In today’s dynamic landscape of digital advertising and e-commerce, companies are constantly seeking innovative strategies that leverage technological advancements to stay ahead of the curve. Two concepts that have gained considerable traction are retail media networks (RMNs) and data clean rooms (DCRs). In this article we’ll dive into the realm of retail media networks and explore how unlocking data collaboration via data clean rooms can bolster retail media network offerings.
Overview & Emergence of Retail Media Networks
Retail Media Networks (Roundel, Walmart Connect, Kroger Precision Marketing, etc.) enable retailers to productize and monetize shopping, transaction, and media delivery data for clients enabled by technology (like DCRs), allowing brands to leverage this data for more targeted advertising.
In addition to several converging trends which our own Oliver Amidei covered here, these are a few additional driving forces behind the rapid growth of retail media networks:
- The surge of e-commerce across brand categories
- Compressed margins associated with e-commerce: The shift to digital sales often involves higher cost associated with the technology infrastructure, marketing efforts, data analytics, etc.
- Cookie deprecation increasing the importance of 1P data and identity-based advertising
Why are retailers investing in RMNs?
Retail media networks enable retailers to monetize their owned digital & physical presence and valuable first-party assets for targeted advertising. It is expected to be a $61 billion business by 2024. Retailers can leverage shopper behavior and transaction information to build audiences for activation across both owned properties and publishing partners to enable closed loop measurement.
These are three key reasons as to why retailers are looking to explore and leverage RMNs to stay competitive in the dynamic retail landscape.
- Revenue Generation:
- Retail media networks provide retailers with an additional revenue stream. This new revenue stream can help offset costs, improve profitability, and increase overall financial performance.
- Expanded Brand Investments Halo as Retailer Marketing:
- Embracing RMNs enables retailers to revamp their marketing strategies through collaboration with brands, creating a “halo effect” on the retailer’s marketing efforts. The presence of well-known brands and their advertising investments within the retail environment enhances the retailer’s overall brand perception, strengthening the retailer’s brand image and positioning.
- Improved Customer Experience:
- Leveraging RMNs can enable retailers to provide personalized and relevant content to their customers, leading to a more engaging and meaningful shopping journey which ultimately results in customer loyalty
Introduction to Data Clean Rooms
Now that we have an understanding of what a retail media network is, let’s introduce data clean rooms. DCRs are secure environments that enable data collaboration in a privacy safe and secure manner between two or more parties. There are several macro trends that are driving the recent prevalence and adoption of data clean rooms.
- Consumer Privacy and Trust:
- Growing importance of customer data privacy and consumer trust
- New state and federal privacy regulations establish significant restrictions on direct data sharing and data collection
- Cookie Deprecation & Importance of 1P Data:
- 3P cookie elimination has/will result in loss of scale in addressability for digital marketing, impacting the performance of digital advertising. The depreciation of cookies is now placing the emphasis on 1P data collection
- Technology Advancements:
- Advancements in cloud-based data infrastructure (ie. Snowflake) has made it more affordable and feasible to securely share data
- Emerging providers of DCRs, like Habu, offer user-friendly interfaces that allow businesses to access valuable data without requiring expertise in data science or engineering
Importance of Data Collaboration for Retail Media Network
RMNs can be further enhanced with the integration of data clean rooms, allowing RMNs to facilitate the exchange of anonymized and aggregated shopper data between retailers and brands in a secure environment. This collaboration enables granular consumer insights, enhanced audience segmentation, and closed-loop measurement.
Granular Consumer Insights:
DCRs enable advertisers to gain deeper insights based on the retailer’s 1P data to access detailed insights into consumer behavior, preferences, and purchase patterns. This allows for strategic optimizations for audience segmentation and targeting, ensuring RMNs deliver relevant ad experiences to higher value audiences.
Enhancing Audience Segmentation:
Data clean rooms empower RMNs and their advertisers to work with aggregated consumer data in a privacy safe and compliant manner.This allows them to refine their audience segmentation strategies, identifying specific consumer segments based on their unique attributes and behaviors. This enhanced audience segmentation drives more effective targeting, ensuring that ads reach the appropriate consumers (i.e. purchasing consumers).
DCRs enable RMNs to track and measure the effectiveness of their advertising campaigns throughout the consumer journey. By connecting data from various touchpoints, brands and advertisers can gain insights into the impact of their advertising efforts on actual consumer actions.
We can help
Retail media networks and data clean rooms are two important capabilities in the digital advertising and e-commerce ecosystem. As privacy concerns continue to grow and 1P data management tools are adopted, we believe these technologies will become even more important for companies looking to drive sales and increase brand visibility while respecting individual user privacy.
At Transparent Partners, we work with advertisers, publishers, and DCR technology companies to realize breakthrough value opportunities for marketers – driving positive, transparent outcomes for all parties. To learn more around retail media networks and data clean rooms, reach out today.