At a recent advisory board meeting, Tiffany Tan from Clorox said something that I have been thinking about pretty much ever since.
She was talking about two ways she thinks about the value a commerce partner brings: execution and decision quality.
Pretty simple distinction. I wrote it down immediately.
Because the more I thought about it, the more I realized how much of commerce has been built around the first one.
And how so much of the opportunity ahead is in the second.
Execution got us here
Commerce agencies and brands have spent years getting incredibly good at execution.
Run the campaign. Optimize the bid. Find the audience. Track the conversion. Measure the return. We are essentially a heat-seeking conversion missile. You point us at the conversion end point, and we will hit it more efficiently and effectively than ever before. That’s what commerce execution does!
In fact, I think one of the reasons commerce and retail media have earned a bigger seat within the marketing industry (including ~20% YoY growth for the last decade) is because so much of the work happens close to an actual business outcome. Did our marketing actually drive sales?
Retailers don’t just have panels or modeled data. They have some of the largest first-party datasets tied to actual consumer purchase behavior. That is a huge benefit for brands looking for more accountability out of their marketing investments (and a whole other Field Note worth on this topic).
The biggest benefit is that we can reach audiences and measure campaigns based on what consumers actually search on the retail site, what they actually buy in-store, what they buy again (and again), which products are gaining momentum and which marketing activities actually drove sales.
But just because we can continue to optimize toward a target doesn’t mean we should always continue to do so.
You can optimize the heck out of a branded search campaign and just be defending the demand that already exists. You can deliver incredibly efficient reach without showing any incremental impact on sales. You can find the perfect audience and negotiate the best rates with your partners, but if the creative is garbage, the campaign is too…
Those aren’t necessarily execution problems. A lot of them get solved through better decisioning upstream.
And that is where commerce can become a lot more critical to the entire marketing industry.
What should we do next?
In our industry (and life) we are inundated with information. There are more reports and data points coming across our desks (or feeds) in a day than anyone could seemingly action in a month. The most important question isn’t what data or insights we can get. It’s what should we do next?
Where does the next dollar go? What is actually driving growth? Which consumer cohorts have the highest potential? What creative elements are actually changing behavior? Are we creating demand or just getting really good at capturing the demand that already exists?
These questions are not exclusive to the commerce or retail media team. In fact, I would argue, the more of your teams can answer those questions in the same way, the better (more connected) your org will be. There is so much demand for integrating planning in our industry but too often we discuss the competing objectives within the same brand initiative.
At their core, these are strategy decisions that cross media, brand, creative, sales, finance, product, supply chain and many others depending on how your organization is ultimately built. What commerce provides are signals that can help answer those questions with more accountability than ever before. Are we ultimately driving sales with our decisions?
For a long time, commerce was one of the places we went to understand what is happening at the end of the purchase journey. Advancements in clean rooms, audience IDs and technology have enabled commerce signals to move further upstream, that means marketers can shape their plan with sales-based insights before the first dollar ever gets invested.
That is what I mean by commerce becoming a decision layer.
Commerce signals need to leave the commerce teams to help improve the decisions and recommendations of others.
If a signal can improve a media channel decision, it should make its way into media. We shouldn’t always have to wait for the next MMM readout to learn something that commerce signals may already be telling us about the sales impact of our marketing.
Commerce signals can also tell us which creative elements are most closely associated with sales. Imagine bringing that intelligence into the next creative brief and now the creative team has a stronger input grounded in actual purchase behavior.
There is so much talk in our industry about outcome-based buying. And while I’m obviously biased, it’s hard to beat an outcome where the consumer actually voted with their wallet. How can we be taking those commerce signals to turn insights into action?
Sometimes the signal improves a retail media campaign. Sometimes it changes how we allocate dollars across brand and performance. Sometimes it informs a better creative brief or audience strategy. And sometimes it helps answer the question every marketer inevitably asks:
If I had one more dollar to spend, where should I put it?
The opportunity is being able to answer that question across all of your marketing alternatives, not just inside the commerce team.
The feedback loop is faster than the organization
One of the things I love about commerce data is the speed of the feedback loops.
Those feedback loops let us learn whether audiences, creatives, tactics or investments are translating into purchase behavior. Particularly when run through RMNs and performance marketing channels, you are able to achieve statistical significance with an extremely limited amount of spend and impressions. It’s a very powerful way to learn but many brand organizations don’t usually move at that type of speed.
I’ve seen channels, partners and audiences that are driving significantly more incremental sales, but the media plan was already locked so we couldn’t adjust the approach. I’ve seen certain product claims or creative hooks outperforming everything else, but the next creative brief was already shipped and it’s too late to update. I’ve seen demand accelerating faster than forecast only to see supply chain and sales unable to keep up and teams completely miss the opportunity.
As much as I could tell you about how awesome commerce data is, it doesn’t automatically create better decisions. Somebody has to see it, understand it, own the decision and actually have permission to do something about it.
Too often the budget belongs to someone else. The brief already went out. The planning cycle happened six months ago. Two teams are optimizing toward different goals. Or the person who sees the opportunity simply doesn’t own the lever required to act on it.
At that point, let’s call it what it is, it’s a decision rights issue.
That is why I think decision quality is such an important distinction. The challenge is not just creating better signals. It is building organizations that can actually move when those signals tell us something important.
Start with the decision
Data helps tremendously to set the direction but it’s important to understand what changes or impact you are ultimately trying to make.
If the goal is to improve decision quality, I like starting somewhere specific. What decision are we actually trying to make better? Then work backward.
Take video investments in our industry right now. Video increasingly spans brand and retail media budgets. Whose objective are we optimizing toward? Who owns the allocation decision? And if the data tells us to move money, does that person actually have the authority to move it?
Better data helps. But the decision layer also requires ownership, shared outcomes and the permission to act.
The organization has to let people move toward a shared outcome (I strongly recommend sales if you couldn’t tell).
What does this change?
I keep coming back to Tiffany’s distinction. Execution and decision quality.
Commerce will always need incredible execution. We still need to pull the right levers to capture demand when the consumer is ready to buy.
But I think the larger opportunity is using what commerce learns at the end of the journey to make better decisions further upstream.
Where should we invest? Which audiences have the most potential? What creative actually changes behavior? What did we learn, and where should that learning go next?
Which leaves me with the question I keep coming back to:
What does this change?