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Dave Simon, welcome to Retail Media Unboxed. I’m so pleased to have you on today. Great to be here. Thanks for having me. So to start us off and for the uninitiated, tell us a bit about Vibenomics. Sure, Vibenomics is the industry’s leading platform for helping retailers manage their in-store ad inventory. So we focus on everything from the generation of the inventory by providing hardware and software solutions to create content experiences, as well as the software to help manage your inventory. so that when you take it to market and include it in your omnichannel packages, it lives in the same platforms as where you’re doing your media planning and you’re buying. It also connects the inventory to the programmatic ecosystem so that you can maximize your yield by providing access to all of the various demand endpoints that a retailer would want to broadcast their inventory to. Excellent. Well, one of the things I’m dying to ask you is you’ve compared mobile gaming’s ad model to what retail media could be. What lessons can retailers learn from how game developers mastered performance marketing and take to their segment of the industry? Yeah, it’s interesting. I’ve had a fortunate career in the sense that I’ve worked in ad tech for most or almost all of my career, but I’ve covered lots of different kinds of markets within it. I’ve worked in the streaming space with CTV. I’ve worked in mobile web, mobile display. a desktop display. And most recently, I spent a few years focused on the performance marketing side of mobile app developers. And the thing that’s great about mobile app advertising is that it’s relatively simple to show dollar in and dollar thirty out. The number of places that you can effectively make a purchase are very limited. It’s one of the two app stores or it’s in the app itself. So you don’t have a multimodal sort of tons of different paths for a consumer to go about, go down and try and map a conversion or a purchase. It’s also really great because when you look at the path that a user takes to convert, there is a digital data point that gets generated against every single one of those touch points. So my favorite example is Instacart. My household is a big Instacart user. When you download Instacart, the install is only the first step you take. You have to download it. You have to sign up with the app and register. You have to pick the location that you want to do your store pickups in. You have to add products to a cart and then you check out. Then you go back to the app, you add more products, you check out. All of those data points demonstrate a path that a consumer takes to effectively predict or demonstrate what their LTV will be to Instacart. Well, all of that data gets used to then figure out how to find the next new consumer that’s gonna come in and how much should I pay for that person? And so when I think about the retail media offering, they have the end purchase. Oftentimes they have it at the user or household level with a loyalty card. They have dozens of touch points for a consumer going through that journey. And so if I think about the breadth and depth of data that exists, that retailers have in their hands, that shows how a consumer takes the path to purchase, the ability to create massive value for the brands that are buying ads from these retail media networks, it exists. And what I’ve seen is that partly because the mobile app space is much more contained than the sort of traditional retail space, but also partly because the technology innovation on the mobile app space has been invested in for years, The mobile app space is years and years ahead of what’s possible for the retailers to solve for their brand partners. And we’re starting to see some of that innovation happen, where you’re starting to map out an omnichannel media strategy that follows consumers through the full conversion path. Because let’s not forget, we’re investing heavily in advertising. online to try and sell products that exist in these retailers. But the average retailer still sells eighty percent of their products in store. For grocers, it’s more like ninety percent. So even though you’re messaging to people in cookies and in streaming environments and in Web and everything else, they’re still going to the store to make a purchase. And so what I’ve been pushing our customers to do is to start thinking about the in-store not as a tactic, but as part of an overall strategy that as you start thinking about if I’m Pepsi and I want to give you ten million dollars and I want to get a seven percent lift in sales, I have to think about the store as a critical part of that. And historically, the RMNs, the last five years, they haven’t been focused on the store nearly as much as they should because they’re trying to help brands figure out how to build an e-commerce strategy. But as we get more mature, what we see is that oftentimes investing solely in e-commerce comes at the sacrifice of total sales volume, which is not what you want to have happen. And so I’ve been evangelizing this idea of looking at these touch points, not as like a conversion event, but rather as this data exhaust you can use to fuel models that help you figure out how to reach the right consumer and drive total sales up. It’s interesting, Seth. All major grocers already scan every barcode and connect it to loyalty data if they have that. Why isn’t that goldmine of data being used to power outcome-based buying as well as it should be, and certainly as well as gaming apps do? Yeah. Well, again, I think the first thing here is the retail space is orders of magnitude larger than the mobile app space. So you’re moving a tanker, not a speedboat. That’s the first challenge. The second thing is that The data has never been looked at in a consistent, cohesive way. So what we found is that most retailers have different data sets living in totally different structures, in totally different environments. Bringing that together is no small feat for an IT department. And so it requires investment. It requires some thought. But if you were to ask the average IT professional to architect a retail experience today, with retail media in mind, what they would architect is fundamentally different from what they’re inheriting in most cases. And so there’s just a bit of like a legacy and that exists. And the other part that’s that’s interesting is that the retail media space has only really taken off in the last four or five years. And this digital media digitization of the retail media space, I should say, retail media has been around for a hundred years. But You know, the fact is, like, if I was a CFO at one of these big retailers, I’d want the retail media group to prove to me that the investment in this IT infrastructure to normalize data, to create fast moving paths, to build ML models on top of it was worth it. And I think now we’re starting to see a lot of these retail media businesses crack hundred, five hundred billion dollar revenue lines. You know, Walmart’s earnings report was a great example. They’re offsetting the concern they have on sales volume with their advertising business. That’s an investable thesis. Right. And so Walmart’s now proven I can make money in this retail media environment. And it’s it offsets some of the risks that I see from things like tariffs or whatever. And so it’s an investable idea now, but I don’t think it was up until maybe the last four or five years. But we’re now at that point where I feel lucky that I’ve worked in these other environments and I can come to spaces that haven’t done this yet, that haven’t gone through this process of automating data flow and that kind of thing that really we can help them figure some of this stuff out as they look to become a much more sophisticated digital media business. You know, more and more advertisers want predictability, not necessarily placements. What does that shift in mindset mean for how retailers package and sell their media? Yeah, it’s a great question. So this is actually one of the fun discussions that we had with app developers. And I think there’s a lot of corollary to what’s possible here. The fact is that there is a trade-off, there’s a balancing act that any good publisher has to do. And in this environment, let’s not kid ourselves, retailers are publishers, right? They own inventory, they manufacture that inventory, they’re dragging consumers into their stores to create consumer attention opportunities. What’s interesting is that from a packaging perspective, I want to sell as much tonnage as I can for as high of a price as I can. that is exactly antithetical of the idea that selling outcomes versus selling tonnage. And so what they have to start thinking about is what is the right ad opportunity to serve up that gets that outcome to happen? And so if I think about the opportunity to serve a display ad here, a mobile app ad here, a streaming ad here, a social ad here, and an in-store ad here, is that use of inventory the right use to both maximize my yield while still meeting that criteria of the outcome you need to hit for the advertiser? And that’s a big shift, right? Because right now, historically, the tactics in retail media have been I’m Clorox. I have this initiative of driving more of my sales through e-commerce. I’m going to invest in on-site search and on-site display. Then a new tactic comes in. I want to drive brand awareness up or maintain category share. I’m going to do off-site CTV because it’s directly, the CTV is really good at driving mind share. And then I want to sell a product. So I’m going to do an end cap. Right. Like those things in conjunction, those things map together as consistent goals from one media plan as opposed to three separate media plans. Those things coming together will enable the retailers to start thinking about like maybe that display ad isn’t the right one because their primary objective is sales volume. And while it might be great for category shift, it’s not great for actually driving a transaction. Those kinds of things become possible once you combine those tactics together. And our more sophisticated retail media customers that have been in the business for a while, they’re there. I mean, that’s what they’re pitching in their upfronts and their JVPs now. And so how that execution happens, that’s where you have the opportunity to deploy some sophisticated machine learning models, to start looking at this data as exhaust that can come in and fuel these decisions. All of that becomes possible because the retailers have started to normalize this conversation with the brands around, give me what your goal is. And then let’s build the holistic plan together as opposed to tactical media executions, which is how retail media has been done up until now. You know, to your point about retailers acting like publishers, many retailers still act more like landlords sort of filling inventory rather than publishers driving growth. What do you think is holding them back from embracing a more performance marketing playbook? Yeah, it’s a great question. Well, one, I would say that there are several of our retailers that are embracing this performance advertising playbook, right? I think we’re starting to see that happen. This year’s JVP conversations, they sounded fundamentally different than they had in prior years. And that’s coming from a whole host of retailers that we work with. And so I think that is happening. Why do I think it hasn’t happened sooner or faster? You know, it’s funny. I was talking to my team about this. You know, if you look at the Gartner hype cycle that they map out, right? Retail media came out and everyone was like, this is amazing. I can target exactly who I want when they’re in market with the product that I have that’s hyper relevant. And there’s a huge amount of investment in retail media. And then a lot of advertisers didn’t see the return. And so that hype cycle sort of defined that trough. And I think we’ve sort of hit the bottom of that trough. And now we’re starting to come back to a much more diligent and financially disciplined way of investing. And so I think at the same time, it’s also given the retailers the chance to say, okay, you guys all just bid into this market like crazy and you bought everything we put in front of you. Like now we’ve got to figure out how to make sure everything drives the value. So I don’t think it’s solely on the retailers. I think advertisers also invested very heavily, probably have invested ahead of what made sense. But now what you’re seeing is retailers are really starting to say things like, You know, which of my products drive Salinger brand sales, my ad products, which of my which of my products drive, you know, shopping cart increased value? Which of these tactics fit? How do these tactics fit in with the traditional shopper marketing stuff that I have going? And what’s really interesting is you’re actually seeing two different or maybe two or two different flavors of the same thing. Some retailers are having their shopper marketing exist as it was completely separately from digital media offerings. Others have combined the two. And I don’t, you know, having a front row seat for a lot of these conversations, I honestly couldn’t tell you which one works better. I think both customer types are having success. And so the real question is like, I want to be able to show up. They want to be able to show up to Pepsi and say, How much do you need to sell this year? And what product lines are you launching? And what categories are you entering? And what retailers are important for you to continue to see growth in? You know, is it convenience is a big category for you? Because if so, I care less about in store. I care more about the brand awareness and finding data that gives people the indication that these are the people you want to be hitting. If your growth driver is in grocery store and I want to see that like you’ve got end caps that are timed well with your in-store audio and are timed well with your in-store visual screen work, right? Those things become much more palatable. But the key piece has to be that the brands have clear ideas of what ROI looks like and what their objectives are. And that conversation, that was the defining characteristic of a lot of the upfront conversations that we were a part of this year. You know, just to go dive into one of the things you said just now a little bit deeper, do you think that hype cycle kind of went on the downward end due to maybe the pandemic? And the reason I ask this is, You know, at Advertising Week, we saw a lot of retail media partners come about, you know, and start participating in the two, three years prior to the pandemic. And it seemed to be a very growing, massive segment of the industry that was participating in this. And then all of a sudden you kind of, you know, retail ends up very shifted during that period of time. You wouldn’t expect to necessarily see the ROI that you originally anticipated with all the changes in the world at that time. Yeah, it’s a great question. It’s funny. I’ll tell you that one of the biggest surprises when I got here to Vibenomics was that e-commerce is still not more than twenty percent of total sales. Yeah, I mean, you know, like, look, it’s skewed, right? I think if you look at younger demos, it obviously skews much higher. But even, like, you know, there was a retailer that told me that it had some data that, I’m going to paraphrase it, but basically, Gen Alpha actually likes going to stores. And so there’s this weird, interesting shift. Like, is that a temporary thing? Because none of them are old enough to have kids and busy schedules yet, and the minute they do, they’re going to door dash everything like the rest of us do. But I think what’s interesting is that The pandemic put a lot of pressure on a fear of not having a good e-commerce strategy. That if you didn’t have an e-commerce strategy, you were just going to lose market share. And it turns out that like five years removed from that now, still the vast majority of products, particularly in grocery and convenience are sold in store. And so, you know, I think what happened is that there was this rush into e-commerce and then what the world sort of got back to business as usual, in-store shopping was still as important as it was before. And so I think what’s really interesting is when you talk to the retailers about segmenting down their audiences, like particular groups need to be messaged to very differently. And so How do you put together the right media plan that follows that consumer through their journey to the purchase? You know, the fact is that they have all these digital touch points now and they can equate a banner ad on the Wall Street Journal, an ad on Pinterest and an ad in the store to a product sale. They can look at the incrementality across that, excuse me, across that chain. That’s a big, big opportunity for them. And so I think that even though e-commerce has to be a strategy, it cannot be your only strategy. And I feel like if there’s one thing we over indexed on during COVID, it was that particular issue. And what do you think it would take both technologically and culturally for retail media to move to a more machine learning driven, optimized way at scale? Yeah, we were talking about this earlier today. Everyone’s under so much pressure to have an AI strategy, and it’s so overblown and blah, blah, blah, right? But the fact is, this is the single biggest place that retailers can leverage machine learning and AI. My prior company, Moloka, we did on-site ad optimization for retailers. It was one of the products that we offered. And what I can tell you how in firsthand I’ve worked at one of the best machine learning companies in the market is that this stuff is really hard to be good at. And so if I’m a retailer, I need to be looking at AI solutions, not generative AI and not even necessarily LLM based AI, but like pattern recognition AI to take massive data sets that I have and turn them into predictions of what to serve up to a consumer at the next moment of opportunity. That piece is where I think there’s gonna be a lot of adoption. There are a lot of really good third-party services out there that you can test. Many of them exist as apps inside of most of the big data clouds that are out there. So you can switch them in and out easily. And so I think building your narrative around that particular piece becomes really, really powerful. And I’m incredibly excited to see what is possible when you look at the variety of landscapes that retailers can touch consumers in, the amount of information they have about them, and then how that leads to value creation for their brand partners on the other side. Looking ahead, what does the next wave of retail media growth look like? And how do you see advertisers, retailers and tech partners all collaborating to get there? yeah well i look this is going to sound incredibly self-serving but i do fundamentally believe it if if retail media one dot o was all about on-site search and display retail media two point o was all about off-site doing all these extensions putting your data into third-party systems you know facebook has been a huge partner for most of these retail media networks and they’ve driven a lot of value three point o is all about in-store We are seeing a massive push from most of the big retailers that we power to make sure they have a very strong story for both in-store audio and visual. One of the best parts about Vibenomics is that it’s owned by Mood Media. Mood Media is a fifty year old company. They’re the largest provider of in-store experiential hardware and software in the world. They power five hundred thousand locations with in-store audio, in-store visual displays. We do everything from massive three story tall LED screen build outs all the way down to like delivering the scent that gets presented in a store. It’s funny. My personal favorite shopping experience when I was a teenager was Abercrombie, as I imagine every millennial is. The music and the smell, that’s a designed program, right? That’s not some guy walking around with cologne spraying it. That’s actually a scent they pump out into the store. And Mood Media is the biggest provider of those kinds of services. So when we look at the retailers that either don’t have an advertising program or who do have an advertising program but it’s not extended into store yet, The single biggest momentum point we see is making sure that they have a big build out of a really rich experience that’s powered by screens and audio that enhances the shopping experience, but also presents a massive opportunity for brands to message the consumers at the point of purchase for the vast majority of purchases they make. And so for us, we’re incredibly excited about what twenty twenty six is going to bring in. I think there’s a lot of really cool, innovative stuff you’re going to see across a variety of categories in retail. That’s a great segue to my last question, which is what marketing opportunities do you foresee arriving in twenty twenty six that have you most excited? Yeah. So there are a handful of of pilots that we’re in and build ups that we’re going through now. Here’s here’s my advice to to any brand person that’s listening to this. Retailers are are eagerly looking for innovative ways to message the consumers and enrich the shopping experience. So the best example I have is the old school palette that gets delivered during football season. That’s like the Coors Light palette or the Bud Light palette that shows up in the store and it’s got some really cool fancy barbecue bolted onto the top of it or whatever. There are digital executions for all of that kind of thing. there are incredibly cool led based screen exhibits that you can put out there we’ve done some stuff where there’s a um there’s a uh an install that we did for a major luxury auto manufacturer in their flagship store in italy we built this three sixty experience that is entirely immersive so you can step into it like you’re inside the car and you’re racing through it’s it’s an incredibly cool experience there are lines to this to sit inside this experience in the store it makes the dwell time three times longer than average the site the number of visits that they get goes up dramatically when they have these things there are opportunities for brands to build those kinds of experiences with their retail partners and so i’m incredibly excited to see like what those kinds of things because look i’m just an ad tech guy you take the creative brains behind these marketing groups and you put them together with the kinds of talented execution people you have in these retailers, there are going to be lines around the block like you used to see with Apple Store just to experience something that’s sponsored by a brand in a retailer. And those kinds of things make long-lasting impact that punch way beyond the investment required to make them innovative. So I’m really pumped to see what that kind of stuff’s going to be. Excellent. Well, Dave, this has been fantastic. If one wanted to find out more about yourself and Vibonomics, where should they go? vibonomics.com. Our website has a bunch of information and moodmedia.com also has a bunch of information if you’re looking to look at build outs for retail. Those are two of the best resources out there. Excellent. Well, thanks so much for taking part in the show today. Thanks so much, Richard.
