With the rise of media networks, retailers are expanding their sphere of influence, diversifying their revenue streams, and transforming their ability to reach new and valuable audiences. According to a recent eMarketer report, after almost 50% growth in e-commerce channel ad spending during 2020, advertisers will increase those allocations by another 27.8% this year. One in eight digital ad dollars will go to advertising on digital properties. Further, Boston Consulting Group has stated in a recent report that, "big retailers are already racing toward a $100 billion high-margin annual revenue prize in retail media."
A major contributing factor is that consumers have high expectations for brand engagement, but many advertisers, such as brands and suppliers, lack sufficient first-party data connections to deeply understand customers and meet their needs. As a starting point to a media network, retailers may consider all the ways their customers might interact with their business, like point-of-sale, website, customer service, billing, brick-and-mortar stores, etc. Once all first-party data sources have been identified, every retailer needs a strong identity strategy to connect all the touchpoints and create a media network that is more robust than competitors.
A strong data strategy is an organization's competitive advantage. However, as part of the data strategy, retailers need to have control over their customer identity. An accurate and cohesive identity layer when applied across fragmented data sources creates a powerful differentiator. Distilling multiple touchpoints to a singular view of a consumer creates a strong foundation to allow for collaborating with advertisers, executing campaigns on a retail media network, and measuring accurate customer insights.
Retailers who are evaluating solutions to build and maintain their own customer identity typically take into consideration these three fundamental components:
- Record creation. Leverage interoperable solutions that complement existing technology investments and enable first-party identity as the base of the data foundation. First-party data resolution enables the creation of retailer-owned customer views.
- Record enrichment. Leverage collaborative second-party data and best-in-class third-party attributes to enhance customer views and solidify customer intelligence. To maximize the enrichment, retailers will need a flexible, privacy-conscious technology to configure their graph and enhance it with second- and third-party insights.
- Translation. Leverage a strong identity framework, which is like "Rosetta Stone" for a retailer's data, seamlessly translating from multiple identities into one cohesive "language". The goal is a consistent integration across an organization, a technology stack, multiple data sources, and any number of marketing activation and measurement partners. Translation should be fast, secure, and interoperable across all channels where the customer is engaged.
Once retailers have a solid identity strategy in place, they can increasingly benefit and differentiate their media network by making it a win-win for advertisers in several ways, including:
- Retaining shopper marketing dollars
Shopper dollars have historically been spent on end caps or in-store marketing. With the rise of delivery and on-demand services, those methods become less valuable and effective. Retailers can maintain and grow shopper dollars by allocating spend to their online placements. Even better, by utilizing first-party data, both retailers and advertisers benefit from delivering more accurate and relevant marketing to consumers. With a media network, retailers are in a position to take advantage and monetize the shift to digital.
- Engaging consumers where they shop
Through placements on a retailer's website and owned and operated properties, brands can reach their buyers in a digital context. Not only does on-site advertising drive new site traffic, but retailers and brands can also reach existing customers at the most opportune time—while they are shopping. Taking it a step further, by leveraging offsite audience extension, retailers can help brands seamlessly find and engage with new customers across the web, ultimately providing more brand-customer touchpoints and conversions.
- Driving product development
By leveraging a data-driven and identity-based strategy, retailers and their brand partners achieve more robust customer intelligence and better understand changing consumer needs. More than ever, today's consumers expect personalized products that serve their interests. Ultimately, retailers and brands are able to meet shopper preferences with better-informed research and development. Trail-blazing partnerships will be able to iterate quickly and reach interested markets with innovative offerings and products.
- Deepening advertiser relationships
Retailers can surface unparalleled consumer insights to increase sales and grow brand relationships. Transactional data is a virtual goldmine when properly leveraged. For example, brands can leverage closed-loop measurement to improve persona profile definition, audience targeting, and campaign optimization.
Retailers have a variety of new tools at their disposal to improve profitability and achieve customer engagement that drives higher rates of loyalty and overall spend. With a focus on building an identity framework and technical infrastructure that provides more control over the customer experience and better visibility into their actions and trends, retailers will develop a greater competitive advantage.