Think Strategy Before Spending
It’s no surprise that Digital Advertising is growing in importance for brands across retailers as consumers have significantly shifted shopping and product discovery habits. As a Supplier at Kroger, you know you should be investing with KPM – but where do you start and how much should you spend?
At Harvest Group, we advise our clients to invest with KPM based on what they’re trying to achieve and what they want to spend as there is not as much pressure from Kroger to spend a certain amount as at other retailers. Investing in what you feel is fit is going to be the best plan of action for your brand and team.
Our goal is to help our clients answer 4 questions regarding their digital advertising business:
- What can I do? We want our clients to understand the full suite of tactics offered by KPM.
- What should I do? We help them evaluate category, product, consumer demographics, and an understanding of underlying business objectives.
- Did it work? We analyze both POS lift and impressions made during the evaluation period and comparing versus previously identified success measures.
- What do I do next? We help our clients reassess future promotional strategies with the data and insights from previous performance.
In this blog post, we’ll walk through a few questions you can ask yourself when thinking about where to start for your KPM spend to be most effective in your advertising budget.
Determining Strategy & Objectives for Your Team
1) What is the role of digital consumers for your specific product or category?
Advertising is not a one-size-fits-all approach. It’s likely that every category and product will require a different advertising strategy based on your overall business goals and consumer demographic.
Utilizing macro-consumer/category information to assess if your brand and category combination over or under indexes with the digital consumer will be a critical starting point. For example, a more grocery-focused, cart-building category such as pancake mix or cereal will over-index with a Kroger Pickup consumer versus a destination beauty category such as cosmetics or specialty bath.
Specifically, this information regarding the portion of your total sales represented by digital sales, and comparing that to the category, may be a great place to start this evaluation.
Think about the big picture first so you can discuss tactics from there. Once you know your overall strategy, you can adjust where you want the growth to be.
2) What objectives are you solving for?
Understanding the core objectives underpinning your overall strategy can help you create a custom program.
Two specific questions to ask as you plan your tactics are:
- Are you solving for trial/awareness or seeking to drive a repeat purchase?
- What role does digital investment play in your total promotional portfolio?
In the case of launching innovation, you may lean heavier on tactics that promote trial and awareness. Conversely, if you are leading up to a key season or even pre-KOMPASS season with a legacy item, driving repeat or incremental purchases may be the overarching strategy.
Combining this assessment with an evaluation of your total promotional plan will be critical in determining the right tactics. The best-case scenario is certainly a digital advertising investment that layers into an in-store promotional event or helps create a holistic approach in a given time frame.
By understanding what you want to get out of the campaigns rather than spending to spend, you will be able to set realistic expectations for your KPM spend and have a clearer narrative for your efforts.
3) What seasonal events or industry trends might affect your brand?
It is essential for brands to look at shopper trends as they make advertising decisions. We all know digital shopping has increased with COVID, but what does this mean on a more granular level for your brand?
Does your customer prefer drive-up over pickup? Do they use digital coupons? What does a possible Fall COVID surge mean for your customer’s shopping habits?
Understanding these trends and how they will influence shopper behavior can help you determine how to spend your advertising dollars most wisely to meet their changing needs. 84.51’s 2021 Holiday shopper insights whitepaper provides great insights for brands preparing for end-of-the-year trends.
How Much Should You Invest?
As a starting point, you can aim for 2% of POS to estimate your initial investment. You can always dial up your spend based on what you know about your consumer demographics and your products. If you’re going after a digitally savvy consumer or advertising a digitally friendly product you can increase spend based on the overall strategy you’ve set in place.
How quickly should you tell your Category Manager about your KPM investment?
The Merchandising team at Kroger does not get credit with KPM spend. They will ask how much you’re spending at KPM and will want to know how your plan blends with an in-store promotional plan. After you’ve determined your strategy and objectives the next step is to put the package together and move into execution mode, in partnership with your broker or local team.
Planning ahead is critical as Category planning is done 6 months in advance. Your team should always be broadly thinking ahead to get interest and ignite excitement to start planning expected performance. Different categories will invest differently in digital spend. If you’re in a category that has a larger percentage of share that is done digitally you’ll feel more pressure to invest. For example, if you know that 8-10% of your business is driven by digital and the category is expected to grow 20%, your Category Manager will be interested in this and encourage you to invest more heavily.
While it may seem intuitive, a combination of 1) appropriate planning and lead time 2) upfront clarity on strategy and objectives for your brand and category, and 3) alignment of goals and metrics for evaluating success will lead to a more cohesive promotional strategy and successful execution in both digital and in-store promotional activity.