Can retailers really deliver on the promise of retail media networks?

Jennifer Ortner
Vice President - Gas, Grocery & Convenience
Jen has decades of experience working with some of the world's largest brands to build and redefine businesses across CPG, Retail and Digital Media & Promotions.

Here’s the understatement of the year: retail media networks are getting big—and fast. As U.S. digital retail climbs to a projected $50B by 2023, both retailers and CPG brands are clamoring to cash in on the booming trend (eMarketer). But can retailers deliver on the data scale and nuanced analytics they need to pull it off? Let’s explore what’s at stake on both sides—and how retailers can future-proof their tech stack to deliver on ROAS and keep expanding the network. 

Benefits galore

In many ways, retail media networks represent the ultimate win-win for both parties. 

Retailers who build or partner to create these channels open a new revenue stream while tapping into new brand budgets previously unavailable to them like media, search and social spend. By advertising products on these networks, retailers also expose consumers to more “shelf” items that often go unseen in the ecommerce experience. And when brands succeed, so do retailers–with increased trips, loyalty, basket size and overall category spending. 

Brands, for their part, get direct access to verified shoppers when they are ready to buy, driving stronger awareness and sales for their brand. In addition to increased ROAS and omni-channel sales, they can also achieve greater SKU visibility, strengthen their retailer relationships and gain a better understanding of the shopper at the retailer. 

First-party data wins the day 

At the top of the list for CPG brands interested in retail media networks is the opportunity to gain access to a retailer’s first-party data. Changing privacy laws and the sunsetting of third-party cookies, although delayed is still a reality, and has magnified the value of first-party data for brands as they look for ways to future-proof their digital advertising strategy.

Most have used cookies to create, track and reach consumers with personalized marketing across sites. Personalized marketing has driven huge efficiency gains for advertisers, and retailer first-party shopper data offers CPGs a route back to a direct, measurable connection with the consumer in the impending post-cookie era. 

Retailers are watching the challenges stack

Despite all the opportunity, many retailers face serious challenges in establishing the network and delivering the needed insights to prove ROAS for brand partners. Top obstacles include:

  • Expense and complexity of building the tech stack
  • Capacity to sell, plan and measure programs 
  • Low onsite traffic
  • Metrics and methodologies that differ from their brand partner or across retailers 
  • Differentiation from other retail media network competition or other digital publishers 

Retailers are taking steps to address these challenges, namely through third-party partnerships and expanded in-house teams who can handle the tech stack and capacity challenges of building and maintaining the network. 

One challenge that has gone largely unaddressed, however, is that most retailers lack the scale, tools and data to compete with established advertising networks like Google and Facebook. In fact, many do not even realize they have a data scale problem until they’re live and running campaigns. That’s a big problem, since scale is often the biggest driver of ROAS—and CPG brands are already paying a premium at that point to advertise on the retailer’s media network. As retailers look to grow their retail media networks, a lack of data scale only stands to further impede their success.

The scale problem

In this sense, the biggest draw of the retail media network for CPGs is also the biggest challenge for many retail media networks. Many retailers simply don’t know who their customers are and rely on insufficient loyalty data to enhance their first-party data. As a result, those retailers are struggling to deliver the needed scale of first-party data to attract brand partners and make full use of their budgets.  And when first-party data isn’t sufficient, media spend shifts to third-party data, which means that to deliver adequate ROAS, impressions are over-delivered to a generic audience or spread over a longer period. 

In many cases, this means retailers are leaving money on the table. A large brand with $8M in planned annual investment, for example, may only be able to spend $5M of that commitment for a positive ROAS, as they cannot get as precise as needed with audience targeting. In addition, a limited first-party audience could make campaign measurement unfeasible for smaller brands with lower HHP or longer purchase cycles.

Identity resolution is the way forward

In order to remain competitive, it’s critical for retailers to optimize and expand their first-party audience. At the foundation of any retail media network, retailers need to be able to identify, understand and engage unknown store customers and provide a full 360 view including both online and offline sales at the individual level. 

Identity resolution greatly increases the scale and value of first-party data, unlocking greater spend from CPGs. For example, we worked with a Fortune 100 CPG retailer to identify unknown customers and better understand the shopping behaviors of a greater percentage of in-store customers. Now, they can reach 90% of their active customers through paid media. They’ve also been able to grow their media network by 17.5% and increase net sales during Q1 2022.

It’s important to note that most identity resolution solutions that are being leveraged by retailers today are not created equal. Most of them are based on simple name and zip code/address matching or trade area appends, which happen to have very poor match-rates with numerous opportunities for error—and an inability to resolve identities to a single person.

You need to go beyond these simplistic approaches to ensure that only a single individual is tied to a transaction record and have a data platform in your tech stack that will allow you to do so with precision and accuracy, not extrapolation and guessing, and at scale. 

Identify unknown store customers with Bridg

As interest in retail media networks skyrockets, both the opportunity and the pressure intensify for retailers who need more first-party data. Those who can expand their first-party audience will be positioned to attract brand partners and keep growing the network.

We help retailers identify millions of unknown in-store customers, provide enhanced customer behavior insights along with SKU-level purchase history—all in a 100% privacy-compliant way. As a result, you can enjoy the same rich insight into consumer behavior, targeting capabilities and closed loop measurement that online-only retailers possess – which means you have the foundation you need to position your retail media network for the greatest competitive advantage.

Ready to expand your first-party audience and watch your media network thrive? Let’s connect today.