The “Unboxing Moment” Podcast © 2021 Target Brands, Inc

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KELLY LEONARD: Hi, I am Kelly Leonard. I am the host of the Second City Work’s podcast, Getting to Yes And. But today I’m hosting Roundel’s first podcast, so welcome everyone. Here with me is Greg Koerner, who is the head of enterprise partnerships and global agency relations at Roundel, Target’s reimagined media company. Greg, how are you doing?

GREG KOERNER: I’m great, Kelly. Thanks for having me. It’s like the longest title known to man, reading there.

KELLY LEONARD: Yeah, I’ve got a pretty long—yeah, your title’s longer than mine. So one of the things I love about doing my podcast is finding the often like surprising connections between different industries in my world of improvisational comedy and theater. So I’m not an expert in the digital media space at all, but I’ve been learning a bit over our last couple of conversations, so let’s start by having you tell us a little bit about Roundel.

GREG KOERNER: Usually the first question I get is what is a roundel? It’s a very simple answer. I don’t think a lot of people do know. The roundel is the actual shape of the Target logo. A circle within a circle. And so it’s very appropriate for our business because we are very much a part of the Target Corporation but we do have our own brand. Roundel is Target’s media company reimagined.

KELLY LEONARD: That’s cool. I work with a lot of academics, and they talk about the importance of connection, right, that human beings crave connection, and that sounds like that’s a business you’re in.

GREG KOERNER: Well, that’s interesting. We believe that when you walk into a place, whether it’s a bar or a retailer and they tend to know what you like, that is an experience that you tend to return to, and you tend to enjoy and like. And that’s precisely what the mission is here is to create a media company where when the media works in everybody’s best interest is when it really is a home run, and it sounds like such a tagline or such a, you know, a marketing piece, and it is, but, at the same time, it’s truthful. It really is centered around everyone’s best interest. Everybody is A, the guest, that are at the core of everything we decide to do or not. But it also puts into focus the brands and those brands that hire agencies, ad agencies. So when it works in those three circles, so to speak, it’s a really powerful engine that we have at Roundel.

KELLY LEONARD: Okay, you and I were talking a couple days ago about this idea around surprise. And I mentioned to you that I’m actually—I’ve worked in comedy my whole life. I’m married to a tenured comedy professor, so my wife is working on her second book, which is about her comedy theory, and surprise is a huge part of humor, and we even know this scientifically, because there was an FMRI study out of China just

a couple years ago that discovered that the same part of the brain that processes an insight is the part that processes a joke. And I talked to you about this because you mentioned this thing called an unboxing moment, so can you tell us what that is and what that has to do with this elegant idea around surprise?

GREG KOERNER: You know, of course. It’s interesting. We love this term, the unboxing moment, and it dates back to the dawn of time, really. I mean, back to when you and I were kids, probably. (LAUGHTS) The unboxing moments back when you and I were kids were probably twice a year. It was when you had a birthday and when you maybe had a holiday celebration with your family. That was it. You didn’t have any other unboxing moments, right. Well, today that’s quite different in today’s e-commerce environment. And so we’ve taken a very thoughtful approach to what the unboxing moment is and that sort of joy and delight of delayed gratification, where you order and whether it’s days or hours later, you open that box, knowing what’s in it, but still have that gratification of the unveiling, so to speak. And Target takes that very seriously.

There’s others that do as well, our partners at Apple, etcetera. That unboxing moment is a very important part of the experience. I would tell you that the Roundel aspect of this is going all the way back to the start of that unboxing moment in our mind starts literally with a search on Target.com. And the results that show up there being relevant for Kelly or relevant for Greg, not just relevant in general. And so that unboxing moment starts when Kelly goes in, searches an item or searches a group of items or whatever the category is. What shows up for you is likely to be different than what shows up for me because of our different habits of buying and/or behavior, and so that unboxing moment becomes very personal through Roundel. Our ability to customize and segment down to your interests for Kelly, all the way through that process of ordering the notifications that come to you in between the order and the shipping and what the shipping date’s going to be, and I’m checking the trucks in Albuquerque, and it’s going to be here on Thursday, a very exciting moment. The box shows up. It’s got the branding on it. You open it, that unboxing moment becomes an experience at Target that’s an extension of the experience that you have with our brand.

KELLY LEONARD: Honestly, I had never considered the idea of search tying to being seen. You know how human beings crave being seen? And I mean, that’s like, oh, search can do that?

GREG KOERNER: We call it a hand-raising moment. Search in particular is a hand- raising moment. I’m in search of detergent or I’m in search of, I don’t know, fishing waders or whatever the thing is that you’re in search of, raises your hand and a brand like Target immediately responds. We have a product called Target Product Ads that is part of our native—we call native advertisements. It’s part of our environment on Target.com that fits. It fits with Target.com. It’s not on the side. It’s not blinking or flashing or swirling around it. It fits into Target.com in a way where, because we know our guests so well, that we can personalize those to become just for Kelly. And you think about that unboxing moment starting all the way upstream, literally at the source of

the stream, all the way through. It’s by design, if you will, and Roundel plays a big part in that at the beginning.

KELLY LEONARD: So here’s a weird, cool connection. So one of the initiatives that I oversee is a thing called the Second Science Project, which started at the University of Chicago, and we study behavioral science through the lens of improvisation and vice versa. So one of the studies that was given to us and was like can you create an improve exercise around this was the idea that people are reluctant to share details about themselves, but actually that’s a great way to connect with people and be seen. And so the exercise is called Universal Unique, and what we’ve set up is take a minute and tell your partner how people shop, like when they go to Target. And then we say, okay, you do that for about a minute, now stop, now think about how you shop, and inevitably, when they do that—the unique part—it’s funny, they find connection, they all have these weird things about whether they bring their bags or they forget their bags, right, it’s completely unique. And it’s grounded in the science of the thing we’re talking about, which is what people really crave. I had no idea that this conversation was going to end up tying to that stuff.

GREG KOERNER: It’s interesting that you say that, because I think if you don’t give it a conscious thought, you know, a retailer’s a retailer, a retailer. I will tell you from personal experience, when I became a Target team member, that’s what we call ourselves, because we are, and it’s roughly five years ago for me, and I’ve been at other places prior. You know, you go to a cocktail party, someone says what do you do for a living, I say, well, I work at Target, we’re in the marketing department. And at a cocktail party you don’t need to go down the whole rabbit hole of whatever specifically you do. And it doesn’t take more than that for somebody—it’s happened multiple, multiple times to me—for somebody to come back to me and say this is my experience with Target, like they have a relationship with the brand. This is my relationship with Target.com or whatever it is, and I would tell you 99.9% of the time, I don’t even say a word back, because it’s them just extolling this is my relationship with the brand.

KELLY LEONARD: For sure. And like I have a personal—I feel like I have a personal relationship with my target on Peterson Avenue in Chicago and have been going there for years, but, like most people, I shifted buying online when Covid hit. I did just go back to get a new Sodastream. My old Sodastream broke.

GREG KOERNER: Oh, thanks for the business. (LAUGHS)

KELLY LEONARD: (LAUGHS) I’m glad to. But I’m actually mostly still buying online, and I think that’s actually going to be true for a lot of people, right?

GREG KOERNER: Well, certainly I think that’s a no brainer. If you go back prior to Covid, which it seems like, on the one hand, it seems like it was yesterday. On the other hand, it seems like it was, you know, eons ago. The good news, for us, is that we were preparing—we certainly didn’t predict Covid was going to happen—but we as an organization were preparing for how do we serve the guest the way the guest chooses

to be served, whether that is your experience when you walk through the brick and mortar or whether that is when you go on Target.com or whether I want it shipped to me or whether I want to pick it up. Those things were in play prior in a big way, and, when Covid hit, it actually took a rocket ship growth into, okay, now game on, because we are now in a situation where it only exacerbates that people are going to have to use Shipt (same-day delivery grocery and household essentials service), they’re going to have to use drive up, we’re going to have to have all these options for our guests in a bigger way, and the good news is the company responded. We’ve seen enormous growth in those various options.

KELLY LEONDARD: So where are the brands inside that? Where are they?

GREG KOERNER: The brands rely on us to feed information back to them as far as to what segments are best for them. Those brands have a lot of information at their fingertips. What they ultimately don’t know is what did Kelly take home and what did a lot of people that look like Kelly take home versus how much stuff did they sell at Target. So what we can help them do is to segment their media buys to—making this up—those that are heavy purchasers of your brand those that are light purchasers of your brand those that don’t purchase your brand. Perhaps you either go after that segment or you eliminate that segment. It’s hugely powerful. Then ultimately too that measurement aspect of did we move incremental units for that brand is a hugely powerful report that we hand back to them. So brands are good friends of ours and vice versa. I’d say ultimately when we put the guest at the top of the priority tree the brand benefits from that through return on ad spend—ROAS if you will—which we’ve seen an incredible uptick in that over the past months.

The other thing I find fascinating is two quarters ago during the earnings call we announced that we had 10 million new digital guests that we’d never seen before. And this is in addition to the hundreds of millions that we see all the time, and of course now we feel that those guests we hadn’t seen before are hopefully lifetime guests, and Roundel’s mission in that is to keep them that way, to continue to serve them ads through TPA and etcetera, Target Product Ads, sorry, that are relevant to them, that worked for the brand and worked for that brand’s agency through the measurement, but did we move incremental bottles of Crest—of whatever it is that we’re serving. And that’s where Roundel plays an enormously important role in not only Target’s success, but certainly in the guest experience.

KELLY LEONARD: We have a phrase in improvisation, play the scene you’re in, not the scene you want to be in, because so many of us, just even our regular non- pandemic lives, we rue about the past or we fret about the future, and the reality is, if we can stay fiercely in the moment, and this is very true for improvisers who are working without a script, they have to stay fiercely in the moment. That they can actually collaborate and be agile and be resilient, and it kind of feels like that muscle was already part of the organization, so that when—we have another phrase which is see all obstacles as gifts, and I think that’s what you folks did, right?

GREG KOERNER: You know, it’s funny, like everybody, I’m sure a year ago, a little over a year ago, we sat as a business within Roundel, very nervously looking at the future. The future had an incredibly murky view to this, muddier than I can recall in my career, and that includes going through things like 9/11 and other things certainly business-wise. And we huddled as an organization within Roundel, within Target, and certainly couldn’t predict the future that was going to happen last year with record sales and record performance both financially and every other way for the organization, but what we knew was, when lockdown really came into fruit ion was people are going to need an outlet. They’re going to need a place to interact and get the things that they need and to feel normal again, right? And that was a big part of it of just as much as possible to feel normal again and that they have a connection. One thing that I caught that you said earlier about Peterson Target is that you called it my Target, right, which is funny, because how many other people do you think call it my Target?

KELLY LEONARD: It’s not their Target, it’s my Target. (LAUGHS)

GREG KOERNER: (LAUGHS) Exactly. And so part of what we decided early on in this thing was, hey, this is a huge obstacle. We have no idea how high this mountain is that we have to climb, but what I do know is that we, as Roundel, have to keep that connection of brand and guest as tight as possible, because more than ever people are leaning into this, and, boy, did it ever happen.

KELLY LEONARD: When we were pitching this idea at the University of Chicago, actually we pitched it to Richard Thaler who won the Nobel prize in economics a few years back, and we were talking to him about the concept around “Yes, and,” which most people know in improvisation. The idea is that, you know, two people making something out of nothing, you don’t get anywhere by saying “no,” and just saying “yes” doesn’t get you very far. You say “Yes, and.” You explore and heighten and all that, and the reason he responded so well to it is he had written a book called Nudge, which in behavioral economics what they understand is people’s default setting is to say no or do nothing, and so what you do is you provide nudges to get them to move in the direction that they can sort of help themselves, and it’s like that’s the same thing you do. That’s exactly what you’re doing in search.

GREG KOERNER: “Yes, and?” I’ve taken the classes, but truly “yes, and.” That’s exactly, that’s precisely what we’re doing, and it was. I can’t lie to you and say that we didn’t have a moment of panic or a moment of oh my gosh what’s going to happen here, but we quickly rebounded from that panic moment and said, wait a minute. We have an obligation here to not only our guest but to our marketers, to maintain this thing, and, to your point, it was, hey, we have an opportunity here. I don’t know how big it is or how small it’s going to be, but we have to do this and maintain what we’re doing, and, in fact, it’s funny. We just had our performance reviews internally, and a lot of what I gave back to my team was how impressed I was with you took a moment to say, whoa, what’s going on here, and then the next moment was throttle down. Like we have an obligation to our guests and our marketers to make sure that we don’t fall down, and that we don’t start making, you know, decisions that fall out of our mission. And so things like Target

Product Ads, it sounds like something you would go buy, and I guess crudely it is, but, at the same time, it’s like that’s exactly why when Kelly logs onto Target.com and sees things that are relevant to him, specifically to him, you keep coming back. And that’s the mission, that we want to maintain that brand relationship you have, as well as put that marketer in the position that can be as best as it can be for them. And it’s actually kind of weirdly gratifying.

KELLY LEONARD: No, I get that. I completely get it. All right, before we warp up, what’s next, do you have a thing that comes to mind?

GREG KOERNER: You know, we do. We have products that are down the road and things like that, but I would tell you they’re all in the same service of what I’ve described, and to the same extent that the way we were prepared for, well, let me go back, the way that the corporation prepared for the—let’s serve the guest where the guest chooses to be served, and then, when Covid hit, man, that really had a Bunsen burner under the chair, and I think that’s what we’re preparing ourselves for. Particularly at Roundel is we don’t know what’s next, we can’t predict the future, and certainly after 2020 you realize you really don’t know the future, and so our mission is stay the course, don’t give up our values. And it’s not a shot at anybody else, but we’ve all been on sites where it’s clear that advertising revenue is a major priority for them, and certainly it’s important to us, but it’s not above does it fit, does it look right, is it right for Kelly, is it right for the brand. Those are the things. And if it doesn’t—if that litmus test is not passed, it doesn’t go forward, regardless of the revenue opportunity for it.

And so our thing is let’s stay on that, and this is a great thing I learned from my improv classes years ago is, if you stay on that, all the variables are just variables, right. It’s like, when you learn improv, it’s like here’s my character, here’s what he does, here’s where he got educated, here’s his family life. Whether he’s on a green car, he’s on the moon, he’s in the basement of a building, doesn’t matter. Those are just variables. And so that’s how we’re sort of operating it at Roundel is build it for the guest, build it for the brand, and all the variables, including Covid, fall around that.

KELLY LEONARD: I love it. I mean, that is the ultimate being others focused, which is take the attention off yourself and put it on the other, and everything will work out. Greg Koerner, thank you for coming on the podcast.

GREG KOERNER: I’m thrilled to be here. I’m thrilled to be on your maiden mission. Thanks for having me, Kelly.

KELLY LEONARD: And if you want to see what Target product ads by Roundel can do for your brand, you can go to Roundel.com/Solutions/TargetProductAds.

Thanks, everybody.