Why the Open Web Is the Yin to Retail Media Networks’ Yang

By Jürgen Galler, CEO and co-founder, 1plusX, a TripleLift company

Retail advertising networks are taking off, with advertisers tapping into retailers’ owned on-site or in-app inventory to reach engaged audiences at the point of sale and boost conversions. It has been predicted that digital retail media advertising will exceed $41 billion this year, demonstrating how it is becoming an essential part of omnichannel marketing strategies. In addition, retailers, who are increasingly realizing their value to advertisers, have begun establishing their own demand-side platforms (DSPs) to offer their inventory to brands, making it easier than ever for marketers to get involved.

But there’s even more significant potential for retailers to expand their monetization opportunities beyond their owned and operated inventory. By forging powerful partnerships with media companies that work on the open web, retailers can offer brands a greater scale while expanding their reach and audience knowledge.

So what makes retail media networks so valuable to advertisers, and how can media companies enhance this relationship further so both parties can achieve their respective goals?

New Opportunities as the E-Commerce Landscape Continues to Evolve

A digital marketing revolution is happening in conjunction with the broader progression of digital shopping, and it’s beneficial for both advertisers and retailers. Indeed, according to Forrester, one-quarter of retailers are generating more than $100 million in revenue from their media networks.

Unsurprisingly, the pandemic-induced online shopping boom has drawn in advertisers, who are attracted to the compelling marketing opportunities it creates and its expanding audiences. There is also recognition from both brands and retailers of the benefits of using digital technology to connect them with consumers.

An example is retail giant Walmart, which has established its own advertising platform, Walmart Connect, allowing brands to target their audiences better based on online and in-store purchase data. It also enables more accurate campaign measurement, helping advertisers optimize future campaigns. Similarly, luxury department store Nordstrom plans to expand its retail media network following its $40 million revenue generated last year.

Retailers Have High Stocks of First-Party Data, but Is It Enough?

With an increasing global focus on data privacy and platform reforms in line with data governance — such as the third-party cookie’s impending demise and Apple’s ATT framework — it’s becoming more difficult for advertisers to glean the insights they need for accurate targeting. Even when solutions such as Google’s Topics solution for interest-based advertising are put forward, they may still be too broad to offer granular data.

Consumers are concerned about their privacy. Permissioned first-party data is invaluable, and retailers can undoubtedly access it online and offline. They gain online and in-store purchase information, email signup data, and account registrations. They can establish strong, trusted relationships through subscription services and loyalty schemes.

As a result, retailers can provide advertisers with targeting and campaign measurement capabilities, but only when it comes to their owned inventory. Furthermore, while it’s true, retailers can connect multiple touchpoints in the consumer journey online and offline, obtaining the same level of connectivity will become increasingly difficult after the loss of third-party cookies.

Retailers are also at risk of becoming victims of their own success. lf the adoption of retail media networks continues to grow, the demand for retailers’ owned inventory will quickly outstrip the supply, meaning retailers will need to look for new ways to expand their targeting horizon.

Collaboration Enhances Data

While there is no one-size-fits-all solution to diminishing consumer insights, greater collaboration is more critical than ever. Those possessing scalable and quality first-party data, who have the appropriate consumer permissions, such as retailers and publishers, have the opportunity to lead the charge in driving open web collaboration. Through privacy-centric audience management solutions, brands can define their audience segments, providing valuable data that can be utilized and shared securely, such as via data clean rooms.

Clean rooms allow companies to utilise valuable stores of consented first-party data — that have been obfuscated to preserve user privacy — to identify similar audience segments through data matching, all without any original data being shared between companies. While this provides parties with audience addressability, overall match rates alone tend to be relatively low, so the contents of data clean rooms are fed into external lookalike mechanisms built for such purposes.

This brings several advantages for retailers who can boost their advertising business — offering brands extended reach opportunities across channels — but also use that enriched insight to attract new consumers to their sites and create better product experiences.

With the loss of traditional consumer tracking methods, targeting challenges are a common pain point for all players across the digital ecosystem. Retail media networks are well placed to provide brands with valuable audience insight in the post-cookie world, all while protecting their owned customer data by using data clean rooms. However, these owned platforms are not free from the limitations and challenges that affect the rest of the ecosystem.

The more significant and profitable opportunity for retail media and advertisers lies in the open web through publisher data collaboration. When advertisers securely share first-party data with the supply-side, retailers and publishers can segment their respective audiences for targeting on their sites. These audience insights are then transferred to the advertisers in a secure, privacy-preserving, clean room setup.

This is available now, and forward-thinking advertisers, retailers, and publishers are already reaping the rewards of privacy-compliant data collaboration. With such robust solutions already active and improving by the day, no one will miss third-party cookies when they are finally gone for good.

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