Kroger Precision Marketing Satisfies Advertisers’ Hunger for Targetable Audiences
The “rise of retail media” continues to make headlines in 2021, due in part to amplified interest driven by COVID-related buying habit shifts. As shoppers increasingly turned to the internet this past year to purchase everything from Apple iPhones to Sunkist oranges, the need to stand out on virtual shelves became more pressing than ever before.
Retail media was already earning increased interest before COVID-19, but the pandemic served as an accelerant, with the grocery space seeing an even bigger shakeup than many other industries. Not only were more shoppers ordering groceries online, but they were also eating at home more often as restrictions rose for indoor and outdoor dining. As reported by Forbes in December 2020—”A year ago, 81% of consumers had never bought groceries online, but during the pandemic nearly 79% of shoppers have ordered online.”
Today, retail media interest is accelerating even further due to increasing concerns over privacy changes in the digital space. Thanks to retail media’s heavy reliance on first-party data, it is among the channels that will be less impacted by third-party cookie deprecation.
As brands seek out new retail media networks and partners to enhance visibility and expand their reach—in the grocery space in particular—Kroger tops a lot of lists.
In this article we’ll explore the advertising options that are available through Kroger, and some stats and benefits that explain what makes them such an attractive option.
What Makes Kroger Such a Strong Retail Media Platform for Advertisers?
Kroger is currently the #1 grocery retailer in the United States. If you don’t have a Kroger grocery store near you, chances are good that you do have a local grocer who is part of the Kroger family of stores, which includes Fred Meyer, Ralphs, Vitacost, and Baker’s, just to name a few popular shops.
Kroger’s 2020 ecommerce sales skyrocketed in the wake of the COVID-19 pandemic, earning a 103% YoY increase. Pre-pandemic, eMarketer predictions didn’t have Kroger making the Top 10 list of US ecommerce retailers; that all changed when they not only broke onto the list, but outsold Costco Wholesale, securing the #9 spot.
Kroger’s climb in the rankings has continued in 2021, with the retailer currently positioned at #8, as shown in the chart above.
This year, eMarketer predicts that “the influx in digital grocery shopping will make Costco and Kroger the No. 3 and No. 4 fastest-growing ecommerce companies in 2021, respectively.” Kroger is doing their part to turn eMarketer’s predictions into truths, showing solid signs that they plan to continue focusing on ecommerce growth in 2021. The company is currently working to build human and robot-powered “sheds”—aka dark stores or fulfillment centers—across the country to accommodate shoppers’ needs.
- Kroger operates 2,800 stores across 35 states, interacting with 60 million US households. To better understand exactly how many stores that is, consider that Target operates ~1,900 stores across the US, Walmart operates ~4,700 stores across the US, and Publix operates ~1,300 locations across 7 states
- 97% of Kroger households have the option to pick up their online grocery orders in person, or have them delivered
- 96% of Kroger’s in-store sales are captured on their loyalty card, providing extensive, invaluable first-party data to advertisers. Not only does their closed-loop measurement help you reach potential customers online based on the products they have previously purchased online or in-store, but it also provides insight into whether customers exposed to your brand through Kroger’s digital ads later purchased your brand in-store
What is Kroger Precision Marketing?
Kroger Precision Marketing (KPM) is the Kroger Co.’s robust retail media advertising solution. Powered by 84.51°, a data science and customer experience company that is a wholly owned subsidiary of The Kroger Company, KPM gives advertisers the necessary tools and options to accurately target their desired audiences by harnessing Kroger’s wealth of first-party data.
In addition to 84.51°, another ‘name to know’ when discussing Kroger Precision Marketing is Microsoft-owned PromoteIQ. This is the external, self-service platform that sellers can utilize to acquire and manage Kroger’s digital ad inventory. PromoteIQ powers featured product listing ad auctions (PLAs), and banner display ad auctions (TOAs), for Kroger.com and all Kroger digital properties.
“Brands care more about business outcomes like return-on-ad-spend than about the standard media metrics they measure most-often (impressions, clicks, likes). That’s why our focus from the beginning has been on measuring true business outcomes.”
— Cara Pratt, Senior VP of Kroger Precision Marketing
So Kroger Precision Marketing is Kroger and 84.51° combined?
In a sense, yes. When the pandemic first took hold in winter of 2020, brands and retailers of all sizes and types worked hard to reimagine and reshape the logistics of how they do business. Luckily for Kroger, they had already been working on building up their ecommerce presence and capabilities for years, and were positioned to adjust quickly and intelligently.
Part of this preparation traces back to 2015, with Kroger’s majority acquisition of DunnhumbyUSA, “the data analysis firm that ha[d] provided it with valuable customer insight.” At the time, Kroger noted they were “keeping the people and technology behind the “secret sauce” that analysts say gives Kroger an edge over competitors,” and renamed the firm 84.51°, retaining the majority of existing DunnhumbyUSA employees.
Targeting and Measurement: Performance Marketing’s Power Couple
By the very nature of their company structure, and their wealth of first-party data, Kroger is set-up to excel in two crucial areas of performance marketing: targeting and measurement.
Kroger can harness a longitudinal view of purchase behaviors over time thanks to the early relationship they built with their customers, some of whom have been using their loyalty card for 20+ years. To put that into perspective, some of their loyalty card data is older than Billie Eilish.
The rich data science of 84.51°—which KPM sits within—allows Kroger to not only use purchase-based data for advertising, but to also create data-fueled predictive views.
“We consider more than 3,000 different variables, and use machine learning to find the best households for brands to go after. When we apply that data science, we can identify households that are 3x more valuable than the average Kroger household. That’s why KPM sits within 84.51°.”
— Brian Spencer, Director, Product Strategy & Innovation, Kroger Precision Marketing at 84.51
While understanding the real business outcomes of your ad investment is a strength of retail media as a whole, it plays a little differently with KPM because: they have the first-party data; they are the retailer; they’re sitting within a data science division. This allows them to isolate the true impact that media has through accurately subtracting the organic sales—or purchases that customers would have made anyway. Custom measurement is included in all campaigns, with no additional fee.
KPM does testing and control, but in addition to that, ensures the control groups are mirror images of the people you’re targeting in your campaign, not just a general population.
Kroger Advertising Options
Kroger offers an array of advertising options to help you reach the most engaged customers on Kroger.com, other Kroger sites, and the larger web. KPM ad types fall within six key categories:
Kroger On-Site Search
Boost visibility for those actively shopping the category your product is part of through product listing ads and carousels across Kroger properties.
Product Listing Ads (PLAs) – powered by PromoteIQ
Available products for PLAs are generated based on your account type, and don’t require any creative from your team. Your campaign targets will auto-populate based on the products you have selected.
- Search & Browse PLA: Search Results
- Basket Builder PLA: Home Page, Product Detail Page (PDP), My Purchases, Cart, Specialty & Featured Shops, Forgetting Something?)
- Savings PLA (these require an active offer): Home Page, Digital Coupons, Cash Back Pages, Select Promotional Event Pages
Targeted Onsite Ads (TOAs, or on-site display)
Creative and approval is required for these banner placements. Purchase behavior targeting (Shop & Discover, Savings) and contextual targeting (Search & Browse) are available.
Kroger Email/Direct Communications
Reach Kroger’s most loyal customers through emails and push notifications sent to the most relevant households for your brand. Your products can be featured in single or multi-subject emails.
With 96% of Kroger’s in-store sales occurring within their loyalty program, their direct-to-customer (DTC) communications can be tailored to include products, sales, offers, events, and more that are most likely to be of interest to the consumer receiving them. These campaign initiatives are largely managed by Kroger’s Best Customer Communications division, and aim to drive incremental purchases and long-term loyalty for your brand.
Placement opportunities include:
- Loyal Customer Mailer
- Kroger MyMagazine
- Themed Events
- New at Kroger
- Custom Solo/Portfolio Events
Kroger Advanced TV Advertising
Improve the effectiveness and reach of your TV advertising campaigns by reaching the most relevant audiences for your products. This is made possible through KPM’s partnership with Roku, with the streaming giant having exclusive access to Kroger’s first-party data to accurately target the right audience on ad-supported OTT.
OTT advertising on the whole is on the rise, with Roku maintaining their position as a major player in the space. The Kroger and Roku partnership is especially impactful thanks to what both brands bring to the table—Kroger as the #1 grocer in the US, and Roku as America’s #1 streaming platform.
Advertising to consumers while they’re watching television is not new unto itself; commercials have been part of the viewing experience since 1941. However, the advertisements shown on linear television aren’t necessarily relevant to everyone in the viewing audience. With ad-supported OTT advertising, a greater percentage of the commercials users see are targeted specifically to them based on their location, age, browsing history, previous purchases, and more.
With exclusive access to Kroger’s first-party data insights, Roku can ensure the right ads hit the right households for maximum impact. And while some of those consumers may keep the products in mind for a future in-store purchase, for others, they may serve as a reminder to place an order right then and there for pickup or delivery.
Kroger Social Media & Influencer Advertising
Influencers have more than proven their value in recent years, with eMarketer reporting an estimated “67.9% of US marketers with 100 or more employees will use influencers for paid or unpaid brand partnerships in 2021.”
Kroger works with hand-selected, highly relevant micro and macro-influencers, regularly testing new and innovative ways to work with and through their network. As customers increasingly seek out new cooking tips, meal inspiration, and more, we anticipate more advertisers will lean into what influencer marketing can offer for their brand.
Current ways advertisers can partner with influencers through Kroger include: macro influencer campaigns on Instagram; sponsored blogs; influencer video series; hosting a Twitter party; and influencer events/retreats.
Kroger Off-Site Advertising (display, audio, and video)
Want to boost your visibility both on—and off—Kroger’s proprietary sites in a seamless, strategic way that is powered by Kroger’s purchase data? 84.51° makes it possible.
- Co-branded digital media
- Creative and offer A/B testing
- Digital media layered with targeted email or direct mail
Kroger Auction and Bid Types
- Kroger uploads your product catalog, and auto-populates your categories on your behalf. If the designated categories are incorrect, or there are any adjustments you’d like to make, you can reach out to a KPM or 84.51° representative
- Second Price Auction
- Bids are set at the product level, and targeted at the category level. Keyword bidding is not available
- Minimum bids are set at the category level
Examples of Kroger Ads
Home Page Display Banner
Dedicated Brand Page
Campbell’s page shines a light on their family of brands, to include Pace, Prego, and V8. Shoppers are presented with a branded banner and Shop by Recipe dishes above-the-fold, with further scrolling revealing clickable banners to direct you to specific brands, Shop by Products carousels, Shop by Brands with clickable logos, and more.
Search & Browse PLAs
Dunkin’ Donuts ensured their Original Blend coffee earned a highly visible placement amongst thousands of returned results for an internal “coffee” search with a Featured product listing.
Shopping at the Frozen Pizza category level, we find a Featured product listing ad for DiGiorno pizza in the third position.
Ready to learn more about how our team of retail media experts can help expand your reach with a data-driven Kroger marketing strategy? Contact us today!
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