How Omnicom’s New Supply Chain IQ Score Supports More Effective Use of Marketing Dollars
In this era of ongoing supply chain instability, rising inflation, and surging fuel costs, companies have enough financial challenges without wasting money advertising products that may end up being in short supply.
Although published in November 2020, a Harvard Business Review (HBR) article authored by several Bain & Company analysts described then what continues to be true now.
Here are a few snippets from “Predicting Consumer Demand in an Unpredictable World” that might sound familiar to businesses and marketers currently trying to figure out how to best invest their resources:
“Covid-19 has shattered the demand forecasts that guide retailers and suppliers of consumer goods and services in figuring out how much to order or manufacture, where to stock inventory, and how much to advertise or discount.”
“Compounding these challenges, when forecasts break down, as they have during the coronavirus, managers tend to revert to their gut instincts. This makes forecast accuracy worse by further confusing noisy data with bias.”
“One common form that we see in our demand-planning work among consumer packaged goods companies consists of trying to please retailers by ensuring an ample supply of items, regardless of whether those items are expected to have strong sales. Field reps don’t want to walk into a store and hear complaints about stock-outs, which cost sales today and damage relationships and thus market share tomorrow.”
The uncertainty captured in those words penned nearly two years ago still rings true today—which is why Omnicom’s recent announcement about its new supply chain tool that connects media spend with inventory has been generating some buzz.
The Supply Chain IQ Score
On May 18th, Omnicom Media Group (OMG), the media services division of Omnicom Group Inc., announced the launch of the Supply Chain IQ Score, “the industry’s first supply-chain based media activation tool,” in a partnership with Crisp, an “open retail data platform.”
Citing a recent White House economic report, OMG underscored the fact that “the supply chain crisis that erupted during the Covid crisis is not fading away as the pandemic subsides.”
As a result, inventory challenges have become “the new normal,” and “marketers need the ability to quickly adjust their media spend to product availability without negatively impacting performance,” according to the statement.
OMG described the new tool like this: “Powered by Crisp, which pipes normalized data from more than 80% of the top U.S. retailers and distributors including Target, Amazon, UNFI and CVS into the Omni open marketing orchestration platform that supports all Omnicom agencies, OMG’s Supply Chain IQ Score gives media planners day-to-day visibility into SKU inventory data at the physical store, digital shelf, and inventory-in-transit levels, enabling media investment to be shifted away from low inventory products in real time.”
Noting that historically, inventory reporting lags behind ad spend, OMG says using the Supply Chain IQ Score helps change the equation so marketing budgets aren’t wasted on products that may be low on inventory or not even in stock.
As soon as an “inventory issue” is apparent, “planners can leverage two years of sell-through and distribution data from Crisp to quickly find an SKU in the brand portfolio that has high repeat purchase behavior, healthy inventory, and strong market basket correlation to the low inventory item,” OMG said. “Working within Omni, the team can determine how much spend needs to be redeployed to the alternate SKU to meet performance targets, and execute the new buy.”
“The Supply Chain IQ Score gives brands the power to quickly, strategically and effectively move media investment at the speed of sales,” Marc Rossen, SVP Investment and Activation Analytics for OMG North America said in the statement. “It flips the historic response to supply chain disruption from ‘pull the spend back ‘to ‘push the spend toward’ – increasing media ROI and helping our clients meet performance goals despite supply constraints.”
Also quoted in the announcement, Crisp founder and CEO Are Traashdahl underscored the value of such data: “You can have the best insights, the most engaging content, and a big media budget – but at the end of the day, you can’t sell what’s not on the shelf. Leveraging the combined force of Crisp’s data-delivery technology and Omni’s marketing orchestration capabilities, the Supply Chain IQ Score enables unprecedented alignment of product inventory and media investment, assuring that marketing dollars are sending consumers to what IS on the shelf.”
In addition to managing low inventory, OMG Managing Director, Commerce, John Schorr, said the Supply Chain IQ Score will also be applied for other purposes, including:
“Geotargeting ad delivery according to actual on-shelf inventory”
“Measuring sales-lift in real-time”
“Local store campaigns”
“Supporting new-product launches”
“Aligning promotion to product freshness windows to reduce spoilage and waste”
Schorr summarized the long-term impact like this: “The Supply Chain IQ exemplifies a future where media will be a true catalyst for consumer demand, influencing e-sales operations and supply chain distribution as we connect product availability to marketing resulting in a better consumer experience.”
Omnicom’s Expanding Footprint
In addition to the launch of its Supply Chain IQ Score, OMG recently announced a series of new partnerships at this year’s Cannes Lions International Festival of Creativity.
On June 20th, a new “strategic agency partnership” was announced between OMG and Walmart Connect, which was described as “the first such agreement between Walmart Connect and an agency holding company.”
Making the announcement at Cannes Lions 2022, Walmart Executive Vice President and Chief Revenue Officer Seth Dallaire said, “As marketers prepare for the deprecation of third-party cookies, we’re building a platform and ecosystem that leverages the scale of Walmart’s first-party data and strong customer relationships to help them deliver strong ROI in an increasingly fragmented environment. Our partnership with Omnicom illustrates Walmart Connect’s focus on driving growth, improving product capabilities and educating the industry on the role retail media platforms have in delivering measurable solutions that connect clients with omnichannel shoppers.”
On June 21st, OMG announced “a comprehensive strategic partnership with Instacart that will deliver a wide range of benefits to Omnicom clients, most significantly in providing new measurement capabilities.”
In addition to describing other details of the new partnership, the statement said that “Most notably, Instacart is building a roadmap to work within the clean room infrastructure of Omni – Omnicom’s open operating system which orchestrates better outcomes for clients across the entire consumer purchasing journey – building on previously announced partnerships with NBC & Disney for planning and measurement in the Omni clean rooms.”
And on June 23rd, OMG announced a new collaboration with Kroger Precision Marketing (KPM) to “reduce media waste,” and “enhance the customer experience.”
“The agreement will launch with Kroger Precision Marketing feeding its SKU-level store inventory data to Omni…,” according to the statement. “This daily data will add a critical capability to Omnicom’s Supply Chain IQ Score which helps brands to quickly and effectively re-direct media spend to deliver on business KPIs in a supply-strained environment.”
“This partnership with KPM will provide product availability data across Kroger’s 2700 stores in 35 states, as well as fulfillment rates from ecommerce orders and market basket insights around SKUs purchased together and substituted–not currently available through any other third-party platform,” the statement said. “Planners can now optimize in-market retail media, utilizing shopper behavior data to shift spend based on product availability; and still have the flexibility to optimize media, while maintaining national consumer demand.”
In the following Beet.TV interview from Cannes Lions 2022, Megan Pagliuca, chief activation officer at Omnicom Media Group, describes the partnerships with Instacart, Kroger, and Walmart—as well as how OMG is working with Amazon—on retail media.