Retail media: Can a sharing approach to data benefit retailers, brands, and customers?
Retail media has gained traction over recent years as customer data from online shopping grows and brands look for post-cookie ways to personalize marketing. Artefact’s Bernal Mazaira looks at what’s on offer.
Retail media: Can a collaborative approach change the game? / Towfiqu Barbhuiya via Unsplash
Retailers are increasingly leveraging their e-commerce platforms and selling media inventory to third-party brands, with ads targeted at consumers based on their preferences and online behavior.
It’s not hard to find figures highlighting the promise offered by the retail media channel. At the end of last year, an IAB / Microsoft survey forecasted that the market will increase to $25bn by 2026. And GroupM’s mid-year report predicted that retail media would account for $125.7bn in global ad spend by the end of 2023 and exceed TV advertising by 2028.
A fertile environment
Two key factors lie at the heart of the sector’s growing success.
First, the Covid-19 pandemic left most people with little option but to do most of their shopping online. Thus, the amount and variety of consumer data that retailers collected increased dramatically, with this valuable shopper insight offering new revenue opportunities.
And, second, the imminent obsolescence of the third-party cookie means brands need new ways to build digital activation strategies. First-party data is obviously critical, but proprietary data is no longer enough; it needs to be enriched with data from third parties.
This has led to second-party data partnerships, facilitated by data ‘clean rooms’, in which consumer data can be shared anonymously. Retailers have insight on factors such as the age of consumers, the items they look at, what they eventually buy, how often they shop, and whether they make repeat purchases. Reconciling retailer and brand databases can build a more complete view of the individual consumer, enabling better segmentation and more accurate targeting for ads and promotions.
Additional revenue for retailers
The data that retailers gather from transactions and loyalty schemes is granular, high-volume, unique, and opted-in, providing an in-depth understanding of customers.
Retail media offers an opportunity for retailers to realize return on investment by collecting this data and capitalizing on the value of their inventory. It’s an additional revenue stream with huge potential; figures from the Boston Consulting Group in 2022 indicated that margins could be between 70 and 90%.
Customer insight for brands
A major challenge for brands selling goods via a third-party platform is that they don’t have a direct relationship with customers. A retail media partnership, however, helps them benefit from retailers’ in-depth understanding of consumers and enrich their knowledge about buyers. The data shared gives brands insight about their customers, allowing them to activate relevant campaigns, measure marketing performance (ie the link between advertising and promotions, and sales), and optimize product assortments.
In addition, it can smooth the path of the supply chain through demand forecasting and demand management (a feature that is also useful for retailers).
Retail media is all the more powerful because people browsing a retail website are already in shopping mode and therefore very close to the ‘moment of truth’. Relevant, targeted advertising from a brand at this point is more likely to convert to a sale.
Personalized offers for customers
Consumers are already familiar with retail media, even if they might not name it as such; Amazon has used the strategy for some time, for example. Essentially, it improves the customer experience by making the ads, special offers and promotions they see on a retailer’s e-commerce site personal to their requirements.
The current market
Unsurprisingly, Amazon (helped by its native e-commerce status) is ahead in the field, owning 37% of the retail media market according to Media Radar. But success is not limited to platforms with digital origins. Walmart, for example has an extensive network of physical stores, and a successful retail media network, Walmart Connect. Meanwhile, Carrefour stands out in Europe, thanks to the company’s serious commitment to building its retail media network, Carrefour Links.
Tesco leads the way in the UK with its Media & Insight Platform, while sites such as Argos, Boots, Curry’s, and Sainsbury’s have all developed competitive offerings. And it’s not just retailers that understand the value of the customer data they have at their fingertips. Other retail media players include ride-hailing platform Uber, and challenger bank brand Revolut, along with delivery companies such as Deliveroo.
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Retail media networks present immense opportunities for brands and retailers to boost revenue and enhance customer engagement. However, navigating this landscape requires robust technology as well as data. The right mix of technical infrastructure, informed partners, and specialized expertise is crucial.
This combination allows for the efficient collection, storage, and processing of the first-party data which is vital in this dynamic channel. A tailored approach is key – each brand must develop a strategy that aligns with its unique business goals, leveraging both data and technology to its fullest potential.
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