The future of retail media tech: AI, agentic commerce, and first-party data at Zalando

00:00:00: Inside Fashion Marketing, a podcast by Zalando Partner Marketing Services shaping

00:00:06: love brands and supporting your long-term

00:00:08: growth through customer centric

00:00:10: marketing.

00:00:17: Hello!

00:00:17: And welcome back to Inside Fashion Marketing.

00:00:20: I'm Haike Larry, Director of Partner Marketing & Consultancy at Zalendo Partner Marketing services connecting brands with consumers across fashion beauty in lifestyle.

00:00:31: Today's episode is a first-timer, as I have the pleasure to welcome my colleague Dia Abdelha our VP tech in ZMS.

00:00:39: And we're going to spill the tea on culture and ZMS.

00:00:43: what it is that we do with retail media at Tech?

00:00:47: What are you currently working on for your team?

00:00:49: Where will you see retail media trends go into the future?

00:00:53: A big welcome!

00:00:54: Thanks for joining us today.

00:00:56: Thank You Heiker.

00:00:57: So maybe start by introducing yourself.

00:01:00: So, Dia tell us who are you?

00:01:03: I'm Dia.

00:01:04: I've been at Zalando now only for six months but it already feels like a much longer time.

00:01:11: Before Zalindo i was on Amazon over ten years mostly out of Edinburgh which is very different from Berlin But that's quite lovely city and really miss it alot And also love the charm of Berlin.

00:01:28: so both them in my mind.

00:01:30: In Edinburgh, I was leading various teams focused primarily on audience targeting and performance optimization as well as insights.

00:01:40: And there I was reading science engineering and product teams... ...and my background is originally computer science where i studied in Egypt.. ..and then I'm originally also from Egypt.

00:01:53: but the fun fact that's that in Egypt I studied German.

00:01:58: German was somewhat familiar to me in coming to Berlin.

00:02:02: I just need the freshen up a little bit, my German vocabulary... ...to get back up at speed.

00:02:08: Okay perfect!

00:02:09: Our next lunch conversation will be in German.

00:02:12: Ah that's going to be tough.

00:02:13: Maybe it'll be a shorter conversation.

00:02:15: How is your French?

00:02:16: Maybe you can practice the French.

00:02:18: Oh

00:02:18: yes, yeah French so-so maybe we stick with English.

00:02:27: No, no.

00:02:27: We can try German.

00:02:29: Okay super!

00:02:30: So great to have you not only on the team but also for this podcast episode.

00:02:36: so dear tell us what is your role in ZMS?

00:02:39: What does it mean to be VP Tech

00:02:41: ?

00:02:42: My role at ZMS is leading the science and engineering organization as well as product organizations where we're building various innovative solutions to our partners.

00:02:53: Our focus lately has been around AI and how we may leverage AI, especially in performance optimization as well as in formats and leveraging our data to build various audience products.

00:03:06: Sounds exciting!

00:03:07: And one review behind the curtain I think we can grant is that at every media business.

00:03:13: so we built everything in-house right?

00:03:17: And maybe you can share a bit.

00:03:19: what are the most important tools your team has built for our retail media platform.

00:03:24: Now, the latest tool that we've been focusing on is enabling all of our capabilities in self-service fashion both for internal partner consultants as well as partners directly.

00:03:36: One key value proposition in ZMS and in Zalando overall it's data.

00:03:42: We have also focused on building insights.

00:03:45: products show all of the underlying customer data to our partners in a very digestible kind of fashion.

00:03:54: On top of that, we built AI and targeting capabilities for our partners that allow them to optimize their campaigns using various controls like Max CPC and various other tools.

00:04:08: Maybe you can explain this bit.

00:04:10: so Max Cpc what is it?

00:04:12: We offer two partners there.

00:04:14: So our partners have always wanted to control how much we spend per impression and per click, given that various campaigns that have different goals have a different value on how much they are willing to spend per click.

00:04:30: And so for some of the premium products maybe they're willing to spent higher per-click than for some more discounted less premium product.

00:04:40: Now our partner's able set their price for both high premium products and lower premium product.

00:04:47: And they can then observe over time how their campaigns are trending, and how well they're doing against the controls or decisions that have made in terms of pricing per click.

00:04:59: So this means even more in a driver's seat now right?

00:05:02: Steer and optimize your own campaigns

00:05:04: Exactly so.

00:05:05: what we've learned is some partners love our algorithm and love automatically optimizes hands off all campaigns, while other partners want much more control.

00:05:16: And that could be also different per campaign.

00:05:18: so for some campaigns they're willing to let the algorithm do its thing and well for other campaigns They want to adjust it to steer towards a different goal in different KPI.

00:05:30: Yeah, a hundred percent and fashion is of course an emotional product.

00:05:35: And yeah the convenience plays a different role than when we look at fast-moving consumer goods for instance.

00:05:42: but still data.

00:05:44: it's so key right?

00:05:45: We see that have lot of data savvy partners you mentioned in beginning first party data.

00:05:53: with fifty three million customers We now have the exciting task to see how we best slice and dice it for our partners to share.

00:06:02: And one of the offers that you work on is audiences, as you said maybe you can share with more.

00:06:08: what does it do there?

00:06:10: Let me show a little bit about what we're doing with audiences but not too much still working progress.

00:06:16: We are using the wealth of Zalando data which has millions transactions every day hundreds million views visits all customer pages And we are putting that together to establish much more relevant campaigns.

00:06:31: That target users with a very relevant message was very custom creatives, and so I don't want to spill too much of the beans.

00:06:41: but at the moment We can see customizing your message through the right audience leads to much better campaign performance across all measures including click-through rate return on the ad spend and various other measures.

00:06:56: So we're very excited about this, We are still working on it but will have a lot more to share soon.

00:07:02: That's good cliffing!

00:07:04: Internally when you joke that once the customer identifies an adder such then they didn't do well right?

00:07:10: It should always feel like something interesting entertaining inspiring not just adult billboards You see online.

00:07:17: Yes

00:07:18: what were noticing is Our partners are building very creative assets and applying them across the Zalando page.

00:07:27: But what we want to do is make sure that asset matches user, right?

00:07:31: The customer.

00:07:33: And what were doing with audiences was giving brands that control.

00:07:38: We feel like the brand or partner know best which message is most tailored for customers And so with audiences, we're giving them that control.

00:07:49: So they can tailor the message to different types of audiences depending on what their creative is about.

00:07:56: Yeah and you have been working in retail media industry for a while now.

00:08:01: What do you see changing along these years?

00:08:06: The retail media landscape has changed most recently.

00:08:09: It's all about AI and agent commerce.

00:08:15: maybe two or three trends.

00:08:17: One is we're seeing some retail platforms lean into the AI and agentic commerce, put their assortment and SKUs for example onto the agentic platform like ChatGPT and various other chat applications or agentic Commerce applications.

00:08:36: And this one trend that were seen.

00:08:37: there's a lot of monetization opportunities as we've seen with ChatGPP ads which was launched couple months ago.

00:08:45: there is now a huge appetite for advertising in those context-rich environments.

00:08:52: What we're seeing as the reverse, which is retailers that guard their data and guard their access to their platform much more than how commerce agents have become a thing.

00:09:01: so they are protecting websites from crawlers or very careful on what kind of data they share with other companies.

00:09:10: In the past this was not big deal.

00:09:13: Google crawling your site and sending traffic to you was valuable, actually.

00:09:18: To send more customers to your page.

00:09:21: but we're seeing a trend also is retailers guarding that more by leaning into the internal agent experience.

00:09:29: so they have their own agents where customers can ask questions about products or they would need to visit websites themselves similar what we had in Zalando with the Zalondo assistant.

00:09:43: So speaking about trends, where do you see the journey going for ZMS Tech in next year?

00:09:51: I see at least three trends.

00:09:53: We will share much more data with our customers using all of our insights tools as we have customer journey compass which is quite an in-depth insight tool.

00:10:05: We will build on top of that, as well in addition to that various other insights products including programmatic integrations for partners.

00:10:13: That are more on the tech savvy side As well as UI tools where they can learn much more about who their customers are.

00:10:20: It would be so exciting

00:10:22: Yes and we've heard a lot of feedback from our partners that they really want More data or insights.

00:10:26: They wanna understand how they're reaching them.

00:10:31: And then the other thing that we're really focusing on is how can we make their campaigns much more performant and in line with their goals and expectations, right?

00:10:42: How do

00:10:42: you stand out in the crowd.

00:10:43: Exactly!

00:10:46: What are seeing?

00:10:47: different partners have different objectives.

00:10:50: it's not just all about one objective maximize my return on ad spend or anything like that.

00:10:55: there a variety of tools some them very focused performance, short-term performance.

00:11:01: So just maximize my return on ad spend.

00:11:04: some are more longer term.

00:11:06: actually I'm looking for consideration.

00:11:08: i want people to see my product but i'm willing to show them to more people who might not convert immediately but will start knowing about my products and going more upper funnel.

00:11:19: we're seeing also a lot of interest in expanding our branding and awareness portfolio.

00:11:28: We're looking into how can we tie between an awareness and branding campaign, And the downstream impact that has on the longer term as it's not immediate.

00:11:38: Right?

00:11:38: Awareness campaign could take a couple of months to see for you to see the real effect off them while at performance campaign You see it immediately.

00:11:46: right within the same day was in the same week Yes!

00:11:49: So having faith That system works needs this connection To insights.

00:11:55: data were really working hard.

00:11:59: That would be a challenge, but it's something that we're very actively focusing on.

00:12:03: next.

00:12:04: And the last one is now Big Hype which is all about agents and AI and all of that.

00:12:11: We see two different areas where AI and Asians are growing One of them being Offset Agents.

00:12:22: So were working with popular agentic AI platforms on how we can integrate our off-site ads business into those platforms and learning about how they perform compared to the normal search advertising kind of offset opportunities.

00:12:42: That's

00:12:44: such a hot topic!

00:12:46: At the same time, we're working on figuring out ways with which we can improve workflows for partners as well as internal partner consultants using the latest agentics approaches and agentic optimization approaches, while at the same time we're also leveraging AI for our performance optimization that I mentioned earlier.

00:13:07: And figuring out how we can build a AI based creative assets that are much easier and faster to build than normal asset creation flow?

00:13:21: So this is more thinking about over next year or so as opposed just in couple of weeks.

00:13:27: I can hear it would be very busier.

00:13:29: Yes, indeed!

00:13:31: So Dia you're still within your first year at Zalando and at ZMS?

00:13:36: And i think this is the perfect time to ask you what does our culture like?

00:13:41: yes so the zalando culture is very focused on inclusion and inclusivity and i found that quite a big part of the culture um It might be also just generally the german kind of culture, of having consensus driving consensus and aligning.

00:14:03: But I found that quite nice as in included a variety of challenges as well as discussing openly with everyone around how do we solve the problem?

00:14:18: How do you move faster?

00:14:19: And then the concept that ties it all together is for example establishing a steering committee which is a new kind of concept to me.

00:14:28: And so the Styrco concept, it's very collaborative around solving problems as a team As opposed.

00:14:37: what I'm more used too Is this single-threaded leadership approach where you give your problem one person and they need To figure out how coordinate across everyone.

00:14:46: So that was quite different type Of culture than i am.

00:14:51: And

00:14:53: the good news is, this also your first summer with Zalando.

00:14:58: This means many rooftop gatherings and enjoying... The best part of Berlin which is Berlin's summer time!

00:15:09: Everyone moving here during winter I think feels really lost.

00:15:13: but yeah now that fun has started

00:15:15: Yes and i'm already looking forward to great Summer parties that Zalandos throws.

00:15:20: Oh yes famous summer party coming up soon.

00:15:25: Of course, there's not only the Zalando culture but also then every team has its own culture.

00:15:31: so how do you find that in ZMS Tech?

00:15:35: Yeah!

00:15:35: So the culture we're very focused on at ZMS tech is one of empowerment.

00:15:42: our goal is to empower every engineer and scientist individual contributor as well act like an owner in Zalando terms, as well think about different ways of solving a problem.

00:15:56: And so especially with Asians and AI.

00:15:59: now everyone in the organization can really build prototypes very quickly... ...and come up with solutions to some of our most challenging problems that we have.

00:16:11: Some ideas that the team has come up was implemented is how can we create an Asian who automatically creates a campaign for you?

00:16:20: in a matter of seconds, right?

00:16:22: As opposed to spending a long time building a campaign.

00:16:26: Or another one built very nice data solution that uses natural language to describe what you're trying to achieve from an analysis perspective and then immediately get the results.

00:16:41: And so with the culture of empowerment is it's very critical as we are growing leaders like one of the key things that I'm very excited about in our organization.

00:16:54: Super and um, i think that is uh yeah something we have in common.

00:16:58: so this culture I would say it's shared across both ZMS tech and commercial And luckily we only separated by once staircase.

00:17:06: So um Yeah We also teams working closely together This year because you mentioned great format we use, right?

00:17:20: Where all voices are heard around the table and that's driving us forward nicely.

00:17:26: So... We talked a lot about types of products that were building up next And exciting trends coming up.

00:17:35: What is actually one key thing you're most excited about in terms of the year or even think bigger maybe for three years In ZMS as well as in retail media tech?

00:17:48: That's a big question.

00:17:50: So, in my head there are really two worlds existing and one is very much driven by efficiency and performance And I'm really delighted whenever... ...I work with our self-service tool as i think it's super easy!

00:18:10: I am not a very tech intuitive person unfortunately but if can understand the manager easily then everybody can.

00:18:18: And the tool is so easy to use and it's very efficient, quick-to-manage.

00:18:25: To set up your campaigns, manage them and see results fast... ...and also then go in quickly optimize when something isn't working for you expectation.

00:18:38: So I'm excited that we will have throughout the funnel more offers that will become available and be able to be driven by self-service.

00:18:48: On the other hand, especially once we see there is so much high content possible now I'm really looking forward for us super reactive on big moments, on cultural trends.

00:19:02: When for instance at the moment there is one big tennis tournament after another right and we see all the players in their fabulous outfits with different brands And it is my absolute wish that we'll be able to in almost real time show them and give then our partners the chance to advertise.

00:19:26: The exact Adidas outfit Zwerv was playing, winning for instance To our customers.

00:19:33: as you know It's many millions of people watching these games might being interested.

00:19:39: Yeah what this winning tennis outfit?

00:19:41: Where can I find it?

00:19:44: Sometimes it is still a bit of challenge to find the tops, bottoms and matching socks stand on our website.

00:19:51: But I think this where we can offer real benefit for customer journey.

00:19:57: Now Haika i heard that you actually tried out using cloud yourself?

00:20:03: Oh yes!

00:20:03: Cloud coding working with someone in my team.

00:20:08: now I wonder given your started playing around was there do see some those long-term visions as things that can happen much quicker?

00:20:18: Yes, for sure.

00:20:19: And I think especially the natural barriers to creative assets and creation have become a lot lower which is so nice.

00:20:32: I think that tools like Claude can really help to have a good sparing partner on creativity, but also to produce within minutes an idea of brief or even creative asset.

00:20:48: That could be used and the speed in the variety is really exciting.

00:20:57: On the other hand we work with content creators, athletes, talents that will never be replaced by AI.

00:21:08: So maybe there'll be a bit of help on the background filter but we also have part-of-our work that's relying a lot on authenticity.

00:21:19: We see high demand for our in real life events where not only provide an authentic experience for our customers, but then also content that we scale online.

00:21:36: That reflect a real life event activation where we see that customers really like that as this human element is so important?

00:21:46: I mean one of the key things that i was impressed by joining ZMS Is the interplay between The Real Life.

00:21:53: Yes

00:21:54: As in We have Like Our Own Event Space In ZMS amazing campaigns that we do offsite in the real world.

00:22:07: And then connecting all of those with our own campaign and tech capabilities to have this end-to-end campaign, which is not just either in person or on billboards or online but actually altogether build these branding performance awareness campaigns right?

00:22:29: And I think it's quite unique how we are able to bring this all together and play with all of it.

00:22:36: Also, that is what many wouldn't expect when it comes together within retail media right?

00:22:42: It's so much more than just sponsored products like ZMS started

00:22:49: out in the classical sense as well not just sponsored product or collections but actually the end-to-end of an advertising business, right?

00:23:03: Everything from...

00:23:06: Starting with data.

00:23:07: Starting was data obviously but everything from advertising in a specific place to creating memory for the customer themselves.

00:23:18: they can just go and visit them build their own experiences themselves up to building those online memories as well using our AI creatives, as well as our performance optimization for all of the SKUs.

00:23:35: So we have a full lifecycle on marketing strategy which is quite unique to ZMS in my opinion.

00:23:43: Yes hundred percent!

00:23:49: Thank you for tuning-in and make sure you hit subscribe for more marketing wisdom from inside fashion marketing.

00:23:55: We say ciao for now.