Google has yet to officially do away with third-party cookies after announcing their removal from its Chrome browser in early 2020, but the clock is ticking toward the final expiration date of tracking codes as a means to target and measure ads online. This winding-down period gave advertisers a head start in finding the best ways to perpetuate a healthy, ad-supported web and deliver better customer experiences.
What emerged was a focus on companies’ wealth of first-party data, which is collected directly from their consumers, allowing advertisers to target audiences across numerous channels via retail media networks. This reorganization around proprietary data is what has led us to today’s retail media boom.
Retail has set the standard for media networks, with brands like Ulta and Target making concerted efforts to boost their ad sales technology. The industry offers a wide variety of advertising opportunities across various consumer touch points, from inside physical storefronts to offsite digital locations like social media and display.
Hotel chain Marriott recently launched the hospitality industry’s first media network, with other groups also set to explore, create and scale this new revenue stream opportunity. Sectors like airlines and financial institutions that have access to monetizable personal information (e.g. transaction or sales data) are well positioned to implement these digitally-driven third-party-cookie alternatives in the near term.
But as first-party data becomes the new gold standard for ad targeting, it still remains a largely untapped resource.
The Need to Network
According to a study conducted by Google and BCG, using first-party data for key marketing functions achieved nearly 3X the revenue uplift and a 1.5X increase in cost savings. Yet the study also found that despite the high profitability and growth rates, most brands aren’t yet harnessing first-party data’s full potential as a new revenue source.
With up to 30% of consumers now shopping more online, the digital advertising industry projected to reach $191 billion and cookies becoming obsolete, retailers across the board must reimagine their digital platforms as prime advertising real estate. But implementing one is easier said than done and requires specific capabilities, technology and talent. Here’s a three-step blueprint for creating an impactful retail media network.
1. Evaluate your customer relationships.
The industry is moving away from an overreliance on data acquired from other companies and moving toward privacy by design frameworks for retailers with direct consumer relationships. Proprietary data and actionable insights that can be gleaned from a retailer’s direct relationships with consumers will hold the most importance.
Retailers should assess and appraise the size and value of their proprietary data by utilizing POS systems and purchase transactions. This pair of data sources will power the network based on the range of audience purchase behaviors. Additional data on details like itemized pricing fluctuations, promotion trends and store locations can enhance relevant data points to advertisers.
This data helps advertisers gain an analytical understanding of what drives consumers’ choices and helps reach them at relevant moments along the path to purchase. Advertisers will then be able to create better-targeted omnichannel campaign strategies that deliver valuable results. From brand awareness to personalized promotions, optimized use of data can lead to strong, positive brand relationships that stand the test of time.
2. Understand the right technology for you.
The first-party data that powers the retail network won’t mean much without being actionable. The only way to ensure the appropriate steps to take with large swaths of data is to measure and evaluate that data to gauge performance, replicate what worked and optimize new and evolving campaigns over time. To do so, retailers can look at their current infrastructure and consumer touch points to determine the viability of existing technologies and how they modernize to a next-generation technology stack. There is no one-size-fits-all blueprint, so retailers should look to understand what makes sense for their customer experience and business model.
Across a range of revenue-generating channels and tactics, retailers should look at their ability to measure KPIs such as return on ad spend (ROAS) to determine revenue earned for money spent; multi-touch attribution to establish the value of each customer touch point along their journey that leads to conversion; and incremental sales, or purchases, during a given campaign beyond normal sales metrics.
Considering the current market’s ongoing supply chain challenges, as well as inventory and workforce shortages, it’s more important than ever to be able to determine how data can be optimized across creative, messaging and channels.
3. Identify talent gaps.
Talent is often overlooked when establishing a retail media network, but data needs a workforce behind it to put it into motion and generate value. To determine if the right people are in place to manage the media network, retailers will likely need to add roles and skill sets across departments such as engineering, analytics, strategy and media.
Once the network’s technical needs are determined, developers will be needed to build, execute and maintain the underlying technology supporting the media network. Once the data capabilities and metrics come into focus, analytics teams will need to generate and optimize segments of preferred audiences and measure performance over time. Relationships with advertisers must be nurtured, so a dedicated team needs to produce and maintain demand while also developing assets to attract the right audience. Lastly, media buyers will plan and optimize the full omnichannel media campaigns across the network.
As third-party cookies take a backseat and eventually go away, retailers can transform their digital investments into a network that powers new sources of ad revenue. But unique challenges remain. Analytics, reporting tools, testing strategies and a next-generation workforce are needed to equip retail players to make informed decisions and demonstrate the full advertising impact of retail media networks.
Matt Krepsik is CEO of Quotient. He previously served as CTO for Quotient beginning in June 2021, leading the company’s strategy and insights team, engineering, product management, business development and media strategy business, enabling advertisers and retailers to deliver high-performing, data-driven marketing strategies fueled by powerful insights into consumer purchase behavior. Prior to his promotion to CTO , Krepsik served as Quotient’s Chief Analytics Officer from April 2021 through June 2021.