Retail media, also known as commerce media, is evolving.
While traditionally it has been seen as a solution for the bottom of the funnel – when a buyer is at the point of purchase – providers are waking up to the potential of retail media as a full-funnel solution.
Thanks to partnerships across social media, CTV (connected TV) and streaming, and off-site, retail media networks can now offer brands a way to tie their campaigns to sales in store, measure their impact, and understand what drives customers to purchase.
“A full-funnel approach is the future of commerce media,” states Eric Brackmann, VP of Commerce Media at Koddi, with confidence. “I see this trend continuing to gain momentum as commerce media networks build new partnerships with more traditional media players.”
How can we expect to see this trend play out in 2024, and what are the implications for customer data and privacy? We asked the experts for their take.
Privacy and measurement
– Consumer privacy needs to be “non-negotiable”
– Could retail media serve as the solution to privacy woes?
– Loyalty schemes must fully communicate the value exchange on offer
Growth and scale
– Full-funnel retail media will unlock new budgets
– Potential for “incredible growth” within social commerce
Measurement and targeting
– Advertisers should focus on conversion for now
– A shift towards longer-term KPIs
– Audience planning tools will increase in sophistication
Consumer privacy needs to be “non-negotiable”
“To make the full-funnel vision work, customer privacy has to be non-negotiable for retail media networks,” says Maren Seitz, Senior Director at independent analytics company Analytic Partners. “There needs to be a certain level of control, transparency and quality of placement, as this is a potentially huge issue for brand safety if not addressed.
“The introduction of a set of measurement guidelines by the IAB earlier this year is a step in the right direction and will ease the path through any potential obstacles. Retail media is going to have to deliver on these principles given the scale it’s reaching.”
Lori Johnshoy, Head of Global Retail and CPG strategy at data collaboration platform LiveRamp, urges retailers to make use of a consistent identity framework for their first-party data: “one with clear rules that protect privacy and align with business priorities as the media network grows.
“This will allow retailers to deepen their understanding of the customer journey in a privacy-centric way, even as they increase their number of data sources. With this approach, retailers will create a durable, privacy-enhanced roadmap that supports data acquisition and retention and sets a foundation for future growth.”
To support this approach, Johnshoy recommends “work[ing] with partners who can implement a range of privacy measures, from using privacy-enhancing technologies, to data encryption, to data access controls that can be configured by partner and use case.
“Privacy protection should be a key element of ensuring customer data is collected, stored, and used in accordance with partner policies and privacy regulations. Retailers and their expanded funnel partners must be transparent about how customer data will be accessed and protected, and set controls to ensure customer data is not compromised or misused.”
Could retail media serve as the solution to privacy woes?
Even with the additional complexity introduced by full-funnel retail media, many experts contend that retail media is an inherently privacy-first form of advertising, built as it is on first-party data. As the industry takes aim at attribution methods like third-party tracking cookies and IP addresses, this is a welcome advantage.
“Retail media actually serves as a solution for current privacy challenges in the industry and is a clear winner in light of cookie deprecation,” says Nicole Kivel, Managing Director, Northern Europe at Criteo. “[It] is unique in being able to execute both audience targeting and closed-loop sales measurement without consumer data ever having to leave a retailer’s proverbial ‘four walls’.
“Unlike other forms of media, where user-level data is typically needed to flow across several different websites or mobile applications, retail media has inherent advantages in keeping data fully within a first party environment.”
Nich Weinheimer, EVP Strategy at omnichannel marketing platform Skai, agrees. “The good news for the industry is that retail media ad serving is built on the core of first-party data collection. First-party data is predicated on a value exchange of identity for goods and services and has the foundational trust required to make a user-friendly, native digital ads experience work for the publisher, advertiser, and consumer alike no matter where the consumer touchpoint occurs.
“Safely leveraging this data within the machinations of the first-party ecosystem and media – the retailer, in this case, offering aggregated intent and other valuable audience signals to their brands – is a strategy that has been forged and proven in the shadow of the pending deprecation of third party cookies.”
Consumers are increasingly aware that companies gather a lot of data from and about them…
– Eric Brackmann, Koddi
Koddi’s Brackmann believes that the full-funnel evolution of retail/commerce media even presents an opportunity for improved consumer experience and privacy. “Done right, we see commerce media as a way to improve the consumer experience regarding privacy,” he says.
“Consumers are increasingly aware that companies gather a lot of data from and about them, but they are not necessarily comfortable with some of the companies engaged in data collection and the methods they use. Commerce media seeks to flip that model – to centre on relevancy and transparency with a trusted brand.”
Loyalty schemes must fully communicate the value exchange on offer
However, as with all forms of data collection, consent and transparency are key. As consumers increasingly offer up their data to retail loyalty schemes, it’s important that they fully understand how this is being used – and feel that the value exchange is fair.
Ian Black, Head of Retail Media at Publicis Commerce, cautions: “One general trend I do foresee is more explicit value exchange communication for loyalty schemes, which will increasingly be required as users become more aware of their data being used for targeted advertising.
“This is already manifesting in exclusive pricing for loyalty card holders at Tesco and Sainsbury’s, similar to what Amazon has done successfully for years with its Prime events.”
I do foresee… more explicit value exchange communication for loyalty schemes…
– Ian Black, Publicis Commerce
Mark Leith, Director of Delivery for Retail Media at OMG Transact, emphasises the importance of data security to engender customer trust. “The shift of retail media into a full-funnel space is likely to have privacy implications on the retailers. However, this is something that they should be able to model by ensuring compliance at all stages with the regulations currently in place – gaining consent from users in more than one place will become imperative,” he says.
“The main blocker for retailers in this space will be if they do not look to invest in secure data practices that allow them to build a deeper layer of trust with their customers, through ensuring that their data is both safe and used in an ethical way – essentially being customer-first.”
Full-funnel retail media will unlock new budgets
“[Retail media] acting as a ‘full-funnel’ marketing solution is an interesting trend and so is the ‘why’ behind it,” says Jaclyn Nix, EVP Sales and Operations at retail technology company CitrusAd. “You start with on-site, but on-site has a limited amount of scale. Additional tactics such as CTV and social allow retail media networks to tap into budgets outside of traditional channels flagged for retail media like shopper marketing and ecommerce.
“It is also an opportunity for brands to bring closed-loop reporting into legacy channels like social and traditional TV. Full-funnel reporting and measurement will be the next big push.”
CTV is growing at almost as fast of a rate as retail media networks…
– Lori Johnshoy, LiveRamp
LiveRamp’s Lori Johnshoy predicts an opportunity for retail networks to tap into national budgets – and improve performance. “As the lines continue to blur between shopper/trade and national spend, media channels such as TV that were once fully-owned by national budgets will increase the number of offerings available on media networks.
“This will give networks opportunity to grow revenue … but they will need to follow activation and measurement guidelines that are much more stringent.
“CTV is growing at almost as fast of a rate as retail media networks, and their partnership will drive even better performance. Their joining also presents an opportunity to bring much-desired measurement improvements to advertisers such as CPGs, which collaborate on media networks to enhance their first-party data strategies.”
Potential for “incredible growth” within social commerce
Skai’s Nich Weinheimer points to the partnerships between retail media networks and social platforms as a crucial trend. “We will see continued collaboration between social ad platforms and critical retailers, similar to the recent Amazon/Meta, Amazon/Pinterest, and Amazon/Snap announcements,” he says.
“Not only will this activate incredible growth in social commerce, but these partnerships will enable better measurement to tie conversions to mid- or upper-funnel ad investment.”
Ian Black similarly predicts an expansion of social commerce in 2024. “When referring to ‘social commerce’ here, I am really aggregating the wider trend of media formats becoming ‘shoppable’. The direction of travel here was made evident by the announcement of Amazon’s tie up with Meta and Snap in facilitating in-app check-out and sales tracking, initially in the US. This was widely considered a direct counter to the recent developments of TikTok Shop.
“As social platforms continue to grapple with signal loss impacts, I can only see a continued trend to forge closer connections with commerce platforms to fill these gaps for advertisers selling via retailers.”
Advertisers should focus on conversion for now
“There’s a great variety in maturity [of retail media networks]; some networks will throw in more resources and mature faster than others,” says Analytic Partners’ Maren Seitz. “[F]or brands starting out, it is best to focus on an established retailer first, especially ones that are making the effort with their data and measurement standards.
“For now, advertisers are also still better off focusing on conversion rather than driving brand metrics. Given the usually higher cost of the ability to target, this should be the first step.
“Upper funnel success needs to be proven in the next step. Brands must weigh up the cost/benefit of a broader reach vs expensive hyper targeted activities – either way, the ads must be highly relevant to unlock the hyper targeting opportunities.”
A shift towards longer-term KPIs
“To date, much of the testing of retail data in upper-funnel environments has been mistakenly focused on its ability to drive incremental short-term sales,” Publicis Commerce’s Ian Black highlights. “In many cases this overlooks the nature of the inventory being targeted and reduced likelihood that audiences are purchase-ready when browsing their social feed, for example.
“A trend we are encouraging at Publicis Media is retailers pivoting towards more appropriate KPIs such as brand lift/recall and indirect longer-term sales impacts, as they would when assessing more traditional digital tactics.
“This levelling of the playing field should open the door for retail data to play a bigger role further up the funnel.”
Audience planning tools will increase in sophistication
Black cites developments such as Amazon’s cross-channel planner, Tesco Dunnhumby’s Insights Module and Nectar’s Shopper Insights Platform as evidence that audience planning tools will offer increased sophistication and, consequently, “assist in equipping advertisers with the granularity of insight needed to ideate around and ultimately justify upper funnel investment.”
“Over time I expect to see these platforms allow for seamless audience planning and building between funnel stages and platforms.”