There’s another piece to the jigsaw that, broadly coinciding with the pandemic, has proven very timely for the explosion of interest in retail media. And that’s the privacy challenge to the way digital advertising networks have hitherto collected and used consumer data for targeting and personalisation.
Compared to traditional offline advertising, the fact that digital advertising can be targeted at web users based on their online behaviour is of enormous value to brands. It significantly raises click-throughs and conversion rates, making ad spend much more efficient.
But the way user behaviour is tracked for such purposes has come under severe scrutiny in recent years. In the wake of far-reaching digital privacy regulations like the GDPR in Europe, major internet players have taken the decision to clamp down on the collection of personal data. In particular, so-called ‘third-party’ tracking cookies - the type used by ad networks - will no longer be supported by major browsers such as Chrome and Safari.
This has far-reaching implications for the digital advertising industry. But it is by no means the end of personalised, targeted advertising, nor is it the end of behaviour tracking and cookies.
Consumers are not against their digital behaviour being tracked per se. In fact, as far as getting personalised experiences goes, they appreciate the benefits. When shopping online, receiving personalised product selections and offers etc based on previous purchases, or picking up on products you were browsing last time as soon as you land on a site, contributes to higher customer satisfaction. People are generally happy to share data with the sites they visit in exchange for these kinds of benefits.
What they don’t like is the idea of hidden entities - such as external advertising networks - also collecting their data and using it for purposes that are not entirely clear to them.
This all adds a whole new level of value to personal data that businesses collect directly, with informed user consent. Third-party data is out, but first-party data - i.e. that collected by the sites users visit - is in. And retailers are awash with this kind of data.
Arguably more so than high margins, more than the pandemic-inspired dash to digital, this shift explains the meteoric rise we’re witnessing in retail media. It explains why demand from brands to buy advertising on retailer-owned networks is rocketing - retailers now control the consumer data that will allow them to continue targeting their campaigns.
There are other benefits to brands in advertising directly on the channels where they also sell. Running sales and marketing on the same platform shortens the journey from promotion through to conversion. Consumers favour short, simple shopping journeys like this. But from a brand’s perspective, it also makes it easier to attribute sales to specific ads. The more accurately you know which ads are driving conversions and which are not, the better you can optimise your campaigns and your ad spend.
Access to consumer data in the privacy-first age, continued personalisation and better analytics give brands a reason to take the retail media offer seriously. As a result, according to Forrester, between 70% and 90% of brands believe retail media will play a significant role in their future growth.