How retail media can help advertisers bridge the data gap

New privacy safeguards and cookie deprecaction will mean a shortfall in customer data. So it makes sense for brands and retailers to team up and make the most of what each can share, says Jürgen Galler, CEO and co-founder at 1plusX…
 
The pandemic-induced online shopping boom is not just a one-time event. The amount of time spent on e-commerce apps has doubled since 2018, and it’s estimated that the value of global e-commerce transactions will exceed $7.5trillion globally by 2026. So undoubtedly, e-commerce is here to stay – and provides attractive opportunities for advertisers.
 
Indeed, marketers are increasingly incorporating retail advertising networks into their omnichannel strategies. Brands using this technique place their marketing content with retailers to utilise ad space on retailers’ owned websites, apps or other platforms, allowing marketers to connect with consumers and drive conversions at the point of sale.
 
Almost three-quarters of brands now have dedicated budgets for retail media networks, highlighting their valued place in the media mix. Meanwhile, retailers are also beginning to move into the ad space, offering their inventories to brands to recognise their potential as advertising platforms.
 
So how is the e-commerce landscape evolving to position retailers as unique and valuable advertising partners to brands, and how can the two collaborate to meet campaign objectives?
 
Retail media growth reflects the evolution of digital shopping
Last year, a quarter of retailers reported receiving more than $100million in revenue from their media networks, and it’s predicted that retail media will receive almost 20 percent of all digital ad spend by 2023. It’s not just advertisers recognising the potential of these networks: retailers themselves are also keen to maximise their own capabilities.
 
Global names such as Wayfair and Best Buy have developed their own digital advertising platforms, launching sponsored products to compete with giant marketplaces such as Amazon. At the same time, British health and beauty retailer Boots – which operates across Europe – is leveraging technology partnerships to give brands access to its 14million Advantage Card members through Boots Media Group.
 
The growth of retail media is seen as part of the broader transformation of digital shopping, emphasising technology to create more opportunities for consumers to engage. A recent Accenture report found that 64 percent of consumers surveyed had made a purchase on a social media platform in the last year and social commerce currently makes up 10 percent of all e-commerce spending. This is set to increase to 17 percent in the next three years.
 
In-app shopping functions such as Instagram’s Shoppable Posts, Facebook Shops, and Pinterest make it easier than ever for brands to capture users’ attention as they scroll. The ease of in-app purchases also makes conversions quick and straightforward. Pinterest has also incorporated AR capabilities into its site to allow consumers to visualise what products will look like in their homes, similar to IKEA's Place app. 
 
This technology adoption in the purchasing journey is likely to intensify and evolve as the metaverse begins to emerge, growing retailers' potential to expand their ad-space offering beyond the traditional channels currently incorporated into their inventories. Brands are already embracing the advertising opportunities offered by this virtual realm, with Roblox’s two-week ‘Gucci Garden’ art installation and Fortnite featuring purchasable Balenciaga pieces.
 
Retailers carry bags of data
Retailers have large amounts of first-party data at their disposal, collected via email signups, in-store and online purchases, account registrations, and more. Moreover, many offer loyalty schemes and subscription services, meaning they can foster closer, more personalised relationships with their consumers, giving retailers a significant trust advantage as customers become increasingly suspicious of how their data is used.
 
The nature of retailer advertising also allows brand partners to target users close to the point of purchase and facilitates closed-loop measurement, as retailers can unite in-store and online behavioural information. In addition, giving advertisers a more holistic view of consumer habits allows their messaging to reach a more targeted audience, enhancing both the user experience and campaign performance.
 
In the privacy-first world, first-party data is of the utmost importance, and retailers have this in abundance. So it is no surprise that retailers want to capitalise on new revenue streams generated by sharing the insights from this data and that supply-side advertising networks are growing.
 
This is especially true as advertisers face a growing need to access audience data. Thanks to the phasing out of third-party cookies and increased browser and app restrictions, marketers can no longer rely on traditional partnerships with big digital platforms like Google and Facebook to deliver their targeted advertising needs. Apple’s ATT solution is projected to cost Facebook $10billion in sales. At the same time, Google's new Topics framework is unlikely to provide advertisers with the granular insights they need for targeting purposes and ROI measurement. Therefore, with their rich data and measurement capabilities, retailers can help to fill those gaps.
 
Maximising data through collaboration
As effective targeting becomes more difficult in the privacy-first world, greater cooperation will be required to draw the same level of insights from reduced amounts of information. Collaboration between advertisers and aggregators of first-party data, such as retailers or publishers, will be necessary to bridge data gaps and increase targeting capabilities.
 
To facilitate these partnerships effectively and securely, it will be necessary to enrich data sets and share conclusions in a privacy-secure way. Predictive analysis, conducted using AI-powered tools to analyse data and anticipate future campaign performances, is one way marketers can determine their audience-based campaign characteristics. Lookalike modelling can also identify similar audience segments based on existing data, enabling brands to grow their reach and addressable audiences by targeting similar cohorts.
 
To enrich their data even further without compromising security, advertisers and retailers can harness clean room technology to share and match their data. This enables both parties to build a clearer picture of their consumer behavioural patterns and preferences while maintaining the privacy of each individual. In addition, any overlapping data can be used for retargeting purposes or extending audience reach.
 
Retailers’ unique consumer insights make their inventories a compelling prospect for advertisers. They can increase their value even further with the help of marketing intelligence tools and clean room technology. With retail giants such as Amazon and Walmart already establishing the successful practice, advertisers will likely see the increasing inventory available to them via new retail media networks.  After all, every party is a winner – with consumers receiving more relevant ads, retailers establishing additional revenue streams, and marketers running more successful campaigns due to greater audience understanding.