Addressability and Data Protection in Retail Media

Authored by: Airey Baringer, VP, Product Management

In the last installment of our retail media blog series, we explored the creative challenges and opportunities in this growing ecosystem. In this edition, we will examine the challenges related to addressability and data protection in retail media.

From extending audiences across the open web to protecting retailer data, we will dig into why retailers should be paying attention to their data strategy especially as third-party cookie deprecation has become much more real. 

Retailer First-Party Data: The Ultimate Value to Advertisers

Currently, retail media networks are in a unique position to deliver more personalized targeting than ever. Retailers have access to extensive first-party data like consumer login information, past purchase data, and what advertising avenues led the consumer to a purchase. Because of this, some of the main reasons advertisers turn to retail media networks are to target a specific audience segment and access closed-loop attribution. These benefits are obvious for on-site advertising within the retailer’s ecosystem. When moving outside of the retailer’s ecosystem, both advertisers and retailers need to consider additional factors to deliver successful outcomes.

Offsite Retailer Audience Targeting Requires Unique Considerations

Successfully targeting retailer audiences offsite and outside of the retailer’s ecosystem requires unique considerations.

First, a retailer’s exact audience can only be targeted offsite where an identity match is possible. While third-party cookies enable scaled offsite targeting today, by the end of 2024, they will no longer be available. Third-party identity solutions are scale-limited because match rates between retailers and most websites will be low. People simply don’t log in to most of the websites they visit and identity solutions only work for a minority of offsite ad impressions.

To account for low identity match rates, retailers should choose offsite data partners who have the ability to scale offsite audiences using lookalike, or audience expansion capabilities. These partners will use a small amount of identity-matched impressions as a seed set of data to create lookalike audiences powered by machine learning and artificial intelligence.  As a result, advertisers will be able to target both the retailer’s known audiences as well as consumers with similar behaviors.

Advertisers should also think about the retailer’s audiences differently when targeting them offsite.  When a consumer browses a retailer’s site, they are in an active shopping mindset and expect to see product offerings. Offsite, however, a consumer is generally consuming content unrelated to shopping. As a result, the expected ad responses from consumers will be different in an offsite environment than they will be in a retailer’s environment. Savvy advertisers will seek to treat offsite audiences as being higher in the purchase funnel and should focus on driving those consumers to the retailer’s ecosystem.

This consumer mindset difference actually plays well into the ability to target lookalike audiences based on a retailer’s known audiences.  The lookalike audiences enable effective prospecting campaigns to find new customers who behave similarly to known customers.

Retailers will benefit from choosing partners that enable targeting of both exact match and lookalike audiences.  Advertisers benefit by leveraging offsite targeting to find both exact match and lookalike audiences with the goal of driving them to the retailer ecosystem to complete a purchase.  Despite the addressability challenges, retailers and advertisers will benefit from offsite strategies if their goals are clear.

Data Is The Most Protected and Valuable Asset for Retailers

As a retailer, your first-party data is the most precious resource and the primary product advertisers are buying access to.  Enabling your first-party audiences to be targeted outside of the retail ecosystem will require high-trust relationships with third-party partners and diligence paired with smart technical system design to prevent data leakage. 

Data leakage devalues the retailer’s first-party data asset by making it available from more places than just the retailer.  Additionally, data leakage increases the risks of exposing consumer data, decreasing the retailer’s brand image and trust with consumers, and limits the retailer’s business growth opportunities. The audience information and customers the retailer worked so hard to earn are effectively exposed in multiple places, making it less important to work directly with the retailer.

Data leakage can be detrimental as there is liability for non-consented access to your customer data, consumers may lose trust in your company, your reputation may be damaged, and consumers may take legal action to control how their data is accessed and used. 

Due to the decentralized architecture of RTB and programmatic advertising, data leakage is very common and difficult to prevent. It is imperative to understand areas of vulnerability within the programmatic landscape and partner with trusted third-party partners to keep your data protected.

Optimizing the Advertiser Buying Motions

We know that offsite is important for retailers to retain advertisers by providing more scale and targeting capabilities. It is also beneficial to retailers to prospect new customers by driving consumers to buy on their site. To best serve advertiser needs, retailers should carefully consider the buying motions required to take advantage of retailer audiences, both onsite and offsite.

Advertisers frequently complain about the number of new buying platforms that must be adopted to transact in retail media as retailers often create a new buying platform for advertisers to adopt.  However, there is another path that lets advertisers use their existing buying platform(s) or DSPs of choice while retailers retain full control over their data.

Retailers can work with a supply-side partner (SSP) who will be able to represent all of the retailer’s onsite ad inventory and all of the offsite ad inventory in a single solution.  Further, advanced SSPs will be able to facilitate the creation and management of a retailer’s audience matching and lookalike audiences so they can be easily targeted onsite, or offsite, using an advertiser’s DSP of choice.

To do so, the SSP will package both onsite and offsite inventory into deal IDs based on the advertiser’s desired audiences.  Advertisers can target those deal IDs on any DSP.  The SSP will ensure the privacy and protection of the retailer’s data by preventing data leakage throughout the programmatic lifecycle while ensuring the advertiser reaches their desired audiences through inventory supply curation.

Retailers that use this approach will better match the needs of advertisers while still enabling effective and private targeting of retailer audience data.  Advertisers will benefit from this approach because they can use their existing buying platform(s).

Looking for more insights beyond addressability and data protection in retail media? Make sure to check out our other retail media blogs here. 

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