Why retail media’s future depends on first-party data integration and accuracy

Suzanna Stevens, brand sales director, Adstra

CPG and retail marketers have reached an inflection point where they realize the future is not just about collecting data. Instead, success requires wielding first-party data strategically in four pivotal ways: advanced loyalty programs, personalized content, retail media solutions and data monetization. These levers, when synchronized, elevate customer engagement and unlock untapped revenue streams with suppliers. 

Loyalty programs and personalized content aren’t mere trends but essential pathways to deeper engagement and data enrichment for both retailers and CPGs. The days of relying on intermediaries are waning as CPGs opt for in-house identity building to reclaim control and capitalize fully on transformative strategies to harness their owned first-party data. 

Amid this shift, an opportunity emerges — retail media. With global revenue projected to soar to $100 billion in the next five years, the potential is staggering. Retailers can leverage their first-party data to deliver tailored advertising solutions, driving high-margin revenue and offering invaluable insights for suppliers. Budgets for RMNs are pouring in, and the stakes are higher than ever. 

However, while Nielsen reports that 86% of marketers recognize that first-party data is crucial to any brand’s marketing initiatives, marketers need more confidence in data quality. In the Nielsen survey, 41% of marketers consider data accuracy problematic. 

Post-cookies, RMNs of all sizes are finding opportunities in customer data

Consider Amazon’s dominance in the U.S. retail media market. With a 75% share, Amazon showcases the power of integrating first-party data to drive targeted advertising strategies. Major bricks-and-mortar players like Costco and Walmart also leverage their data advantage to localize ad campaigns, capitalizing on in-store visits and household demographics.

Across the pond, the U.K. and Germany stand out for their robust RMN growth, fueled by e-commerce penetration and GDPR compliance. 

Still, smaller RMNs face an uphill battle in demonstrating their strength in data accuracy. The top 10 retailers commandeer the lion’s share of ad dollars, stifling the voices of smaller networks. 

Yet, therein lies the opportunity: mid-tier RMNs can carve out their niche by capitalizing on their unique value proposition of capturing traffic during moments of purchase intent. In an era of cookie deprecation and waning targeting capabilities, this is the holy grail for advertisers.

Advertisers and RMNs are leaning on collaboration to overcome walled gardens 

The onus for data-driven success stories doesn’t solely rest with RMNs. 

Advertisers must diversify spending, tapping into multiple networks to preserve choice and foster innovation. To do so, successful teams are building their own identity graphs that take advantage of the plethora of options. For them, success relies on plugging into as many RMNs as possible to buy audiences locally and effectively.

RMNs must take a similar step. Since they need to serve as many advertisers as possible, they’re not in a position to turn away different currencies or identifiers. They need to be fluent in as many identity currencies as possible to survive. Ultimately, advertisers and RMNs must have a multi-identity currency facility to communicate and match ads with the audience. As both parties embrace identity graphs that transcend walled gardens, they are fostering collaboration and choice in the retail media ecosystem.

The final challenge is whether retailers will settle for comfort, perpetuating the dominance of siloed retail environments, or champion a new era of retail media in which they own their data and there is evident diversity, innovation and choice. Advertisers already achieving data-driven outcomes in this way stand as an example: the time for action is now. 

Sponsored by Adstra

https://digiday.com/?p=538010

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