man on windy street

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When commercial terms are reliant upon brand spend, the retailer quickly embodies characteristics of Aesop’s North Wind

Greek storyteller Aesop has a famous fable of which I’m increasingly reminded in the world of shopper and retailer media. It describes an ongoing argument between the north wind and the sun as to who is stronger. They decide to settle the matter by competing to see who can strip a passing traveller of his cloak. As the wind howls powerfully, the traveller wraps his coat closely around him, tightening his grip with each gust. Whereas the sun gently shines upon the man, gradually becoming warmer and warmer until the traveller gleefully removes his cloak to soak up its rays.

It’s an apt narrative when looking at the current state of play within retailer-owned media estates. When brands invest in media that is owned and operated by the retailer, there’s an evident conflict of interest. When commercial terms are reliant upon brand spend, the retailer quickly embodies characteristics of Aesop’s north wind. When there’s minimal risk to incoming business or revenue for a retailer-owned agency, it is easy for things to become stagnant. Without accountability, what have they got to lose?

It’s this precise competitiveness and commercial-mindedness that keeps independent agencies on their toes, knowing all too well that at any moment brand spend is able to be taken to a number of competitors – competitors who are constantly fighting to prove their worth. It keeps ideas fresh, it keeps employees engaged and it ensures that all spend is spent in such a way as to maximise effectiveness.

Retailers sell products to shoppers and their owned agencies sell media to brands. The shopper and the brand are their customers. They don’t tell shoppers they’re bound to spending a specific amount in store on specific products or else they can’t shop, yet they too often tell brands they must commit to a certain level of media spend. It’s for this reason separation is so crucial. Independence is optimisation. Media should be purchased on the basis it’s the most effective channel for the brand.

To attract marketing investment, retailers need to make it a positive investment choice. They need to prove to brands that their spend is worth it and to do this there needs to be a level of independence to maintain honest and accountable work. As we slide into what is looking to be a deep and dark recession, the marketing managers of this world have never had more eyes on their budgets and had their decisions more scrutinised when it comes to marketing spend. Each pound must be worth it. So the historic model utilised by some retailers, who demand that a minimum incremental spend from brands increase year on year, is quickly becoming defunct.

In this rapidly changing retail environment, it’s only a matter of time before brands start to tighten their coats more than ever. The longer retailers and their owned agencies act like the wind, the less the industry can grow and improve. And the more brands will head elsewhere in search of some warmth.