The ongoing cost-of-living crisis is resulting in many shoppers re-evaluating their purchasing habits and, in some cases, putting traditional brand loyalties to one side in favour of more affordable alternatives.
In response, brand marketers are more determined than ever to gain a better picture of who their customers are, their purchase preferences and the touchpoints that matter most across the consumer journey. In fact, according to recent research, 42.3% of senior brand marketers reported that ‘understanding the whole customer journey’ was a paramount concern in Q2 2023.
However, one negative consequence of the shift in consumer loyalty is that the traditional ‘value exchange’ carefully maintained between brands and retailers is being negatively affected. For example, with in-store footfall dropping, are retailers still catering to the demands of the various brands they stock? As shoppers’ preferences continue to evolve, retailers must explore how to continue evolving to the needs of brands and facilitate new types of mutually beneficial arrangements, such as data collaboration.
The Rise of Retail Media
With the approaching phase-out of third-party cookies on Chrome, many of the traditional methods of targeting and measuring campaigns will become much harder, and the customer journey will become more opaque than ever to brand marketers. As a result, the first-party data amassed by retailers has become extremely valuable to brands looking to accurately understand and target their customers as well as measure their advertising investments, therefore gaining a better understanding of behaviour.
One strategy that many retailers are exploring right now is the area of data collaboration, where retailers make their huge bank of up-to-date customer and shopping data available to brands to analyse and leverage in a respectful, privacy-centric way with targeted promotions and offers. Many of the world’s biggest retailers have now established their own retail media networks to leverage this new opportunity.
When done correctly, retail media works well for all the parties involved. The retailer benefits from the additional revenue from brand advertisers.Meanwhile, the brands gain access to customer data and insights that would otherwise be beyond their reach. Lastly, the customers benefit from campaigns and offers that are more in-tune with their own preferences.
Retailers therefore need to align their platforms with this new reality, enabling these data partnerships which provide access to customer insights for brands. Otherwise, they face being swept aside by competitors who are taking advantage of data collaboration to enhance their marketing strategies.
Embracing Collaboration for Success
It’s no surprise that some brands and retailers have been slower than others to fully embrace retail media. The concept of a retail media network is very different to the traditional relationship between brands and retailers. For example, retailers are now providing a new kind of service for brands, which, in turn, demands that they need to educate their brand partners about the new opportunities available and explain the terminology, technology and strategies involved.
Performance teams will become key stakeholders on the brand side, ensuring that clear goals are set, and adequate investment is reallocated from their mixed marketing media spend. As a result, many brands are appointing retail media directors, who are responsible for the bigger picture, ensuring that retail media budgets remain flexible and that data insights are not siloed between teams.
This new scalable media proposition demands that retailers think more like a publisher or one of the online advertising giants we all know. This shift in thinking will impact the way teams across the business collaborate to establish more holistic thinking between loyalty, marketing performance and data teams, with brand demand now being the responsibility of both the brand and the retailer (rather than just previously that of the brand through more traditional digital media channels).
Crucially, retailers will also need to invest in technologies that support retail media networks to help them to deliver real business outcomes for brands in a safe environment. A key solution underpinning retail media networks is data clean room technology, which enables data collaboration and brands within the clean room to activate, analyse, and measure marketing spend. With ad budgets currently under close scrutiny, leveraging the right clean room technology is vital.
Data partnerships stand as the bridge to a brighter and more collaborative future for both brands and retailers. This will enable brands to gain a better understanding of their customer’s journeys and purchasing habits, help them forge more meaningful customer relationships and create tailored customer journeys.
By prioritising collaboration, retailers can drive engagement as well as loyalty, not only with customers, but with brand partners too.
