Greg Koerner, vice president of vertical sales, Experian Marketing Services
Retail media is undergoing a significant transformation as first-party data collection and analysis develop. The biggest retailers in the U.S. — Target, Kroger, Lowe’s, Best Buy, Walgreens, Dollar General, Albertsons and more — are investing heavily in advertising via retail media networks (RMNs) and other digital sources. Flush with valuable data and inspired by Amazon’s recent success, these brands and direct-to-consumer digital natives like DoorDash and Instacart are finding online advertising to be a sizable revenue stream.
Global retail media has grown by leaps and bounds and doesn’t appear to be slowing down. Spend in this area is expected to account for 19.3% of digital advertisers’ allotments in 2023, almost double the share spent in 2019. Success stories abound: Retail ads have grown to account for 5% of Amazon’s total revenue, Walmart’s digital ad business grew by 30% in the last quarter of 2022 and Lowe’s sales increased by 15.1% in the last six months.
The key to many of these retailers’ advertising success is the effective collection and activation of first-party consumer data. Furthermore, many smaller businesses have begun dipping into retail media in the hopes of accelerating revenue growth.
Retailers’ data is reaching brands with first-party resources
Taking a cue from the larger retailers, smaller brands have amassed an effective combination of resources — first-party data and direct sales capabilities — to place them on competitive footing with the largest incumbent publishers and ad networks.
Retailers’ rich first-party data procured from audience sources has allowed them to become premium suppliers of ad inventory in a relatively short time. This inventory is often addressable and targetable based on high-intent signals from searches, shopping carts and other behaviors.
Yet despite the success of the biggest retailers, not all brands in the space know how to extract value from first-party consumer data effectively. Many are scrambling to find solutions as they await the upcoming deprecation of third-party cookies. They’re searching for ways to maintain an ongoing relationship with consumers while gathering valuable data that can be used to target audiences in the future.
Isolated networks are preventing retailers from successfully activating first-party data
Retail brands are increasingly recognizing the value of first-party data, but many don’t have an understanding of their customers beyond their RMNs. For example, they might know what a customer bought over the last two months (such as a specific brand or product), but they often don’t have the demographic data that advertising teams require for further targeting and measurement.
These retailers’ lack of knowledge about what happens outside of their RMNs and other properties poses a long-term risk of their networks becoming yet another walled garden for advertisers, shifting the burden of omnichannel measurement and attribution to their operations.
To address these challenges, savvy retailers are making the most of RMNs by connecting them to other data sources, such as off-site partners or other media properties. This enables them to match their proprietary data to sources across the omnichannel environment, providing more actionable consumer insights.
Retail brands are using data privacy and collaboration solutions to grow revenue
Fortunately, many retailers understand the necessity of first-party data activation. They’re developing new tactics to balance the need to safeguard their proprietary data while making it easier for advertisers to activate it as part of an omnichannel approach.
These brands are seeking ways to safeguard consumer data privacy while also connecting that data to other parties, whether it’s matching first-party data, generating lookalike audiences or merging it with third-party segments. These tactics are helping them share high-quality data with ad partners while preventing data leaks and commoditization.
Still, not all retail brands are prepared to adapt to these changes in data collection. For them, while this evolution has altered the retail media environment, there’s still time to adjust campaigns and compete in a digital environment more reliant on first-party consumer data.
However, traditional retailers and brands new to the space won’t become successful data and media companies overnight. They’ll need innovative solutions to enhance their efforts in productizing, commercializing and securing valuable consumer data.
For instance, one of the most effective technologies brands are now using is the data clean room, which enables retailers to match the first-party information collected via their networks with shared, secure data sets. This is helping them connect their first-party data with a broader audience. And overall, procuring external solutions — whether innovative technologies or qualified partners — is assisting retail brands in developing effective first-party data strategies and enhancing their RMNs while productizing, commercializing and securing that data in the process.
Sponsored by: Experian Marketing Services
More from Digiday
People claim that the role of chief diversity officer is vanishing. However, AI is booming, and the CDO can help ensure responsible AI.
It’s hard to concisely capture the myriad ways ChatGPT and generative AI overall have shaped business culture and society in a single year.
In the packed DealBook conference in New York yesterday, owner Elon Musk bluntly told them to shove it.