney Advertising and Kroger Precision Marketing are launching a collaboration that will make first-party data from the Kroger retail media arm available to advertisers for targeting and measurement on streaming TV platforms in Disney’s portfolio. The limited beta test will start with Hulu, and a select group of CPGs are being invited to participate. The program is expected to roll out to the general public in the second half of 2023.
What are the benefits? The companies said this collaboration combines data science capabilities from Kroger Precision Marketing with Disney’s capabilities to provide premium inventory on its streaming platforms that reaches consumers on their couch, just like traditional TV. Specifically, the partnership is focusing in three areas:
Audience: The combination of Disney’s audience graph and data from 60 million annual households shopping at Kroger will “create efficiency and improve KPI’s through purchase-based data science,” the companies said.
Content: Advertisers will be able to reach people while they view news, sports and entertainment programming across streaming platforms. Alongside Hulu, the company’s portfolio includes Disney+ and ESPN, so there's room to make an even bigger impact as the program expands.
Measurement: With Kroger Precision Marketing data, brands can measure whether advertising helped lead to a sale. This allows them to “close the loop” between an advertising campaign and a sale, the companies said. In particular, advertisers will receive data on retail sales, household penetration and segment level insights.
Key quote from Lisa Valentino, EVP of client solutions and addressable enablement at Disney Advertising: “While the industry is focused on identifying alternative currencies, Disney is doubling down on driving real-world results for brand clients each and every day. The unrivaled reach of Disney, amplified through retail media insights from one of America’s leading grocers, results in a better experience for both viewers and advertisers, and actionable results for our clients.”
What it means
Streaming + retail media: While retail media is typically associated with on-platform advertising at grocers’ websites, the first-party data that powers it can also be valuable for advertising that takes place beyond a marketplace. Streaming, known as CTV in advertising circles, holds the promise of becoming a powerful new advertising force by combining the mass appeal of TV advertising with measurement and targeting capabilities of digital advertising. Retail media is helping to boost the latter with data accessed directly from purchases and loyalty programs. This partnership comes after Kroger Precision Marketing initially expanded into CTV in September 2022 with the addition of inventory to its programmatic marketplace.
Power in partnership: Retail media and CTV are both still in early days. This initiative shows how collaboration between companies can help to solve key problems that will promote growth of both spaces. In this case, Kroger Precision Marketing is bringing data and measurement capabilities that can help to enhance Disney’s nascent advertising offering. It's worth noting that when it comes to grocery and entertainment, these are two giants of their respective spaces. “As consumers spend more time with streaming TV, it is increasingly important for industry providers and advertisers to work together to bring innovative solutions like this to the marketplace,” said Carol Simpson, Sr. Director of Shopper Marketing at PepsiCo, which was the first advertiser to work with the companies.
Hulu out front: Hulu was an early mover on CTV advertising, having introduced an ad-supported tier back when it launched in 2007. According to Statista , the platform maintained 22% of CTV market share in 2022. Now, Disney+ and other platforms such as Netflix are introducing their own ad plans. Hulu has the existing reach and inventory to prove out what works in a nascent area such as the introduction of retail media. At Disney, learnings can then apply to other platforms.
Trending in Retail Media
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.