Notes and Thoughts on Grocery 2.0

Today with the addition of Peapod to our network we now serve 93 Retailers who do more than $90 Billion dollars in grocery sales. Putting us second to only WalMart in terms of reach and impact. In the last six months alone we have added $46 Billion dollars from partners such as Delhaize, A&P, Big Y, Piggly Wiggly, Roche Brothers, Lunds, and now Peapod.

Why the acceleration? There is no single reason but a convergence of powerful forces that are driving consumers, retailers, and manufacturers to digital solutions:

1. Increasing Consumer Usage with 94% of US consumers shopping online and online grocery shopping penetration increasing we now have best in class stores with online sales at 10% of store volume.
2. Changing Grocery Market with Non-grocer retailers (e.g. Wal-Mart, Club, Amazon) taking market share retailers are looking to “lock in” and expand their most valuable customers. The average online order is $140 and increasing with best in class retailers seeing $160+ baskets.
3. Digital is Easier. For the consumer who is time pressed but dollar savvy, for the retailer who can leverage tools such as email, online circulars, and online shopping to a better ROI, and the manufacturer who faced with the massive media fragmentation can find millions of consumers in one place shopping just for groceries.

This trend is only going to accelerate as we move into 2009. Remember your local book store? They were hit by the same tidal wave of forces only for many of them to close shop unable to cope with the sudden and dramatic change. Retail Grocery is at a similar inflection point and our goal at MWG is to navigate these changing waters to enable our partners to win.

Alec Newcomb

For years, Seattle-based Starbucks coffee company was praised for building its brand without heavy advertising. While the strategy proved successful in a booming economy, Starbucks’ recent financial woes, store closings and layoffs have left many questioning whether, ultimately, that decision to refrain from expansive marketing may have propelled the company’s decline.

In a comparison of Dunkin’ Donuts and McDonald’s coffee advertising strategies, Optimedia’s Antony Young outlines how two competing brewers positioned themselves against Starbucks and grew their market share in a down economy. Dunkin’ Donuts focused heavily on television, public relations and its web campaign. McDonald’s focused more on regional advertising and nontraditional media, such as product placements.

Dunkin spent about 15% of its total media budget online, developing a website Dunkinbeatstarbucks.com and serving ads across several sites.

Young concludes that Dunkin’s approach to use heavy broadcast was efficient, but typical. The exception, he says, was Dunkin’s “strong push online, which was a definite strong point in Dunkin’s communication plan”. McDonald’s, a traditional TV advertiser, departed from the company’s typical media buy to focus on local strategies, which, according to Young, paid off.

Advertisers can learn two things from the 2008 coffee wars.

One is a simple, but not always obvious lesson: the number one brand in a category cannot maintain its position indefinitely without continued innovation and effective communication. Starbucks’ blind faith in the superiority of its product, its subtle communication efforts and its cult following, coupled with its expansive growth strategy, alienated the company from many consumers, who no longer recognized the brand as the trendy, grassroots coffee it used to be. The down economy, when consumer purchase behavior had begun to shift continuously, was an especially bad time for Starbucks to lose focus on its brand position.

Two, brands can no longer afford to emphasize traditional broadcast advertising over online and regional efforts. In a diverse media mix, multiple channels often complement each other, but the focus should be on where consumers are most engaged. Dunkin’s website encouraged consumers to “Learn the Truth” through Dunkin’s story and “Spread the Truth” via e-cards sent to “less fortunate Starbucks friends”. Ads directed users to the site where they spent invaluable time interacting with the brand. These online tactics gave Dunkin’ a competitive advantage in a high-margin market.

To read Young’s entire analysis, click here.

Rachel

MyWebGrocer announces that Peapod, serving 14 major US markets, is joining the MyWebGrocer Ad Network. With the addition of Peapod, the majority of retail Grocery Ecommerce transactions occur within the MyWebGrocer Advertising Network.

The addition of Peapod, Peapod by Stop&Shop, and Peapod by Giant to the ninety other leading retailers on the network means that the network now has significant store density in the key New York, Chicago, Washington DC, and Boston DMA’s.

“The addition of Peapod, who has set the bar in e-commerce, is a significant milestone in our Ad Network’s rapid growth” explains Rich Tarrant, CEO of MyWebGrocer. “In less than a year we have demonstrated the power for our network to drive sales at the digital shelf for both retailers and CPG manufacturers. If a brand manager wants to communicate with online grocery shoppers, then the MyWebGrocer advertising network is the place to find them with credit card in hand.”

“We believe that the targeted nature of grocery specific advertisements within the MyWebGrocer Ad Network will be of value to our Peapod customers”, said John Burchard, Senior Vice President of Peapod. “In addition, Peapod’s website, with its large base of active online grocery shoppers, will be an attractive destination for CPG manufacturers to engage with consumers. We are very excited to pursue an advertising partnership with MyWebGrocer.”

About Peapod
Founded in 1989 as a smart shopping option for busy people, Peapod today stands as the country’s leading Internet grocer, serving 14 U.S. markets including the metro areas of Chicago, Milwaukee, Boston, Suburban N.Y. and Washington, D.C., and communities in the states of Illinois, Maryland, Massachusetts, Connecticut, Virginia and Rhode Island. The Skokie, Illinois-based company, a wholly-owned subsidiary of Royal Ahold in The Netherlands, has achieved over 13 million deliveries since its late 1980s inception. For more information on Peapod, call 1.800.5.PEAPOD (573.2763); e-mail service@peapod.com or visit www.peapod.com.

About MyWebGrocer
MyWebGrocer was one of the first to launch online Software as a Service for retail grocers in 1999. MyWebGrocer increases basket size, acquires new customers, retains current customers, and drives revenue in-store and online business for their clients. MyWebGrocer has the largest grocery advertising network in the country covering 85% of the US, earning their clients direct ad revenue. Some of their clients include Shoprite, Lowes Food Stores, Big Y, Food Lion and 90 other leading grocery chains. For more information please visit www.mywebgrocer.com or call 1-888-662-2284.

Search Engine Marketing Workshop

Search Engine Marketing: Advanced Strategies for a Competitive Market
Search marketing is one of the most widely used marketing techniques by online retailers. Yet search marketing is complex and requires extensive and specialized knowledge for a program to be successful. This day-long workshop is designed to provide in-depth strategies, tactics and techniques that retailers can apply immediately to improve their search engine marketing programs.

Creating the right search campaigns: How your product mix affects how much you spend on search?

Different types of retailers need different search approaches. Low-margin retailers or retailers selling products with lots of competition, need to know just how low their keyword bids must be. Retailers selling a more expensive product or merchandise that consumers take time to make up their minds about can spend more, but that spend is usually spread over more terms. This session will help retailers understand how their merchandise reflects their keyword bids and how to create consistent, successful, high-ROI keywords campaigns that take margin into account.

Come to the show and check it out! 10:30 AM – 11:30 AM, Day One—June 15, 2009 at the Boston Convention and Exhibit Center.

Cheers!
Courtney

Advertisers and publishers in the online industry talk a lot about ad serving. Without ad serving, online advertising wouldn’t exist. But what exactly is ad serving?

This is a question I hear a lot. What goes on behind the scenes that allow advertisers to show consumers ads online? It is a simple question, yet one that is often overlooked. Let me explain.

There are two main types of ad serving; publisher ad serving and advertiser ad serving. Examples of publisher ad servers include Doubleclick DART for Publishers, Accipiter Ad Manager, and 24/7 RealMedia’s Open Ad Stream. Examples of advertiser ad servers include Doubleclick DART for Advertisers, Mediaplex Mojo and Atlas.

In publisher ad serving, an advertiser most likely bought advertising on the publisher’s site and specified files to be served onto the site. The files are first trafficked on the publisher’s ad server, or when applicable, directly onto the publisher’s site. Trafficking consists of campaign set-up, ad creation and targeting, and creative production and assignment. Once the ads are approved to serve on a specific site, the following occurs:

1. A user visits the site, causing the browser to call the web publisher via a web server. The web server loads an HTML file, the web page the user sees.
2. In the HTML file is an ad URL that tells the browser to call the ad server. The ad server selects the correct ad’s file location to send back to the browser.
3. The browser requests the ad creative from the ad’s file location. The file containing the ad’s creative content is sent back to the browser to load.

Between steps 2 and 3, the ad server completes several actions that determine which ads and creative are selected to serve.

1. The ad call that is made contains a unique ID that is specific to a web page or group of web pages. Snippets of the ad URL also include identifiers that are specific to ads, such as size and placement.
2. The ad server reads the ID and chooses which ad to deliver based on multiple criteria.
3. Common criteria include whether the browser is part of any targeting groups, such as geographic location; Whether any rules associated with the campaign assigned to the unique ID apply; The priority of each ad that matches delivery criteria (which should serve first); The priority of creative that matches delivery criteria.
4. The ad server sends the final selection to be delivered to the browser.
5. The ad server sends data to its inventory forecasting, reporting and billing systems to be logged for future use.

That’s publisher ad serving in a nutshell. Of course, ad serving systems differ, but the workflow remains relatively straightforward.

Advertiser ad serving depends on publisher ad serving processes but adds tracking functionality that easily automates the majority of campaign work. Advertisers running campaigns across multiple publishers use ad serving to automate workflow such as data input, creative management and trafficking, and to centralize reporting.

Advertiser ad serving begins like publisher ad serving:

1. The browser calls the web publisher via the web server, which responds by sending a HTML file. 
2. In the HTML file is an ad URL that tells the browser to call the ad server. Instead of the publisher ad server selecting the file location to send back to the browser, it delivers a secondary ad tag that re-directs the call to the agency ad server.
3. The browser calls the agency ad server, which selects the correct ad’s file location to send back to the browser.
4. The browser requests the file containing the ad’s creative content, which is sent back to the browser to load.

The complexities of ad serving technology enable media buyers, ad operations staff and agency personnel to relatively seamlessly complete complex tasks. With targeting and tracking capabilities already at significant levels, advanced ad serving tools are sure to continue improving the power of online advertising.

Rachel