The Acceleration of Retail Media Solutions

As advertisers grapple with the impending deprecation of the third-party cookie and recent mobile identifier restrictions, large retailers are making a noteworthy move into the data market. Amazon.com has obviously paved the way, but more major retailers like Target, CVS, Walgreens, and Walmart have followed suit, likely eyeing Amazon’s ability to use its data to create a formidable advertising business.

These moves signal a larger trend: how the advertising ecosystem is adapting to become more people-based. As some 2020 research indicated, as much as 80 percent of U.S. marketers were still moderately reliant on third-party cookies, illustrating how far we still have to go to lessen our dependence when we’ve known for some time they’re going away. Retailers are providing a first look into understanding what people-based strategies work well and the opportunities that can be unlocked in this changing landscape.

Retail companies have long been transforming to data companies. This progress was braced by the steady growth of e-commerce and direct-to-consumer marketing which saw surges throughout the coronavirus pandemic. Especially for many of the largest retailers, the ability to capture consumer data — transactional, preferences and behavioral — covering the majority of Americans can rival that of even Facebook and Google. Now retailers are following in the footsteps of the duopoly, entering into the media and advertising space while finding a way to keep proprietary data assets safely within their own closed ecosystems.

More retailers are enabling near-real-time data capabilities to bring advertisers closer to moments in the buyer journey across channels. And as a bonus, retailers have access to in-store and online purchase data to help close the attribution loop. But even with powerful proprietary assets, retailers still face the same challenges everyone is concerned about in the years ahead.

With retail media’s ability to measure and access near-real-time data, retailers stand to receive an outsized share of the performance marketing spend that will likely move first, as early as Apple’s ATT changes gain momentum and campaign outcomes start decreasing. The same flight to retail media from performance marketers is likely once cookies are deprecated.

The growing market of retail media solutions comes at a time when a scaled understanding of consumers is much needed to help advertisers navigate not only the deprecation of cookies and new data restrictions, but also adoption of emerging channels like connected TV (CTV). This puts retailers in a position to access upper funnel marketing dollars.

To capture that spend, retail media has to embrace the opportunity to enable data to be more portable across the evolving landscape of CTV and the broader TV ecosystem. Walgreens recently announced it would add advanced TV to its network, partnering with OpenAP to integrate with OpenID, a unique identifier for television. Similar moves from other retailers into television only make sense.

Extending capabilities into channels like CTV and streaming audio will also be crucial to compete with Amazon, which already has a powerful hold on branding channels in the connected home with its Amazon Fire sticks, Alexa, Kindles and more.

Retailers’ ability to understand customers across first-party websites, mobile apps and in-store transactions is a powerful start to a true picture of identity and is incredibly impactful in driving action near the end of the buyer journey. Advertisers also need to activate against these insights across other touchpoints — e.g., third-party publishers, social media, CTV and more. As it stands, even the largest retailers don’t have the same ad inventory as major publishers, so making data portable outside of their own properties is critical.

The nation’s largest retailers have the beginnings of an identity graph, but still have gaps to fill in creating a persistent view of identity that can plug into the advertising ecosystem in holistic and actionable ways. As retailers consider how to connect data to off-property channels, maintaining privacy, security and control over customer data will be top of mind. In the next evolution of marketplaces, retailers will be looking to achieve portability without making proprietary data public, giving away the keys to the kingdom.

As consumers flock to more digital channels, linking retail data to connected ecosystems like streaming television and audio will be key to fulfilling advertising inventory and creating more ad opportunities for advertisers. This will require a people-based view that can be bolstered by identity-enabled solutions like retail data marketplaces. However, there’s still work to be done in connecting all the necessary data to create the comprehensive picture of identity necessary for the future of marketing.

Dave Oliveira serves as vice president of TransUnion’s Media and Entertainment vertical, where he leads sales and business development teams focused on the media ecosystem across advanced TV, publishers, agencies, and ad tech and martech companies.