Could retail data be the new gold mine for retailers and brands?

Strategy Consulting 2 March 2022

New regulations, tech barriers, and users’ changing habits around cookies are having a growing impact on advertisers, especially mass marketers. Since they have few direct contact opportunities with their clients, the latter rely heavily on third party data to carry out their marketing activities. Their ability to understand and target their clients has therefore been weakened and with the phasing out of third-party cookies, it risks becoming dangerously fragile. Meanwhile, the health crisis has accelerated consumers’ transition to e-commerce, leading brands towards a growing battle for visibility among e-commerce advertising inventories. 

With this challenge in mind, some retailers have developed a brand-oriented response by harnessing their data and offering exclusive digital inventories as close as possible to the purchasing stage. It is a sizeable opportunity for all parties involved, but one which brings with it numerous challenges for brands and retailers alike.

Monetizing digital inventories: benefits every step of the way

Monetizing retail data 101

To meet brands’ expectations, retail market leaders are currently developing offers to monetize retail data, as evidenced by Amazon’s ambitions and the recent launch of the Carrefour Links, by Carrefour. The proposed offer, which is often similar among retailers, is made up of the following aspects:

  • Retail media: promotion of advertising spaces on proprietary e-commerce platforms, with targeting of the retailer’s audience. The main marketing goal of retail media is conversion
  • Audience extension: harnessing of the retailer’s audience for targeting on other sites than the retailer’s. The main marketing objective of this offer is brand awareness and reputation, by capitalizing on a retailer’s customer insights
  • Customer insights: harnessing of customer insights held by the retailer through specific analytic processes: sociodemographic data, behavioral data, transactional data, marketing data…

Advanced targeting, diversifying revenue, strengthening of customer insights… An overview of the benefits

These offers meet brands’ needs, notably in terms of customer insights and targeting ability. They allow access to retailers’ qualitative digital inventory, while also providing advanced and fresh knowledge about customers and sales performance, and setting up targeting close to conversion through ready-made or personalized audience segments.

For retailers, adding value to this data is a growing opportunity in a high-demand market. It allows for developing new revenue streams around digital assets, while reinforcing commercial relationships with brands. The scope of retailer/brand relationships – often defined by the experiences of trade marketing teams – widens to cover more global strategic questions for brands.

Personalizing the buying experience for users is also an important mutual benefit. Several studies show the importance of this personalization in the buying process, especially when ad content and messages shown are adapted and non-invasive. This is a huge opportunity for retailers, who can therefore offer this personalization on a large scale, across many platforms, and at different points in the buying process. As far as brands are concerned, it allows them to strengthen the loyalty and proximity they have with their customers.

An opportunity up for grabs, requiring in-depth work on data, technology, and organization

Carrefour, Casino, and Fnac-Darty are among the major retailers that have begun the race to monetize their data. What offers do they feature, and what are the key success factors? Let’s take a look at the main challenges to overcome in order to make the most of this monetization opportunity, both for brands and for retailers.

Organizational structure and data exploitation: a challenge for retailers

Firstly, a structured, ambitious, and flexible development plan must be defined to guarantee the fast launch of a competitive offer, adding content later to anticipate (or follow) constant market evolutions. Similarly, since volume is the first marker of competitiveness for advertisers, one must seek to reach a critical mass of data. To achieve this, retailers must first evaluate the “business potential” of each type of first-party data available. Next, one can begin to consider alliances with players in retail and non-retail, using second-party data, in order to develop the competitiveness of the offer among other market players.

Secondly, it is essential to carry out work on data exploitation ability. From a technical standpoint, the offer’s success is contingent on the creation of monetizable inventories on digital platforms, the definition of activatable ready-made audiences, and the implementation of partnerships with external digital publishers. From a human resources standpoint, the creation of expert teams should be approached differently depending on how digitally mature the retailer is. For example, players with limited digital maturity should prioritize implementing partnerships with external organizations who specialize in data exploitation to develop and launch an offer. Meanwhile, players with more advanced experience should prioritize putting together internal teams dedicated to data, supported by external partners more specialized in data exploitation.

Media budgets, first-party data, and data governance… what are brands up against?

For brands, the portion of their media budget allocated to digital platforms is often too small to make their ambitions a reality and adapt to the digitalization of the way users consume. This cautiousness could be due to several things: historical reliance on traditional platforms, negative experiences using certain digital channels, or lack of understanding of the potential of digital, among others. However, consumer expectations coupled with the current maturity of the digital media market ought to encourage brands to reevaluate how they allocate media resources and see the significance of these new offers proposed by retailers.

On the other hand, although exploiting retailers’ data is an opportunity for brands with little direct contact with their consumers to reach them and get to know them, building your own first-party data capital should remain a priority. This priority should be integrated in marketing action plans, in order to design customer engagement programs or direct-to-consumer initiatives (which are increasingly being used in mass marketing) relying on the principles of consumer benefit and consent. Once a brand has built up this database, more advanced collaborations with retailers can be implemented.

Finally, governance between trade marketing teams and communication teams should be adapted. Indeed, this approach sees retailers become first-level digital marketing partners for brands, and provide solutions that open doors to more global marketing opportunities. This naturally entails a wider collaboration between teams, in order to optimize the value harvested from these offers.

In today’s context around data, monetizing retail data is therefore a major media and marketing strategic challenge, for retailers and brands alike. It should be tackled with an ambitious development plan covering strategy, governance, resources, and digital budgeting.

Beyond media and marketing remits, recent offers developing on the market give a glimpse of how the scope of retailers’ data exploitation could quickly come to support more traditional challenges in the brand/retailer relationship. This is true in terms of stock or price optimization, and steering product choices. It is now time for both brands and retailers to explore these new territories of data usage in order to prepare for the future.

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