James Kotecki (00:08):
This is CES Tech Talk. I'm James Kotecki, bringing you one of my favorite C Space Studio interviews from CES 2024. I had a lot of great conversations in Las Vegas, and I know you're going to like this one, so enjoy.
(00:24):
Hey, welcome back to the C Space Studio, sponsored by Integral Ad Science. We're here at CES 2024. I'm James Kotecki, and joining me, Cara Pratt, SVP Kroger Precision Marketing. Thanks so much for joining us today.
Cara Pratt (00:36):
Absolutely, James. Thanks for having me.
James Kotecki (00:38):
So Kroger, obviously a grocer, but tell me about your job, Kroger Precision Marketing. Day-to-day, what does that entail? What are you thinking about?
Cara Pratt (00:45):
Yeah, I lead Kroger Precision Marketing, which is the retail media engine of the Kroger company. Obviously, it's been a fast and furious pace about how we think about the data signals and the audience intelligence and closing the loop off of the impact and the efficacy of an ad impression. So as we came to market roughly six years ago, we talked about media accountability being really critically important. How do we make sure that brands feel good about the ad dollar invested and the performance there?
(01:14):
What do I think about day in and day out? There's no doubt that as I reflect on and as we reflect on where the industry is, we have to really be mindful of not just technology and operational changes of what publishers and the ad tech ecosystem and retailers and advertisers need to prepare for, but we also have to make sure that we're really mindful about the cultural sea change that's happening with respect to investment dollars, with respect to org design elements, and how the structures of organizations externally can really optimize to take advantage of this changed expectation with audience intelligence and data signals. So I spend a lot of time thinking about that externally. What are the experiences we need to bring forward? What's the organizational design elements that can support it? And then what do we need to do internally with how we organize ourselves to create that bridge most effectively for brands?
James Kotecki (02:08):
I like this concept of organizational design, and I want to dig in there, but first, can you contextualize for us those experiences that you're talking about? So paint me a picture, if everything goes perfectly, what is the consumer experience and just a typical kind of interaction with you, and then what does the brand experience on the other side of that? Can you just kind of paint what the ideal is that we're going for here?
Cara Pratt (02:30):
Yeah, well, consumer experience from an advertising standpoint should be frictionless and it should be inspired. Advertising isn't going away, but the fact of the matter is there's a lot of irrelevant advertising that consumers are exposed to. So as we think about what's that experience on Kroger as a commerce player, Kroger as a publisher, we want to make sure that we're igniting curiosity and igniting discovery at the same time where we're supporting the habitual nature of grocery shopping in really productive performant ways. And so from a consumer experience side, I'd say inspired and frictionless.
James Kotecki (03:02):
So this is an experience people having primarily on your website, right? Where they go to the website, when they want to shop for groceries, order things online, what are the ads that they're seeing and how is that seamless is what we're mostly talking about?
Cara Pratt (03:10):
For that part of the ecosystem. And then we think about what are the bridges that we've created materially in the programmatic space and the social space and the streaming space, which we have relationships across Pinterest and Disney and Meta and Pandora. And we think about what those experiences can come forward and how we drive relevancy to the forefront.
James Kotecki (03:28):
You're watching Ratatouille, you see an ad for a delicious kind of cheese, you come over to Kroger and it's all seamless.
Cara Pratt (03:33):
It's about reducing wasted impressions from a brand perspective too.
James Kotecki (03:37):
And so then from the brand perspective, how does it look when they're dealing with you or what's the experience you want them to have when they're interacting with you?
Cara Pratt (03:45):
Yeah, we have a full suite of solutions from everything on our owned and operated self-service aspects all the way to both managed and self-serve-off property as well. And so we've been really diligent in making sure that we're intentional on what adjustments we need to make to reduce friction in an already pretty complicated space with respect to influencing the planning side within agencies on behalf of brands all the way down to the buying side.
James Kotecki (04:07):
So you talked a little bit about the org chart as being something that you're thinking about a lot, organizational design and how that's impacting how you see your work in the future. Can you unpack that a little bit for us? And I think this is, I may have alluded to it in other conversations here in the C Space Studio, but I think you're the first one so far who's really brought this up in an explicit way. So I want to dig into what you mean by that and what you're thinking about what the future means.
Cara Pratt (04:29):
Well, think about connected commerce. You think about content and commerce converging, brand meets demand, how organizations settle themselves from a structural standpoint, both from at the highest level transactionally, but critically and importantly, P&L ownership into decision rights that happen for shopper dollars and trade dollars and media investment dollars.
James Kotecki (04:52):
Who's making the call. Who's spending the money.
Cara Pratt (04:53):
Who's making the call. A dollar is a dollar invested, and at the end of the day, brands are looking to drive demand. Brands are looking to materially impact full funnel investment strategies to ultimately move products. And it's really important for that recognition about the change that's happening within different organizations to support that model in the most productive, performant way. And everybody's on a journey, and it takes time to break habits, I'd say, in design structures that supported an industry from five years ago and 10 years ago to what needs to be true as we look forward for the next five to 10 years.
James Kotecki (05:30):
Technology creates the need to move faster, it also creates the ability to move faster. One of those technologies is AI. Obviously everybody's talking about AI here at CES 2024, but I imagine that's something that you think about as one of those organizational shiftings that's going on.
Cara Pratt (05:43):
Yeah, and talent, obviously, is a critical bedrock that will enable any organization to be able to accelerate in the right way, in the purposeful way, especially those with the right density of data and the deterministic nature of that data. And at Kroger, we've had over 20 year relationship with customers tethered to a loyalty card. We can understand the behavior change of customers over time. We can use that for predictive dimensions to understand who is the right household that will deliver X brand outcome. Whether brands are really focused in on the business outcome of maintaining an increasing buy rate amongst a specific cohort, whether it's around growing penetration, whether it's around maximizing incrementality, who we expose what content to, that audience strategy and how that audience strategy threads into the channel distribution strategy and making sure that we know frequency dimensions across the board is really, really critical. So AI is playing a role in audience enablement, audience strategy at scale, and we've got an incredible data science organization that's leveraging the tenets of petabytes of customer information to help us expose-
James Kotecki (06:48):
What's a petabyte? I don't want to put you on the spot. What is it? Is that... So it's obviously bigger than a terabyte.
Cara Pratt (06:51):
It's a volume of data. So to put in perspective, one petabyte of data, you could take 4,000 pictures every day for the rest of your life on your phone, that's going to store one petabyte of data.
James Kotecki (07:01):
I think I need one petabyte of data sometimes. But that's great.
Cara Pratt (07:03):
You need one petabyte of data. But we think about how do we unleash this in the right way? How do we utilize that in the right way? As we've used, we use an embeddings from an AI perspective and couple that with machine learning techniques. As we think about the fusion of that from an AI perspective, we're seeing a 26% increase in incremental return on ad spend for campaigns that are leveraging that AI based audience strategy.
James Kotecki (07:26):
So actually that goes right to where I was curious about this because sometimes I wonder, okay, with all the data science that's currently being applied, are there still big leaps that are potentially hiding in the data? Are there insights that are waiting to be uncovered by even more data, even more advanced analytics and AI and machine learning that we could unlock? And here you're saying 26%, that's actually pretty significant. So it implies that we're not done. If this is a bunch of oil in the ground, there's still some oil in that well for us to keep drilling down on.
Cara Pratt (07:53):
We're not done yet. Brands are not done yet. Publishers are not done yet. We have work to do as we think about how do you identify what the pockets of growth will be for the future, you need the right data signals to influence that. You need the right strategic minds in the planning cycles and the organizational design to really squeeze that out and make sure that those dollars are the most effective dollars spent for a brand.
James Kotecki (08:17):
So CES is focused this year, as it was last year, on human security. And this is a major issue of basically how technology helps people. How does it help people live better lives across a number of dimensions? Is that something that you're thinking about at Kroger and are you thinking about ways technology helps that?
Cara Pratt (08:32):
Absolutely. The human connection and the commitment that we have and have to have to help customers live better lives. Everything from the privacy side and the base commitments there, all the way to what's the experience that customers have, the human connection? Kroger overall, our mission and our commitment is to feed the human spirit. We think about how food can play a role in the lifestyle of households. We have a unique opportunity to be able to create a really connected experience that's right for that human. Again, advertising isn't going to go away, but we do have an opportunity to make that ad more relevant, more connected, and we can support the lifestyle of our customers. Every day is a rush for a different rush based on different family dynamics and family dimensions. Somebody might have five minutes to put food on the table for a household of five and somebody might have 35 minutes. What do we know about shoppers? What do they want to know from us? How do we help them with meal planning? How do we help them create better and more improved and more inspired everyday practices?
James Kotecki (09:35):
There's never enough time, so we'll take all the help that we can get, obviously. And that's interesting when you talk about privacy, because you can obviously talk about people put their credit card in to buy stuff on the internet, whatever. But as I'm thinking about it, the kind of food that someone buys and the kind of meals they create, it is kind of an intimate thing. And I imagine one could piece together certain things about someone based on the kind of things that they were purchasing, the kind of food and the kind of ways that they're nourishing their own family. So it's interesting to see that that's something that you're thinking about very closely.
Cara Pratt (10:03):
It's a really important human connection. The human connection and then the responsibility we have to help our customers understand what a different optionality is. Whether they want to eat healthier lives, whether they really need to focus in on convenience and on the go because of the lifestyle that they are in in that moment, and the transitionary period that households have over time, it's something that we're really reflective on on the responsibility that we have.
James Kotecki (10:29):
Well, thanks for reflecting with us today, Cara Pratt, Kroger Precision Marketing. Really appreciate your time here in the C Space studio.
Cara Pratt (10:35):
Thank you. Great to be here.
James Kotecki (10:37):
Thank you. Well, I hope you enjoyed that conversation from CES 2024. That's our show for now, but there's always more tech to talk about. Hit that YouTube subscribe button, leave a comment, follow us on Spotify, Apple Podcasts, iHeartMedia, or wherever you're getting this show. And get more CES at CES.Tech. That's C-E-S.T-E-C-H. I'm James Kotecki talking Tech on CES Tech Talk.