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Top 3 tips on how to build a data-driven retail media business
April 27, 2023
Everyone seems to be getting into the media game these days. Retail media networks are popping up left and right as privacy concerns make it harder for advertisers to target customers, illuminating the value of retailers’ first-party relationships with shoppers. Plus, the e-commerce boom that Covid spurred has digitized most retailers’ customer relationships, creating more holistic data-driven ties where the retailer’s view of the customer was once mostly limited to transactions.
Retailers have a massive opportunity to monetize those customer relationships and build media businesses by helping their brand partners reach shoppers. According to Gartner, there is a 3x measurable economic impact of sharing data externally. But standing up a data-driven media business is no small task. It requires privacy-safe practices, fresh talent, and technical know-how, plus the ability to package and sell an offering.
Evan Hovorka, the head of product & innovation at Albertsons, that has launched its own retail media network says, “It’s about using data more intelligently without breaking privacy commitments. We also want to be in service of the CPG – giving them autonomy, giving them access to the insights and performance that they expect.”
Let’s break down three steps retailers, or any other organization looking to build a data-driven media business, can follow to do just that: conducting a data audit, sourcing the talent required, and crafting a go-to-market strategy.
1. Conduct a data audit
The first task for any business that knows it has valuable customer relationships and wants to safely monetize them is to conduct a data audit.
What exactly is the data asset you have? What are the rules governing what it can and cannot be used for? What is the value of the data to potential customers? How accurate, comprehensive, and unique is the information? What is the total addressable market?
A host of issues will present themselves at this stage. For example, one major challenge for organizations looking to monetize their customer data is integrating it. Organizations store many different kinds of data across various systems. A retailer might have data pertaining to transactions, foot traffic, demographics, and marketing performance, for example. Creating a single customer view across the CRM, CDP, and various other data partners such as location intelligence and marketing measurement solutions requires some legwork but will be key to maximizing the value of data.
Another major challenge is privacy. One of the main reasons retailers are seizing the media opportunity is privacy changes like Google’s elimination of the third-party cookie on Chrome and Apple’s deprecation of the Identifier for Advertisers making it more difficult for brands to track and target customers. Retailers cannot reduplicate those privacy errors by haphazardly sharing shopper data with brands. They need to set up systems that ensure they get customer consent for data collection, storage, and sharing in perpetuity.
2. Find the right people for the job
Determining whom you need to hire to start a media business follows naturally from a data audit. If you know what you need to do to transform your data asset into a product, you can hire the people to get the job done.
For example, a retailer building a media business will likely need advertising operations professionals to manage ad buys, watch over revenue, ensure inventory is not sold that the business does not have, and keep customers happy. It will need salespeople to sell the inventory, technologists to stand up and manage automated buying, and product managers to oversee the process.
A retail media business will likely need agencies or technology providers as well. The aforementioned integration challenge will require software solutions that can unify data across silos. Shoring up data privacy practices requires consent management as well as technology that can ensure partners are only accessing the minimal amount of information they need to reach shoppers.
3. Develop a learning agenda and go-to-market strategy
Next comes crafting a learning agenda and go-to-market strategy. This means determining what your goals are and exactly what you are selling, how you will sell it, and who will be the first to leverage this offering.
Use case design is key. It is easy to get excited about high-tech applications and start dreaming about in-store virtual reality (VR) advertising. But retail media is still a fairly new business, and upstarts will do well to keep it simple at first and scale in later stages. Retailers might start with display ads on their website to drive repeat or complementary purchases based on transactional data and expand to advanced use cases like in-store geotargeting, for example.
Another question is who will pilot the program. This is where retailers should turn to their most trusted brand partners. Consider which partners have been asking for the precise data, insights, and capabilities that you’re developing. Deploy the program with them, learn what works, and scale up from there.
Ultimately, the key for retailers looking to monetize their direct, trusted, scalable relationships with customers is to remember that those relationships are the core of their business and integrate respect for shoppers into every stage of media planning.
If retailers ask shoppers for permission to use their data for advertising, provide value through tactics like personalized recommendations, and protect the integrity of the shopping experience, they will seize the opportunity to build a media business while retaining the trust of their shoppers. And that’s what the retail media boom is all about.