Retail media is one of the fastest-growing channels in the digital advertising space. In the U.S. market, 2023 is expected to be its biggest year for ad spend growth, with eMarketer predicting that retail media ad spend will grow to $61.15 billion by 2024. The direct relationships that retailers have with their shoppers make their first-party data an incredibly valuable asset for advertisers looking to effectively engage with their target audience.
But while the future seems rosy for retail media, there are a few things that retailers need to take into consideration to build and grow sustainable networks:
Finding the right tech partners to connect their data and inventory with the buy-side and help maximize the value of their audiences — retailers have the data but they need technology to activate it;
Ensuring compliance with ever-changing privacy regulations — an urgent requirement for retailers operating globally or in markets with stringent data protection regulations; and
Being aware of the challenges that the deprecation of conventional identifiers brings — because first-party data alone is not a cure-all for addressability
Getting these aspects correct puts retail media networks on the right track to growing successful and future-proofed advertising businesses.
Combining Data with Technology
Retail media has first-party data and a direct relationship with consumers. To activate this data, they need to forge relationships with tech partners that can get them closer to buyers and, at the same time, enable additional capabilities:
Data onboarding: just like retailers, brands have invested in first-party data and want to make good use of it; and
Activate data outside of their own operated inventory: offering brands the chance to broadcast their products to a broader audience
Finding the right partnerships will put them in a position to better compete with retail media giants and walled gardens, such as Amazon.
Protecting Customers’ Data
More stringent privacy regulations require retailers to pay more attention to how their data is collected and shared. This process is essential if they plan to activate this data outside of their properties and across devices. Retail media networks are operating increasingly like digital publishers and can gain significant learnings from media owners’ experiences over the last few years.
Data must be collected and leveraged with users’ consent. The fact that a customer logs into a website doesn’t necessarily mean that they agree to the use of their data for advertising purposes. Meta’s latest GDPR fine should set an example. Generally speaking, regulators in the U.S. are less demanding today, but state-level data protection laws such as the CPRA are moving in the same direction.
Data protection standards don’t just apply to retailers. It is crucial that technology partners meet the same standards, as it is their role to process the retailers’ data. Resources like Neutronian’s data privacy rankings can help retailers evaluate and select the best partners.
Cookieless Challenges and Opportunities
Today, cookies are used by retailers to connect audiences across websites for several purposes. Because of this, their deprecation represents a big challenge to the growth of the retail media business.
Large retail media networks with multiple websites might have users authenticating on one website but not on others. The absence of third-party cookies limits their ability to identify such users and leverage first-party data across domains to engage with them. The same issue applies to the data onboarding use case, challenging brands’ ability to activate their data on retailers’ websites.
The need for cookieless technology is even more evident for retailers that want to make their audiences addressable off-site or for smaller, niche retailers that want to sell their data within data marketplaces to generate an additional revenue stream.
All these examples show the importance of finding an alternative solution that can future-proof retail media businesses from the loss of cookies. This is not just a future need but an opportunity to leverage today in browsers such as Safari. Next-generation identity solutions enable retailers to activate data across websites in cookieless environments as well as test and find the right solution in preparation for the future.
A Mature Market
Building a successful retail media business that stands the test of time requires preparation. It is in retailers’ best interest to lay the foundations to succeed.
As they launch media networks, major advantage retailers have is that they are jumping into a more mature digital advertising market, offering technologies that enable retailers to maximize their first-party data in compliance with data privacy regulations. To capitalize on that advantage, they need to be aware of the challenges and opportunities they have and find the right partners that can maximize the value of their data whilst also protecting it when it leaves their digital walls.