Retail Media Amazon

Amazon’s retail media personalization is world-beating – smaller retailers, take note

By Hannah McNally, Paid Media Director



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May 31, 2024 | 6 min read

For The Drum’s retail deep dive, Jaywing’s Hannah McNally looks at just how far ahead Amazon’s personalization offerings are – and sounds a cautionary note to retailers piggybacking on the behemoth.

An Amazon Prime Christmas box

Amazon's dominance in retail media personalization is clear - but competitors must be careful not to rely on it / Amazon / Wicked Monday via Unsplash

With over 12m UK households signed up to Amazon Prime and over 13 million UK consumers purchasing from Amazon marketplace on a weekly basis, the e-commerce giant plays a significant part in our day-to-day lives. It’s also using this market share to dominate the thriving retail media scene. But how?

In short, Amazon is not only adapting but thriving in the face of the cookieless future, mastered personalization on the way.

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Truly personalized advertising, through retail media

Opinions vary on the importance of various strategies in this space, but one thing is clear: adaptation is crucial. As cookies become obsolete, retailers must rethink their approaches to advertising and customer engagement.

While some may argue that personalized targeting through cookies is essential for effective advertising, Amazon’s targeting strategy demonstrates otherwise.

Amazon’s TV and marketplace ads offer a refreshing perspective on reaching audiences without relying on cookies. By leveraging its vast customer data and powerful algorithms, Amazon delivers targeted ads to audiences based on viewing habits, interests, and shopping preferences. This approach removes the need for cookies while enhancing the advertising experience, ensuring consumers are served ads that they truly want to see.

One of the key strengths of Amazon’s ads lies in this personalized retail media experience. Unlike traditional cookie-based targeting, which can feel impersonal and intrusive, Amazon’s approach feels tailored and relevant.

How does the tech giant achieve this? By serving ads that speak to consumer motivations. Using its library of customer data, Amazon can tailor ads based on the books you read, how you work out, what clothes you wear, which household appliances you need, which toiletries you use, what car you own, what food you eat… the list is endless.

It seems that we, as consumers, support this approach; over 66% of UK consumers are willing to exchange their data to be served ads that are relevant to their needs, emphasizing the need for retailers to adapt targeting strategies.

Can anyone else do it like Amazon can?

Being good at personalization isn’t an automatic result of having a ton of data. No; to do it right, you need your data to be optimized for insights, ensuring all data and reports are consolidated into a single customer view. If data is siloed, key information can be missed, undermining personalized marketing initiatives. Amazon both has a huge wealth of data, and clearly knows how to organize, report on, and action it effectively.

The difference between Amazon and many of its competitors is while many have all the data required to create personalized user experiences, the structure of this data may not allow them to create that single customer view of all on- and offline behavior.

Still, there are opportunities for personalization even for smaller retailers, whose first-party data is much more important, valuable and useful than anything they get from ad servers. Using what you have, even if small, to enhance your customer’s personalized journey will have a significant impact. It doesn’t take a huge amount of investment to get this data into a workable format.

Thus, retail organizations that use Amazon as their shopfront to the point of Amazon holding their entire customer relationship (including contacts) are playing with fire. While it’s a valid route to get off the ground, striving for data independence, and understanding your customers, gives you the opportunity to retain more value, rather than hunting for scraps in Amazon’s walled garden.

That’s easier said than done, of course. It will require a strategic customer approach and investment in data infrastructure. Amazon is Amazon is very skilled at collecting and leveraging data to get more value from customers. It will take most of the value from that capability from captive retailers.

Amazon leads the charge in post-cookie retail media by excelling in personalization. Through sophisticated algorithms and vast data, it delivers tailored ads without reliance on cookies, while prioritizing transparency. Its approach sets a precedent for retailers, promising a brighter future for advertising that many other brands can begin to replicate. But they must eventually strive for their own independence.

For more deep analysis of the heroes and villains of retail in 2024, head over to our focus week hub.

Retail Media Amazon

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