As we approach the end of the third-party-cookie era of digital marketing, brand marketers are eagerly looking at alternative ways to find and target customers. In particular, methods that better respect the privacy of consumers and actively seek consent to be ‘marketed to.’ For this reason, the marketing world has turned its full attention to accumulating ‘first-party data’, i.e. user information that has been directly and willingly shared by the consumer with the brand. When this data is collected, the brand also seeks the consumer’s permission to use the data for marketing purposes.
Why is this focus on first-party data transforming the global advertising industry? For the simple reason that some brands have a wealth of first-party data, while other brands have practically none. For example, established major retailers with decades-old loyalty card programmes have access to a goldmine’s worth of data. This includes the massive amount of up-to-the minute customer behaviour and sales information that is flowing into their systems every day. With an abundance of opted-in and logged-in first-party data, these retailers’ customers are also very familiar and comfortable with the concept of sharing their information in return of receiving targeted deals, personalised offers and an overall better brand experience.
Consumer Packaged Goods (CPG) brands, on the other hand, have rarely had a direct relationship with their consumers, as their sales have mostly been made via partners. As such, CPG brands are unlikely to have consumer first-party data at any meaningful scale. As customer-brand relationships become more omnichannel and consumer shopping habits evolve, the development of first-party data at a meaningful scale is increasingly challenging and, unless there is a significant planned ROI, very costly, thus creating additional hurdles for brands who lack these insights.
Brand marketers under pressure
In 2023, established brands are under a lot of pressure. High inflation and a cost-of-living crisis are prompting shifts in consumer behaviour. This includes reconsidering what products they want to buy and where they want to buy them. Indeed, recent research has found that consumers will, on average, visit three or more of the top 10 retailers in any given month in hunt of the best deal and are increasingly looking to retailer-owned labels. Across all sectors, from supermarkets to automotive, established brands are facing increased competition from new entrants and less expensive rivals that their formerly-loyal customer base wouldn’t have considered previously.
Because of this, obtaining a clear picture of performance in relation to changing consumer behaviour has never been so important. Therefore, brands lacking up-to-date insight into their customers right now are in a dangerous position. Thankfully, for CPG brands, data collaboration with retailers provides an answer to their first-party data problem.
Data collaboration opens new doors
Data collaboration – often through what many may be familiar with, ‘data clean rooms’ – enables partners to work together and leverage their shared data for insights, without either party (or parties) having access to the others’ data. Data collaboration involves privacy controls such as encryption, so data can’t be used inappropriately, while also providing data scientists and media planners with the tools they need to better plan, activate, and measure.
Data collaboration technology is what powers the creation of ‘retail media’ networks, the retailer-owned platforms that marketers can use as media properties to reach the retailer’s customers with their marketing messages. They can include the retailer’s online environments like its website, apps, and any other digital properties. It can also include offline channels like in-store and direct mail.
Retail media networks allow brands to leverage insights into the people who are buying their products, their competitors’ products, and the general makeup of the buying audience. By completing their portrait of who’s driving sales at the retailer level, advertisers close the measurement loop, and can better gauge the effectiveness of their ads and offers. The output: advertisers can better target the right audiences and reduce advertising waste, while retailers improve yields and deliver enhanced customer experiences.
In a relatively short space of time, retail media has become an important part of the media strategy of many brands. Beyond retail, more and more data-rich companies are unveiling “commerce media networks” as they realise the value of the data they hold. While grocers, and health & beauty, can be considered pioneers, other arenas with large, permissioned and loyal customer bases – such as travel, hospitality and entertainment – can offer tremendous value to marketers by harnessing the power of data collaboration.
Unlocking the potential of data collaboration
Brands who embrace the potential of retail and commerce media and data collaboration now, and work with the right partners to meet their unique business needs, will put themselves ahead of the curve. Regardless of whether a brand has decades of first-party data, or is just now starting its first-party data strategy, data collaboration helps to strengthen insights by reinforcing them with the rich insights of partners. Through better understanding of consumers, brands can create lasting and winning relationships to help sustain them in an ever-more competitive marketplace.
NAM Implications:
- Think how this degree of influence over the impact and effectiveness of advertising budgets has over traditional media.
- Coupled with the fact that retailers having squeezed most of the juice from retail margins and efficiency improvement like stockturn….
- ….are now left with Retail Media as a source of incremental revenue.
