A conversation with commerce media expert Jason Bagg

Jason Bagg, an executive leader who creates shareholder value through strategic transformation, has a story to tell about transformation at an online retailer. While working as CMO and CCO, he was tasked with implementing strategic initiatives to grow topline revenue and increase margins in a post-COVID climate. He tested a number of hypotheses before focusing on one key strategy: a tech-focused initiative to build a scalable commerce media operation. 

Launching a scalable retail media platform on a tight deadline was part of bringing that strategy to life, which led him to Moloco Commerce Media. Bagg and his team set an aggressive timeline to launch, integrate, and commercialize the product. “And we did it,” he says.

In a recent conversation with Moloco, Bagg talked about creating that commerce media operation, the thinking that went into it, and his key learnings.

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Moloco: Jason, would you set the stage for where things were for your company as you moved toward a decision to stand up a commerce media business?

Of course. An entrepreneurial, e-commerce marketplace was acquired in 2019 by a retail conglomerate. It had tripled in size and then came out the other side of the pandemic. We needed to answer a fundamental question: What do we need to be a great e-commerce marketplace?

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Moloco: How did you decide to focus on commerce media?

We started by evaluating a number of strategies implemented by marketplaces around the world to see what was scaling and profitable post-COVID. Then we asked whether we thought different approaches would make sense in the context of our market, and importantly for our business and customers. We also considered speed to value, cost to implement and own and organizational capability to execute.

We had an existing display ads business that was very manual and people-based, so we knew there was interest from our sellers and we had a small media sales focused team already in the business.

We saw that in successful, large, retail media programs, around 80% of revenue and margin is driven by onsite media, and we made that our priority. We also saw that sponsored search relative to display ads represented a majority of that. So, we gave ourselves the challenge to integrate and operationalise scalable onsite sponsored search within three months - before the end of the year.

And then we started looking at technology solutions.

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Moloco: Did you consider building it yourself? 

We didn’t have the time or resources to build something that was outside our core business. We ran a sharp RFP process where we invited a selection of vendors we thought would be able to meet our needs. We selected Moloco, obviously. 

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Moloco: How did you assess the technology and the tech provider?

The nice thing about e-commerce is that we can rapidly evaluate the experience with our customers, and as customers ourselves. In addition to the usual reference checks and technology due diligence, we went to websites and ran search terms to see if the results hit our benchmarks for user experience. 

Retail media must add to the experience. If it degrades the customer experience, or the brand experience, it will hurt the core business. In long tail marketplace catalogs, odd results are inevitable. You look up “men’s shoes” and you see a woman’s dress appear. So then the key question is: What’s the system that corrects it, and how automated and scalable is it?

You want the results to be fast and relevant and based on the context of the customer expectation and your business, not randomness. Importantly, you want the technology to learn from customer interactions to improve the experience in an automated, scalable way.

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Moloco: How do you test a vendor’s system and trust that it can identify and fix problems? 

We had a strong engineering team that completed technical due diligence. In addition, we tested our common searches and completed user testing with customers to align on customer experience expectations and design optimisation.

And at the more holistic level, we looked at the metrics that matter. We know if we see significant declines in click-through rates and, ultimately, conversion, something’s not working. 

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Moloco: How did you think through what would be good for your advertisers? 

We took a simple view: Suppliers and brands will like this if it grows their business profitably. Does it grow their top line and does it minimize the cost or effort they have to put into it?

We know our supply base pretty well. We spoke to them a lot — in person. We asked what other media they were using, how they used it, what worked, what didn't and then went to a larger group with more structured surveys. 

We did think a lot about machine learning optimization, because in retail media you've got to make a decision about what you optimize for — total revenue, the supply return, or your margin — and triangulate across those outcomes. Done, well, these don’t need to be a trade-off. Great, relevant ads will drive incremental revenue and margin while delivering great advertising returns. We believed that we would need automation and optimisation to be able to achieve that with a catalog of millions of products and millions of customers.

And that’s how it played out. There are things you can't really know until you've just watched it unfold — like, does machine learning really optimize the whole system over time? We’d seen it work in similar settings, like our paid media acquisition. 

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Moloco: Are there any other key learnings you could share from that experience? 

With Moloco, we had the business team out with us, very regularly, talking all the time. We decided to over-invest in the adoption of this product. We started with smaller-scale trials with advertisers and spent a lot of time with them to make sure they understood the workflow and automation and the reporting to evaluate performance. We thought it necessary for building a critical mass early that was engaged with the product. 

We also learned that you can’t over-estimate the value of having a technology partner that is constructive and hands on. Choose a vendor that will be interested in your business and model and customers — and advise you on how to configure the product in a way that's relevant.

‍If you would like to learn more about putting onsite retail media to work for you, contact us about a free consultation from our commerce media experts.

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