Recent disruptions to the digital media landscape leave challenges and opportunities for retailers, emphasizing the acceleration of data capabilities to future-proof their businesses for a cookieless world.
Although digital ad spending is projected to top $586 billion globally by 2023, ongoing deprecation of third-party cookies and evolving global data privacy regulations will make it increasingly difficult for companies to collect actionable customer data from platforms like Google, Apple and Facebook. In response, brands are strengthening their first-party data collection, establishing direct, consent-based relationships with customers.
A first-party data strategy decreases reliance on third-party data. But a wealth of owned data also positions retailers to create their own media platforms, partnering directly with suppliers or other brands to deliver highly personalized communications and engagements across owned channels. These relationships are inherently symbiotic, with partners and retailers exchanging direct insights on targeted audiences (ultimately strengthening their first-party data over time) and retailers benefiting from new revenue through data monetization.
Data Privacy and Consumer Trust
A brand acting as an advertiser gives the brand more impressions in front of customers and prospects, when you create your own advertising network, you’re getting the same types of signals that the walled gardens are getting without having to depend on the walled garden—you’re decoupling dependencies.”
Ray Velez, global chief technology officer, Publicis Sapient
In 2019, Amazon netted nearly $13 billion in advertising revenue—representing 11 percent of additional income. In 2021, that number is expected to top $26 billion, with Amazon representing around 5 percent of the worldwide digital ad market.
Data independence can be a driving force for retailers looking to stay ahead while increasing e-commerce profitability, improving customer relationships, and driving better business decisions. Here, we explore four ways retailers can build a data strategy that delivers.
1. Identify new business opportunities across owned channels
There are so many ways a shopper can engage with a brand and each avenue is an opportunity to deliver personalized communications. By creating a single view of the customer, retailers can use data to create unique shopping experiences that lead to new revenue opportunities.
The more connected data a retailer has from point-of-sale transactions, mobile or internet traffic, email engagement and media impressions, the greater chance it has to create targeted campaigns or new products and services. For example, retailers can combine loyalty program data and transactional data to present personalized credit card offers, auto-replenishment or subscription services based on past purchase history and preferences.
“To go across these channels to orchestrate a personalized experience is going to get harder unless you’re a first-party brand who has a consent-based relationship that can link back to customers,” Velez said.
A connected customer data platform allows retailers to easily share data with partners, suppliers, publishers and advertisers in a cleanroom environment, creating the foundation for a media network while remaining fully compliant with regulatory guidelines.
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2. Build a media network
With a media network, retailers and brands can work together to create joint marketing campaigns that benefit both companies. Let’s say a consumer technology brand wants to advertise its latest smartphone or desktop computer. The brand could partner with a big-box retailer to run a campaign on the retailer’s website or marketplace, leveraging the retailer’s customer data to target look-alike customers. In turn, both companies receive direct data on how customers engaged with an ad, what products people were most interested in, and which promotions led to a conversion.
“By creating joint campaigns, you’re increasing traffic without having to buy those advertisements yourself,” Velez said.
66 percent of shoppers say they’ve bought something online they’ve seen advertised.
3. Invest in personalized experiences
As retailers begin to build out a media network, they must also think about how native advertisements fit into the shopping experience. People are easily frustrated by poor ad experiences—in fact, one study from adtech firm Blockthrough suggests that 81 percent of shoppers use ad blockers just to silence the noise of interruptive or annoying promotions.
According to Velez, retailers should never introduce anything that distracts a customer from making a purchase. “You’re personalizing experiences, not distracting from them,” he said.
Promotions should occur naturally within a shopper’s journey, with experiences that are personalized, contextual and add to a customer’s interaction with the brand. Retailers must also remain transparent, making clear distinctions between paid promotions and organic results as people browse for the products they need.
“Amazon sells ads in such a way that it does not distract you from one-click purchasing,” Velez said. “It’s enabling a shopper’s ability to get to a conversion and get through checkout without any friction.”
39 percent of shoppers say they want retailers to provide more cashback options.
37 percent of shoppers say they want retailers to provide personalized offers based on spending preferences.
4. Break down data silos
Data monetization brings new revenue to a business and strengthens the quality of first- and second-party data collection. Once data is collected in a connected ecosystem that is compliant with regulatory conditions, retailers can use the data to improve other areas of the business.
For example, understanding which target audiences are interested in buying a product and where they are located can inform inventory optimization and demand planning, with retailers able to make intelligent decisions on how they stock distribution centers or arrange store layouts to meet local demand. Data can also be used to continuously test and learn when implementing new marketing campaigns and partnerships, improving the quality of customer experiences over time.
“Retailers are getting more information about people who have interest in buying a product,” Velez said. “Now retailers have advertising signals they could use to test new imagery that drives more conversions. All of these things are improved because retailers have more signals to gauge intent.”
Make the most out of customer data
Many retailers already have the capabilities in place to better understand their customers. Looking holistically at the customer journey and advertising experiences in a safe, compliant way enables retailers to expand their offerings, improve the quality of personalized experiences and make their data go the extra mile.