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15. October 2024

Retail Media: The Rise of First-Party Data

In a world where third-party data is losing its grip, retail media offers brands a powerful alternative—delivering hyper-targeted ads exactly where purchase decisions are made. As privacy rules tighten, knowing how to tap into first-party data could be the key to staying ahead.

In recent years, retail media has come up as one of the most influential forces in digital marketing. As consumer behavior shifts increasingly towards online shopping, brands are recognizing the value of reaching their audience directly within the platforms where purchases are made. This trend has sped up the rise of retail media networks, which enable brands to place targeted ads on e-commerce sites such as Amazon, Walmart, and Target (Nakoa Digital, 2024).

At the core of retail media’s effectiveness is its reliance on first-party data, which provides a wealth of valuable insights into consumer behavior. This allows retailers to offer brands precise targeting capabilities, directly reaching consumers with a high intent to purchase. First-party data is particularly important today due to growing concerns over data privacy (Agile Brand Guide, 2024).

The Function of Retail Media

Unlike traditional advertising channels where consumers are targeted based on general browsing behavior, retail media reaches customers at the point of purchase, making use of the direct access retailers have to their customers. This means that ads are displayed to consumers who are already shopping, increasing the likelihood of conversion (Suchhelden, 2024).

For brands, this approach ensures that they are advertising in the most relevant spaces. The result is highly targeted advertising that leads to better engagement and stronger return on investment (Criteo, 2024).

Another benefit is being able to tie advertising spend directly to sales outcomes, allowing companies to measure the impact of their campaigns more effectively. Retail media ads can appear in different formats, from sponsored product listings to display and video ads, all designed to influence consumer decisions within the retail environment (Nakoa Digital, 2024).

The Role of First-Party Data

First-party data refers to information that retailers collect directly from their customers through interactions such as browsing behavior, searches, and past purchases. This data is highly valuable because it offers brands unique insights into consumer preferences and allows for more personalized advertising.Unlike third-party data, which is collected indirectly and often without consumer consent, first-party data is gathered directly from customers with their knowledge and consent. This aligns well with increasing privacy concerns and regulations.

The overall trend is moving towards a more privacy-centric digital landscape, meaning that brands which prioritize first-party data in their retail media strategies will be better positioned to succeed in this evolving environment (Agile Brand Guide, 2024).

The Post-Cookie World

Although Google recently announced that they will continue supporting third-party cookies indefinitely, the broader shift towards a privacy-first digital environment remains a significant concern for brands and advertisers. Many are still preparing for a future where third-party cookies will play a diminished role in tracking and targeting users.

RMNs have become a valuable solution for brands looking to maintain personalized advertising strategies. Since retail media relies on first-party data, it remains unaffected by the limitations facing third-party data. This makes it a future-proof option for brands seeking to maintain strong customer connections while adhering to evolving privacy regulations (Agile Brand Guide, 2024).

By shifting focus from third-party cookies to first-party data, brands can continue delivering relevant ads while respecting consumer privacy. It allows advertisers to collect valuable insights into customer behavior and improve ad performance, without relying on potentially outdated or restricted tracking methods.

Retail Media and Server-Side Tracking

The combination of first-party data and server-side tracking offers brands a powerful way to ensure accurate, privacy-compliant data collection. Server-side tracking shifts the responsibility for tracking user behavior from a user’s browser (client-side) to the retailer’s server, which results in more reliable data and better adherence to privacy regulations.

When combined with retail media, server-side tracking allows retailers to gather clean data on customer interactions, even when using multiple devices or platforms. This ensures that ads are delivered to the right users with less risk of data loss due to ad blockers or privacy settings.

Brands that integrate server-side tracking into their retail media strategies can better understand the performance of their ads and optimize campaigns for higher return on ad spend (ROAS).

Retail Media Networks: Monetizing First-Party Data

Retail media networks (RMNs) are ad channels created by retailers using the first-party data they collect from their own customers. These networks provide brands with a direct line to consumers based on their online and offline behaviors. For example, Target’s Roundel retail media network uses first-party data to offer hyper-localized and personalized ad experiences. Advertisers can place ads on Target’s website, mobile app, and across other sites using Target’s customer data to reach specific audiences based on geographic or demographic information (Madhive, 2024). Meanwhile Amazon and Walmart built robust media networks that offer brands an alternative to traditional platforms like Google and Facebook.

The benefit of monetizing their first-party data is that retailers not only create new revenue streams but also provide brands with precise tools to connect with consumers, making retail media networks essential in today’s advertising landscape.

Future Outlook

As the advertising industry continues to evolve, retail media networks are expected to see significant growth. Industry forecasts suggest that retail media could surpass traditional advertising channels such as TV and approach social media in terms of ad spend by 2027 (Madhive, 2024).

Retail media’s unique ability to link advertising efforts directly to sales outcomes will continue to attract brands that are looking to measure the real-world impact of their marketing campaigns. As consumer privacy regulations become more stringent, first-party data will become even more critical for brands looking to deliver personalized, yet compliant, ad experiences.

For both large retailers like Amazon and smaller players, retail media offers opportunities to build new revenue streams by monetizing the data they already collect from their customers. As RNMs grow, they will also push brands to improve their data governance practices, invest in technology, and educate their teams on privacy standards and data collection methods (Agile Brand Guide, 2024).

FAQ

Retail media refers to advertising directly on retailer platforms such as Amazon, Walmart, and Target, where brands can reach customers at the point of purchase. Its popularity is driven by its effectiveness in delivering highly targeted ads using first-party data.

First-party data provides insights directly from customers, allowing retailers to offer precise targeting and personalized ad experiences, which leads to higher conversion rates.

Retail media networks are advertising platforms created by retailers using their own first-party data. They allow brands to reach customers both on and off the retailer’s site, using data-driven strategies for personalized ads.

Server-side tracking ensures reliable data collection by shifting tracking processes to the retailer’s server, reducing data loss and maintaining privacy compliance, which is crucial for accurate targeting in retail media campaigns.

While third-party cookies are still supported, the industry is moving towards privacy-centric solutions like retail media, where first-party data is the key to maintaining personalized advertising strategies in the future.

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