Interviews, insight & analysis on Ecommerce

Retail media networks: the future of digital marketing or simply a fad?

By Graham Tricker, Commercial Director, UK, LiveRamp

When Amazon launched its retail media network a decade ago, in a bid to capture some of the lucrative advertising revenue being snapped up by Facebook and Google, the decision would transform the way that online retailers market to consumers. Once almost entirely associated with Amazon, retail media is becoming increasingly desirable across the entire digital advertising industry and now makes up 10.7% of global ad spending.

As brands and agencies continue to dedicate larger shares of their budgets to retail media campaigns, and tech companies try to respond with new tools to make retail media more effective, this figure is expected to keep growing. But with so much money being directed into retail media, the big question is whether the move is the right one for the industry. Are we looking at the future of digital marketing and online retail, or a marketing gimmick that will soon disappear into the abyss?

The retail opportunity

For one, the substantial shift toward e-commerce spending in markets around the world means that retail media isn’t going anywhere. Brands are eager to reach consumers wherever they are and will pay more for access to high-value, addressable audiences. With large customer bases and pools of first-party data, retailers can provide marketers access to their customer audiences through a variety of addressable channels, including CTV. Retailers can therefore increasingly compete for brand marketing budgets, in addition to existing trade budgets, as well as strengthen the existing relationships between themselves and their client brands.

At the heart of unlocking these revenue streams and boosting ad revenue is how these retailers leverage their customer data.

The value of data

The importance of data is not a new revelation for retailers, and many have found ways to capture and store vast amounts of data via different avenues, such as online shopping and loyalty schemes. The ability to unlock this data and convert it into audiences can provide a great deal of value not just for the retailer, but for the brands they work closely with.

CPG brands don’t tend to have huge amounts of data available to them, because they mostly rely on retailers to sell their products, rather than selling directly to the consumer. Though some brands have strengthened their direct-to-consumer offering, they don’t have a complete picture of the shopping habits of their customers, because consumers are still – and will always be – very reliant on retailers to make CPG purchases. Brands can therefore gain a lot of value from being able to collaborate with retailers – accessing data on the people who are buying their products, the people buying their competitors’ products, and the general makeup of the audience buying within that category.

Clearing the hurdles

Perhaps the most obvious challenge to collaboration on this data is ensuring that it is done in a privacy-compliant fashion. Indeed, historically retailers have been reluctant to use their first-party data for marketing purposes, for fear of having to act as the data controller. But whether it be for ad targeting or consumer insights, brands nevertheless now expect as standard accountable, measurable and addressable results, which demands the secure exchange of first-party data. Thankfully, there are now technologies which can be utilised to ensure that the process is entirely addressable, safe and privacy-compliant. These include data clean rooms, which allow for the collaboration and monetisation of data between retailers and brands in a neutral and interoperable way.

Beyond the tech, there’s the additional challenge of solving how an online retail media strategy can be carried over and aligned to physical stores and wider marketing activities. The retailers that are most successful at marketing to consumers are the ones that think of their online and offline presences as one of the same, and enable brands to reach consumers consistently by leveraging first-party data across all touchpoints.

The opportunity is there for retailers to unlock the power of their first-party data and bring in significant additional revenue through retail media advertising.  By leveraging available technologies toward the secure collaboration of this data, retailers can ensure retail media remains an area of strong, strategic growth.

*LiveRamp is a client of Bluestripe Communications, owned by Bluestripe Group, owner of ECA

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