Against a turbulent media and advertising environment, retail media has emerged stronger than ever. Retail media is forecast to be a $51.36 billion opportunity in 2023, growing to $61.15 billion by 2024.
Why does retail media continue to grow at such an exponential rate? In our increasingly digital-first world, retailers are collecting more data on shopper behavior and outcomes than ever before. It is estimated that online shopping accounts for 20.3% of all retail.
Retailers are, therefore, in a unique position to make this data available to brands who need more effective ways to reach their current and potential customers. In effect, enabling retailers to act more like media owners with a high-value and authenticated addressable audience.
What is a retail media network?
A retail media network is a first-party data advertising solution that enables retailers to make their audience and data intelligence available for brands and other media companies to deliver targeted advertising.
Amazon is credited as the first retailer to launch an advertising solution in 2012. Today, that advertising business generates $9.5 billion in quarterly revenue (Q3 2022). The success of that media solution has led to many other retailers launching similar solutions. In the US, we have seen brick-and-mortar retailers such as Walmart, Walgreens and Home Depot and digital retailers operationalizing their first-party data to create greater addressability and precision for marketers on their properties as well as other media inventory such as social.
Across the Atlantic in the UK, we are seeing media owners such as broadcasters partnering with retailers and retail data owners, such as loyalty card or behavioral organizations, to offer marketers a tailored media solution to maximize performance with new and existing shopper experiences.
In an increasingly competitive landscape, retailers are exploring ways to offer even richer media experiences to brands. These new solutions bring together data from multiple parties to create expansive ecosystems around their retail media network. These opportunities are moving from concept to reality at an incredible rate due to the rise in popularity of data clean rooms.
The role of data clean room in a modern retail media solution
A retail media solution is only as robust as the customer data that underpins it. Consumers are inundated by news of data breaches and misuse and are, therefore, more aware and skeptical than ever. As such, organizations must collect data in a fully consented and transparent manner and carefully consider how they unlock value from that data and make it available for partners without risking their customers' security or privacy. A misstep here not only threatens regulatory repercussions but also risks the reputation of the brand or media company.
Data clean rooms are the answer to this challenge, as they empower retailers to connect datasets across multiple organizations and analyze them as one without requiring any data to be moved, centralized or commingled. This provides the control, ownership and flexibility required for retail media owners to bring together various parties with valuable datasets into a rich retail media network, allowing businesses to connect, match and execute without risk.
Finally, data clean rooms allow retailers to fully operationalize and monetize their first-party data with other brands, media owners and agencies to maximize the impact across a customer’s omnichannel journey without risk.
How are retail media opportunities growing?
Shopper marketing is the most traditional opportunity for retail media and retail media networks. This owned media activation enables brands to match their first-party data against a retailer's shopper data. This data matching enables brands to target shoppers across the retailer's owned channels.
How data clean rooms are powering shopper marketing
With a data clean room, retailers can make their shopper and audience data available for brands to quickly and safely match their first-party data against without requiring either party to sacrifice control of its data and without risking the privacy of their customers. Brands are then free to build custom audiences based on the individual goals of each campaign, for example, retention, up-sell or re-engagement. These custom audiences are exclusive and unique to each brand, as they are based solely on the intersection of their data sets.
The multi-party nature of a data clean room also means that other second and third-party data sources can be introduced to enhance these audiences further. For example, combining identity data from graph providers, exposure insight from other media owners, or additional behavioral data from an agency partner to improve everything from ad creative to measurement.
The power of retail media can expand beyond just the retailer's owned channels. By working with media owners, brands and retailers can leverage their combined customer intelligence to target consumers and measure the impact across multiple channels.
How data clean rooms are powering off-site activation
With a data clean room, a brand and retailer can match their first-party data sources against various media owners, such as a CTV provider. This allows the brand to take their highly tailored audience created against the retailer's audience and identify where, how and when those individuals are consuming content. The brand can use this insight to plan high-performing media campaigns that deliver the right message to the right audience at the right time. Additionally, the retailer can provide accurate measurement of the lift generated with their valuable customer data across the omnichannel journey.
At the end of 2022, we saw two of the leading broadcasters in the UK deliver such retail media solutions to market. Underpinned by InfoSum's data clean room, ITV announced a solution with Boots and Tesco and Channel 4 with Sainsbury's/Nectar 360. We look forward to hearing the results of these solutions in early 2023.
Second-Party Data Planning
Many brands face the challenge of having limited-to-no first-party data themselves. This is common in companies with no direct-to-consumer strategy, such as a CPG. Retail media enables those brands to tap into second-party data held by retailers, media owners and other data providers to inform their media planning with rich segmentation, market research, or even attribution.
How data clean rooms are powering second-party data planning
Through a data clean room, brands with low levels or no CRM data can safely access the data insights held by multiple parties. Using that data, these brands can create high-value audience segments. For example, a CPG can build an audience based on those individuals who have previously purchased its products or shown interest in a specific product category.
Furthermore, advanced data clean rooms that offer advanced machine learning tools that enable those brands to identify the characteristics and behaviors across those datasets that are most common. This actionable insight can then be used to create buyer personas that inform customer audience creation and targeting at a greater scale. These audiences can then be activated directly across the retailer (shopper marketing) or other media owners (off-site activation).
The final piece of the puzzle for retailers, brands, their media agencies and media owners is measuring media campaigns' success based on in-store and online outcomes. Retail media networks have a unique advantage against other media solutions in this case, as they have direct access to the outcome or purchase data. They can easily create powerful closed-loop analysis to prove the value of their proprietary customer data both in-store and online.
How data clean rooms are powering measurement
The multi-party nature of data clean rooms makes measuring the incremental impact of retail media campaigns simple and fast. Each party involved in the retail media campaign brings a different piece of the data puzzle to the table:
- Brands with their own eCommerce offering can bring outcome data to be used in the analysis. For example, sales data or shopping cart data.
- Retailers can provide outcome data from their online and offline stores, and exposure data for shopper marketing campaigns.
- Media owners have an essential role to play in the incrementality analysis. Ahead of campaign delivery, they will need to create two audiences, those who will be exposed to the campaign and a small control group who will not be exposed. Post-campaign, the media owner can make both audiences available for analysis.
Analyzing all these data sets makes it quick and easy to conduct incrementality measurement, which calculates the uplift in the desired outcome that can be attributed to the campaign. For more information, watch our incrementality video.
Tap into the retail media opportunity today
Whether you're a retailer looking to build a retail media network, a media owner wishing to collaborate with a retailer on a retail media solution, or a brand ready to tap into these solutions, a data clean room will empower you to unlock the full potential of retail media.
Data clean rooms enable multiple parties to seamlessly and safely collaborate across multiple data sources with complete protection. This protected approach to data collaboration allows these organizations to resolve identities across their various data sets, unlock new rich consumer insights, build and activate high-value audiences and measure the success of those campaigns - all from one platform.
Download our ultimate guide to data clean rooms and for everything you need to know about the data clean room trend and how they can underpin your retail media opportunity today. Ready to get started with your retail media network, download our guide, Powering the next-generation retail media network.