industryopinion Why retail media is
irresistible for retailers and brands
Paul Winsor, head of industry GTM, retail & CPG, EMEA & APAC at Snowflake talks about the advantages of retail media.
T
he world of retail changed forever as a result of the pandemic. With the rapid rise of online transactions, retailers – armed with a new breadth of customer insights
– recognised the power of their ecommerce platforms for brands looking to target engaged, relevant audiences. Retail media isn’t anything new – it’s been around for decades
but was traditionally a tactic retailers would deploy in-store by the checkouts and the aisles. By advertising to consumers already in the buying process, retailers were able to capture their attention at the right moment, and therefore, drive further sales. Before being digitised, this process was labour-intensive and costly as it meant using cardboard and paper to promote items. Nowadays, retail media is commonplace on ecommerce sites and is highly cost-effective. GroupM predicts that by 2028, retail media will actually outstrip television adverts worldwide, demonstrating the ground it is gaining in the world of advertising. To take advantage of this growth, retailers need to harness
their data. A comprehensive data strategy enables retailers to analyse the data they have on their customers and share it with third-party brands, without compromising consumer privacy. Building a 360-view of the customer requires retailers to fine- tune their infrastructure and maximise their capabilities around data management.
Why retail media works Retailers of all sizes are facing significant pressure on their margins as a result of ongoing inflation and tough price negotiations with suppliers. Retail media not only offers them the chance to optimise their brand advertising in stores, but also provides a chance to monetise online platforms and harness first-party data to create new revenue streams. With more and more consumers shopping online, retailers
are building vast online options for advertising space. Their inventories expand far beyond standard banner ads and now encompass smartphone apps, websites, social channels and more, all enriched with first-party data on customers’ shopping habits. This data creates the potential to segment audiences, deliver personalised messages, and tweak timing and frequency, all of which optimise the chances of advertising achieving short- term results as well as longer-term brand building.
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Mastering data, matters While advertising on retail sites such as online supermarkets is considered a safe bet for brands due to long-established and trusted retailer domains, many have a long way to go before they unlock the full potential of retail media. Deploying retail media use cases requires a synergy of technology, data infrastructure and people. It involves building a centralised data platform to break down data silos and create a unified view of the customer. Once this data is correctly assembled, businesses can take this a step further by using data clean rooms which allow them to derive insights on sensitive or regulated data without exposing the underlying data. This means they have full control over the exact data they wish to share with third parties during the data sharing process, ensuring customer privacy. While retail media is still in its infancy, we are already seeing
different models appear that are characterised by how retailers decide to leverage shopper data. Some retailers are guarding their data closely, using it only internally to help advertisers develop targeted campaigns. While others are already exploring the potential of sharing data directly with advertisers as a value-add service. For example, Tesco’s data science company, Dunnhumby, teamed up with ITVX to use data gleaned from 20 million Tesco Club Cards with advertisers, while Ocado is working with global tech firm, The Trade Desk, to offer advertisers access to customer behaviour data.
The full power of retail media Retail media is growing rapidly and has impressive growth predicted. The reasons for its meteoric rise are simple: it’s a high-margin source of income for retailers and a cost-effective way to achieve advertising objectives for brands, delivered inside secure and brand-safe spaces. A mature data strategy is key to taking advantage of the
opportunities of retail media; first-party data must not be siloed and must be ready to be shared securely with partners. Allowing shopper data to be used by off-site advertising networks will enable retailers to take full advantage of the valuable data they own and drive even greater earnings from retail media.
September/October 2023| 15
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