Here’s today’s AdExchanger.com news round-up… Want it by email? Sign up here.
Best Buy’s Best Bet
Sales at Best Buy were down more than 6% from last year in Q2, as consumers cut back on discretionary purchases, especially electronics and home appliances.
Best Buy’s shares jumped more than 10% on the news.
Wait, what?
Although sales are down and macro trends have been woeful, the company shocked investors with a 40 basis point profit margin improvement. (A 0.4% increase is actually quite a lot when you sell as much as Best Buy.)
As revenue shifts to services from device sales – still the bulk of Best Buy’s business – its margin goes up. “Services” is just another way to say advertising and membership revenue.
Best Buy is one of many large retailers, including Walmart as frontrunner, that all of a sudden have CEOs and CFOs talking about advertising on earnings reports. These non-CMO C-suiters aren’t interested in advertising per se, so much as the shift from OpEx investments (employee hours and physical store rent) to CapEx (automation and information services).
“We’ve had a robust retail media network business for a long time in partnership with our vendors,” Best Buy CEO Corie Barry told investors. “And we are expanding our available ad products and improving the advertiser user experience.”
Can’t Spell Authentic Without AI
TikTok hopes to impress marketers with a recently unveiled suite of AI-powered ad products, including a video generator.
But agencies have mixed feelings, Ad Age reports.
TikTok boasts high user engagement because its ads look like (and often are) real content. But auto-generated content is often flawed, and brands get negative reactions when it’s unconvincing or doesn’t hit the mark.
Speaking of, consider TikTok’s new video generator, which spins product info and catalog images into basic videos – more like animations. It’s a good way to create video supply, but TikTok users tend not to respond to posts explicitly about products, and the auto-generated videos are constructed entirely from product listings.
Still, TikTok is tapping into a trend. AI-based ad products like Meta’s Advantage+ Shopping Campaign and Google’s Performance Max are on the rise – despite some qualms on the buy side.
“There’s a big sense of ‘Where do I go to learn about all of these new tools that are popping up every day?’” said Justine Braun, director of data science at Swift Agency, which rolls up to WPP. “Marketers [still] haven’t seen AI tools that have really helped all that much.”
Private Entry
Grocery chains are developing their own private-label brands, The Wall Street Journal reports, and winning share from CPGs like Campbell Soup, Mondelez and McCormick.
For consumers, it’s a positive development. CPGs raised prices excessively in recent years, profiting under the guise of inflation.
National grocery chains hate this trend. They’re the kings of shrinkflation, after all. But when big-name CPGs left a vacuum for reasonably priced grocery staples, the retailers stepped in.
Private-label lines also reflect the importance (or perhaps not) of advertising. These products are cheap primarily because they require little marketing. Target doesn’t need customers to know its food brand is called Good & Gather for it to be a massive seller.
Or consider Post, the cereal maker.
Post spends way less to advertise its best-known brands, like Honey-Comb, Fruity Pebbles and Raisin Bran, than Kellogg’s does with Froot Loops, Frosted Flakes, et al. But Post is also the top private-label and off-brand cereal seller.
Companies more invested in their brands prefer not to whitelabel. Post uses private-label lines as a hedge on its core business – and therefore relieves the pressure on itself to advertise.
But Wait, There’s More!
Publishers and advertisers demand that Apple’s Tim Cook stop the rollout of an anticipated ‘web eraser’ tool over fears it’ll hobble web advertising. [Business Insider]
A brand safety watchdog wants to galvanize ad tech vendors to save publishers from MFA classification. [Digiday]
What Netflix’s recent data dump means for advertisers. [Adweek]
Google Zero is here – now what? [The Verge]
You’re Hired!
Flashtalking by Mediaocean appoints Amanda Glen Smith as chief client officer, and promotes Grant Parker to president, Anthony Yam to EVP of product and Chris Winburn to EVP of US sales. [release]
