Exclusive First Look: Kroger and Pacvue Expand with On-site Advertising

As America’s largest grocery retailer, Kroger serves nine million daily customers and 60 million households annually nationwide. Now, advertisers can access its on-site advertising inventory to buy product listing ads on Kroger eCommerce sites through Pacvue.The new capability will make it easier for brands and agencies to manage on-site Kroger search campaigns, while leveraging the intelligent automation, reporting, and recommendations advertisers have come to depend on from Pacvue.We want you to be the first to see it in action. Watch this recording to learn:An overview of Kroger and Kroger Precision MarketingAdvertising options & opportunities to grow your brandPacvue’s new Kroger advertising platformHow to get started & best practices we’ve seen so far

Based on Pacvue's case study of a body care brand on Kroger, here are some of the benefits of being a first adopter:

• Early Kroger stats in 2021 are similar to early Instacart stats from 2020, and despite one-third of the ad spend on Kroger compared to Instacart, impressions and ad sales were comparable​.
• Brands are still seeing low CPCs and high ROAS, making it a great time to start testing for your own brand.

Ben Ryan Schwartz

Awesome, so again, for those of you just logging in, I wanna welcome my colleague, Jason Comack from Kroger to today's webinar, where again, it's gonna give everyone in our audience a first look at the Kroger and Pacvue Advertising opportunity when it comes to on-site. Should Anyone have any questions throughout today's session, please list them in the chat box or the Q and A box, and we will get to them at the end of today’s presentation. So with that being said... Let's kind of kick everything off. Perfect. So for those of you who I have not met before or who are unfamiliar with me, my name is Ben Ryan Schwartz, and I am the Director of Retail partnerships here at Pacvue, and I am thrilled to be here today to talk all about our partnership with Kroger. To expand on site advertising, and I am joined by my awesome colleague, Jason Comack. Jason, would you like to introduce yourself?

Jason Comack

Sure, thanks Ben. Yeah, it's really great to be here speaking about Kroger and Pacvue’s partnership. My name is Jason Comack , and I am the Director of on-site product strategy for Kroger precision marketing.

Ben

So for those of you who are attending your first webinar with us today, Pacvue is the leading enterprise platform for brand sellers and agencies looking to manage e-commerce advertising across 30 plus retailers by combining holistic performance with recommended actions. So for today's presentation, just to give everyone an overview of the agenda, Jason is gonna be kicking it off by talking you through or giving you an overview of Kroger Kroger precision marketing, as well as the advertising opportunities available. I will then take you through all the benefits of working with an API partner like Pacvue, along with a few case studies, and then as I referenced before, we’ll end today's webinar with a Q and A, so that way, if you have any questions as again, please add them to the Q and A or a chat box, and we'll get to them at the end of the presentation. So with that being said, Jason I’d love to turn the keys of the party over to you.

Jason

Great, thanks Ben. So I'm really excited to talk about Kroger precision marketing today, as well as an overview of who Kroger is and what the advertising opportunities we are that we're bringing to market. And so Kroger is America's grocer, actually one in every two households shops at Kroger locations, we are the number one green grocery retailer around the country, you may know the Kroger name, but we also operate under several local grocery brands like Harris Teeter, Food for Less, pick and save and more, there's actually 2700 locations in total. I was really exciting as program actually just announced a natural expansion of the delivery subscription service called Boost, and Boost is a low-cost way for shoppers to receive unlimited delivery and actually double their fuel points, which is one of our key rewards on loyalty cards on every purchase. And at Kroger, we're just not concerned about our own brand, we actually wanna make sure all the brands we sell are successful too, so we launched program precision marketing five years ago with a mission to make advertising more effective For CPG brand partners, today, the spotlight on retail media is as powerful as a new lever to influence shopping decisions, and so Kroger precision marketing activates where consumers are spending their media consumption time, and today our media portfolio includes on-site media, which we'll speak about a little bit more today that you’d expect from most retailers as well as offsite partnerships with other publishers like Pinterest, Roku and Pandora, more recently, we launched a private marketplace to allow brands to use data for sophisticated reach and measurement on the open web.

But the difference between Kroger and other retail media networks isn't just our scale, it's actually the value exchange implicit in our customer relationships, Kroger's loyalty card program delivers value back to shoppers the more you shop, the more savings and fuel points you earn for over 20 years, consumers have opted in to join the program, and this allows us to capture purchase data on 96% of sales, and with all that rich data, the result is a longitudinal view of purchase behavior over time, which is extremely valuable to CPG brands. And so with that relationship, we have that longitudinal view of what households are buying over time, we actually track thousands of variables from petabytes of data that's actually refreshed weekly, and this scale is critical for our data scientists to apply machine learning models on data signals, which inspire discovery and drive conversion. In totality, we generate over 3000 variables to predict which households are the ideal households to target depending on a client's objective, advertising, duration and budget, and on the back end, we are tracking meaningful metrics like sales lift and return on ad spend. And the ultimate result of what we do is drive incremental growth for CPG brands, Kroger precision marketing has a full ecosystem of media touch points to spark new households to discover and to convert, and for brands looking to increase consideration, we now lift campaign household penetration an average of 25% to 30% for brands focusing on conversions, we're averaging a sales uplift increase of 35% to 40% across all media channels.

What's important is that we also keep new households repeating and loyal, for example, one in every four new shoppers that click on a PLA purchase two or more times within 10 weeks after clicking, ultimately this drives that flywheel where we're bringing new households and keeping them loyal. And now I’m excited to talk about today, how we can really start to influence the digital shelf on Kroger, and so product listing ads are our search products, you can boost individual products and skus across some of the highest pages on Kroger dot com, some important points about how we're driving this search that is transacted on a CPC pricing model, and it's using a second price auction. On average, our advertisers are actually seeing three to seven times return on investment, but when we use our 14 days click attribution window, and what's unique about the Kroger search ecosystem is that when consumers come to our site, they're actually more often than not not searching for a brand name, in fact, 90% of the top 500 searches on Kroger.com for non-brand terms, which means that product listing ads in paid search is a great way to get in front of new customers.

And one thing that's important with program precision marketing is that you're actually bidding at the SKU level with relevant categories of your brand, we do not currently allow keyword targeting, and you do not have the ability to competitively conquest, and so we offer three core search placements across the site that reach customers as they navigate around Kroger.com both on web and on app. So the first I'm gonna talk about is basket builder. Basket builder is actually a great placement for retention, so you can get your products in carousels across the site, whether that be on the homepage and features, buy it again, or on the PDP pages, and this is a great lever if you wanna pull for retention because you're reaching customers who already like your products and bringing them up, and so they can see them sooner in those carousels and ultimately would drive repeat purchase savings is a really important area on the site, we actually see savings traffic growing significantly right now... And this is a great way for you to either bring new households in, retain those existing by making sure your coupon offers are prominent as the customers having it, their coupon wallets in different portions of the site, and finally, search and browse, search and browse is probably core to what you would think of when you think of retail media search, it's our core in-grid search product where you're appearing on a search result page and also department pages.

This is a great opportunity to get in front of customers by boosting your product towards the top of those search results, especially when customers are actively adding to cart, and again, what's great is, especially with so much of those search terms being non-branded, it's a great way to also get your brand in front of new customers, and so ultimately, why should you invest in product listing ads? Yeah, I think it captures on a customer strong intent to purchase, we have over 5 million searches happening daily, so there's just so much interest in searching for products, and when you use PLAs we find that 42% of clicks on product listing ads are actually from new households, and of those that click nearly 50% convert, again, a really great opportunity to get in front of those new households, and we're seeing strong household conversion rates amongst all our placements, both across desktop and app. And so recently, we've done some customer journey framework and some case studies just to think about and show how customers are engaging with our search products. And so, as I mentioned, PLAs are not only just an opportunity to reach new households, to retain households and broaden reach as well.

And so as I mentioned, one of the things we're really proud of when we think about the way that customers are engaging with us is that 42% of those PLA clicks are new households, what's interesting is that you can see that those are also extremely present when we talk about our attributive units. But what’s really interesting too, is not only are Plas a great way of engaging those new households, but they show promise in turning those new households that you just brought in to loyal customers, 25% purchase two or more times after 10 weeks of clicking, so you think about the power of using all those different placements to bring in new customers and then keep them loyal with a place like basket builder. And so overall, PLA really goes across the entirety of the lower funnel when we're thinking about getting customers interested, retaining loyal customers and driving new household conversion, and so our recommendation always is the best practice is to engage across all these placements, we see the best returns on ad spend and best results when people are leveraging all these placements, because what you're really doing is thinking about capturing new customers, keeping them loyal with a placement like basket builder and then engaging them.

When we are, they're looking for saving messaging by being present in all of these different placements, you're capturing the customer as they move across the site and as they're at different points in their customer journey. So we have over 2000 brands that are currently working with us, and whether you are a brand that’s already working with us for some of that's never worked with Kroger Precision marketing, we would love to engage with you and help you drive success for your brand.

‍Ben

Awesome, thanks so much, Jason, for that. So let's just kind of jump into what it looks like working with a Kroger API partner, like Pacvue... So why choose Pacvue? I'd say there are four key reasons of why I think folks were gonna sit and work with a partner like Pacvue, so I think one is making sure that you are staying ahead of the competition, that means gaining an edge with competitive insights, share of voice monitoring and rapid product development, you can also save time without sacrificing performance, so you can work more efficiently with role-based automation, AI optimization and keyword recommendations, and you can also increase sales with while lowering costs, so you can manage campaigns with more control, including daypart bidding, auto budget tracking and budget pacing, and then last but not least, you can leverage flexible, robust reporting, which means that you can bring sales inventory and advertising data together to customize dashboards, or you can also work directly in Excel. There also are a host of additional features that Pacvue essentially has that we'll sit on top of the native Kroger UI, such as bulk changes, filtering day parting as I previously mentioned, as well as share of voice data.

So what I would say or are some of the biggest benefits of working with an API partner, so first and foremost, day parting, so this will really give you guys the ability to easily schedule ads during optimal times for maximum results, also rules-based optimization. So that means now you can optimize your campaign budgets,products and targeting all within the Pacvue platform metrics optimization, so optimizing your ads, against specific targets, whether that CPA, CPC, ROAS in-store sales and much more as well as I'd say the last one being in-store insights, so this is actually one of the most interesting features for advertisers are the in-store insights because it gives you insight into product performance, both in-store and online. So many of you might be wondering how exactly is Kroger and Pacvue going to work together? So one key thing that I do wanna call out is there is an intermediate, an intermediary partner called promote IQ, and promote IQ is actually the sponsored listing service to the retailer sites, so they actually sit between Pacvue and Kroger precision marketing. So  just kind of keep that in mind. So the complete integration is Pacvue, Promote IQ and Kroger precision marketing.

So once you've signed up, it's easy to get started with Kroger product listing ads... So a couple of key things that I guess to call out in terms of performance, so brands also, you'll often see 3 to 6X average return on ad spend, I think Jason actually called it out earlier, I think it actually has said 3-7%. So again, definitely a significant amount of performance that you're going to see when it comes to ROAS also, you're gonna see at a 65% average conversion rate as well, a couple of other fun facts, 85% of searches are unbranded on Kroger, as Jason kind of mentioned previously, only in stock items will be promoted to, don't need to worry about waste of ad spend, and then of course, Kroger uses a second price auction model. So what are the benefits of being a first adopter? So here's a case study in the body care brand on Kroger, so kinda call out some quick things for you, so some of the early stats in 2021 are similar to the early Instacart stats from 2020 for those who you familiar with that, so despite one third of the ad spend on Kroger, compared to instacart impressions and sales were comparable, brands are also still seeing low CPC and high ROAS making it a really great time to start to start testing your brand with Kroger, and then lastly, this is a food pantry brand that found that by promoting larger case size ROAS increased with the larger sizes, as you can see here.

So with that being said, in preparation for today's webinar, we did actually have some questions come in through the registration form for today's session, so I'll kind of go through those questions first and then we kind of open up more broadly. So here, I guess, are some of the initial questions that we received, so will the new integration allows for day partitioning on Kroger, and then as we kind of called out previously... Yes, it does feature, it will feature a day parting capability as well as a scheduler, are day parting insights based on a holistic or real-time data like other platforms no, because currently at this time right now that info is not available from Kroger, will share of voice be available for Kroger. Yes, it is keyword-driven, on-demand insights into commodities. No, but Pacvue will be crawling, so we'll still be crawling at the keyword level, will pacvue provide any intent into placement type of desktop versus mobile level for Kroger, not necessarily a distinction between desktop and mobile, but it will go across the different PLA types that Jason previously called out, will there be any unique features for the Kroger integration that we've not seen before in some of the other partners that Pacvue is currently integrated with...

Not upon release, but we do soon to expect additional insights into in-store sales, and that's all going to be driven directly by the API that is provided by promote IQ that lives between Pacvue and Kroger. So that being said, I'm gonna open it up to the other Q and A that we have for today. So the first question that we got is will Kroger be offering advertising for adult beverage brands, Jason...

‍Jason

No we cannot accept adult beverage suppliers.

Ben

Awesome, and then that also followed up... Well, it says is KPM being offered for pharmacy brands.

Jason

So we work with over-the-counter brands, but not specifically for RX, if you have additional questions on that, if you have an assigned account executive for KPM, you can certainly reach out to them.

Ben

Awesome, thank you for that. So I do see a couple of questions that have come through regarding for folks that are currently not activated on Kroger, what does that process look like? So at the very last slide that you'll see in today's presentation, there is an email address to the Pacvue sales team, so my recommendation for anyone who is interested, you can email the Pacvue sales team and they can kind of discuss with you next steps in terms of what that looks like in terms of leveraging the Pacvue platform to start advertising with Kroger. So we saw that question come in, a couple times will Pacvue ingest the Kroger loyalty card IDs for in-store attribution. That is a great question, and I don't necessarily know the answer if that information is coming through from Kroger via promote IQ to Pacvue, Jason, do you know by chance?

‍Jason

So obviously, we're not gonna pass back any personally identifying information, but what you can get out of the Promote IQ platform today is we are tracking... We are tracking in-store sales based on the loyalty card data, and so you can see that currently in the Promote IQ platform, you could see those metrics right now...

Ben

Awesome, thank you for that question. Can we bid at the keyword level, are we able to add keywords on Pacvue, so... I believe you can bid at the keyword level, again, I believe it still has to be unbranded, because again, there is no branded search or no branded keyword targeting on Kroger. Is that correct?

‍Jason

So actually we're not... We are not currently allowing keyword targeting, so the way that you would actually target is actually at the SKU level, so you're ads are gonna be at the SKU level, and then the way that it kind of mapped back to what queries you ultimately show against is based on Kroger's digital item taxonomy, and so when a product is set up with your Kroger digital site merchants, it actually assigns it a category, and they also heard that referred to a commodity. And so we made a purposeful choice to really protect the customer experience, to basically only allow category bidding based on relevant commodities that you're assigned to. I know that this is something that comes up a lot when talking about Kroger, but I think we feel strongly about protecting that customer experience, and we do feel that you get the benefits or the things you may want to get out of keyword bidding somewhat naturally, when you're thinking about Kroger because again, so much of our traffic that comes through is non-branded anyway.

Ben

Awesome, thank you for that. Let's just see. Does Kroger allow geo-targeting?

‍Jason

And so we have something that we actually call divisional targeting, which is not the way that you may see the geographic targeting based on a zip code or state, what you can do is you can target certain divisions and certain divisions of Kroger basically around these... Or Kroger or different of those sub-set of stores, and so you can target that way to target specific groupings of stores, but you can't target geographically by a zip code or state. So there are ways to get a little bit more granular when you do it that way.

Ben

Perfect, thank you for that clarification. Question regarding what exactly is the set up process, I guess from a fee structure perspective, in terms of integrating with Kroger, what i would say Mika, if you wanna reach out to the Pacvue sales team, they can talk a little bit with you regarding what that set up looks like between integrating Pacvue with Kroger. Is there documentation for how to work directly with KPMs API... My understanding, Jason, is that API is only available to API partners like a Pacvue, is that correct?

Jason

Yeah, that's correct we are not. That would be if you're interested in connecting to the API, you would work with an API partner like Pacvue.

Ben

Awesome, thank you for that. In terms of... When will Kroger actually be live? So what I would say is we are targeting... We're targeting a July launch, so I'd say stay tuned for more information on that... For anyone who is interested is, I kind of referenced before, you can definitely reach out to our sales team and we can notate your interest, and then when we are ready to go live, our sales team work with you on next steps in terms of onboarding. Is there a documentation on PLA guidelines or restrictions

Jason

The way that Plas serve, they're basically serving based on the way that your digital item set up is within Kroger, so I think the only real guidelines there would be the minimum floor pricing and the minimum bid per placement, which when the documentation... When this PowerPoint is sent out on one of the slides, it has the minimum bid price for placement, so you'll be able to see that.

Ben

Awesome, so a question from a category leader, how do we ensure that the taxonomy works for our products?

Jason

So I think that is something that you would work back with the Kroger team on. If you have any specific questions about that, if you have an assigned account executive, a Kroger precision marketing, send them an email, and I'd be more than happy to chat with them and you on any questions you may have, there

Ben

Will we be able to access time out reporting with the integration, so essentially, when campaigns are capping out during the day, I actually do not know the exact answer to that, I know typically there can be alerts directly within the Pacvue platform, I don't necessarily know in terms of how that will work directly with Kroger, so I can take that as an action item unless Jason you know the answer to that.

Jason

No, I was gonna say, I think we need to follow up on that one.

Ben

Yeah, if product data is used, then for bidding, which product data management tool would you recommend... So I guess there's a couple that are up here, one world salsify, indigo, Any thoughts from your side, Jason?

Jason

No, I don't... I would just say, we're really speaking today in the context of precision marketing and how we're using PLA and not specifically how you may make updates to your onsite content, so... No, I don't think I can do a recommendation there...

Ben

Yep. And last but not least, or I guess there was a question regarding, I guess from a current Pacvue user, how do you add in Kroger? So I think as I had mentioned before, if you were someone who would be net new to Kroger or if you are on Kroger, and in terms of being able to integrate with Pacvue, you can reach out to a member of the Pacvue sales team. So if you already have a representative that you're working with here, you can feel free to reach out to them, you can also contact sales at Pacvue dot com, and they can review what the opportunity looks like for Kroger and then what that onboarding process looks like. Alright, I think those are all I got some more questions coming in, does the search algorithm use product page content in addition to category...

Jason

I don't really wanna get too much into the search algorithm today, however, I can certainly follow up with that as we have some content that is externally shareable on our search algorithm, so again, if you do have a current KPM account executive that you're working with, please reach out to them, and I'll be sure to get in contact.

Ben

So... Yeah, so what I would probably say in terms of any other follow-up questions as it relates to search in the platform, we can make sure that information can be deceminated... I think as Jason mentioned the Kroger. The Kroger position marketing team will have some documentation that can be shared out other that will to be published online or it can be accessed from a rep... Is that correct, Jason? That's correct. Perfect, and then, yes, any questions that folks have regarding integration, release date, things of that nature, feel free to connect directly with the Pacvue sales team, and we kind of keep you up-to date on what that looks like. So with that being said, those seems like those are all of the questions that have come in, so to kind of reiterate again for anyone having questions, you can feel free to reach out to sales at Pacvue dot com and as reiterated or to reiterate what we shared previously at the beginning of today's session, a copy of the presentation, will be going out to folks probably next week after the holiday, on behalf of the team here at Pacvue, I would like to thank my colleague, Jason comack of Kroger for co-hosting and jointly presenting on today, today's Pacvue Kroger session, I know we're incredibly excited about on the launch of this offering, there seems to be a lot of excitement in the market, which I think is gonna be super timing for Kroger, and I know Pacvue is super excited to be along for the ride as well.

So with that being said, everyone have a fantastic Wednesday, and then also have a wonderful Fourth of July weekend, and we look forward to staying in the future. Have a great week, everybody.