HOW RETAILERS CAN MAXIMIZE THE VALUE OF UNTAPPED DATA
For 20-odd years, third-party cookies have reigned supreme in the advertising world as digital ads rocketed to a market worth hundreds of billions of dollars. Retailers and brands wholeheartedly subscribed to conversion measures they didn’t control, but it’s always been something of an open secret that these cookies were a shoddy substitute for the deep, precise measurement of signals and sales, relied upon long before the advent of computers.
Now, the age of the cookie is coming to an end — a “crumble” deferred several times by Google already that yet remains clearly in sight. Privacy concerns inevitably led to meaningful legislation from Europe and California, and will see third-party cookies deprecated by late 2024, barring any more foot-dragging delays.
The gaping void left behind by cookies stands to be filled by first-party data, which puts retailers in a powerful position as the arbiters of the extremely precious “checkout moment” that will become the foundation of a desperately needed measurement solution. Retailers that recognize this and move quickly to establish a retail media network capable of maximizing the value of first-party data will be the ones that seize a similar moment to the one captured by Meta and Google a generation ago, giving them a chance at becoming the media giants of tomorrow.
Retailers that recognize this and move quickly to establish a retail media network capable of maximizing the value of first-party data will be the ones that seize a similar moment to the one captured by Meta and Google a generation ago, giving them a chance at becoming the media giants of tomorrow
Well before cookies became the dominating force that they’ve been for decades, marketers and analysts spent the better part of a century refining techniques for accurate measurement, harnessing macroeconomics to attribute sales to signals such as radio and postcards. Once the internet blanketed the world and the power of third-party cookies became clear, these tried-and-true methods were largely lost in a fog of attribution and conversion tracking. Businesses surrendered themselves to this new approach and its outside arbiters despite lacking clear visibility and understanding of the underlying methodology. Deep down, retailers knew they’d need to someday dust off those old analytic skills — and that day has come.
Of course, assembling a proper retail media network to channel rich, insightful data into a bountiful revenue stream is far easier said than done, especially for younger businesses that are going to be starting from scratch. To successfully navigate this monumental undertaking, the playbook should include the following five steps:
STEP 1: COLLECTION
Checkouts are unmistakably the “secret sauce” to retail media, serving up a quantifiable customer interaction that other spaces can only approximate. From a first-party data perspective, checkouts give you both recency and behavior — two critical qualities of valuable data. For brands, they give real measurement, for which there will be a boundless hunger in the coming years. These three qualities combine to create incredible value that other media channels may try to approximate but will never be able to truly capture.
It should come as little surprise, then, that the first step to harnessing the power of first-party data is to collect and record customer interactions. Woven into the all-important checkout can be other valuable information such as promotions, data capture campaigns, loyalty platforms and so on. To go even deeper, this data should ideally be sourced across all channels — in-store, online, on social media, etc. It’s a lot of extra work, but putting in the effort will open up an omnichannel approach in monetizing first-party data, which will be key in future-proofing these models in the years to come.
This is once again easier said than done — the adage “garbage in, garbage out” comes to mind as an example of how this first step can go awry. There can be no assumptions here — this data has to be completely on point or you have no hope of hitting any of the following steps.
STEP 2: UNIFICATION
It’s not enough to just have all of this first-party data — it has to be unified. Some chains use entirely different databases and schema across their different locations, resulting in a massive waste of what could potentially be hugely valuable data. This unification can be done through a SaaS platform, a spreadsheet or even a filing system in a warehouse — the important thing is to have a single place where you can query sales, customers and stores by both entity and time frame. Data is most valuable when it is recent and tied to a specific event. The key to having both the visibility and access to unlock the fullest potential of this data is unifying it across the board.
STEP 3: DETERMINATION
Once all of the relevant data is both recorded and unified, it’s time to put on the data analytics cap and determine its value. What insights can you glean from this unified data? How can you utilize these insights? Figure out what you’re measuring and why you’re measuring it.
The endpoint of all of these considerations should be definitive insights and decisions — a retailer should be starting to deeply understand their customers and, by extension, the value they create. This is where omnichannel considerations become important. Ideally, a retailer should be able to review how a single customer interacts with them, including both online and in-store.
For example, let’s imagine a retailer notices a strong correlation between buying Ben & Jerry’s ice cream and Colgate toothpaste. This is the moment to consider the value of that correlation. How could it be valuable to a campaign? What sort of predictive analysis can you do around this particular cohort and — critically — how can you then sell that cohort from a retail media perspective? By now, all the puzzle pieces have been assembled on the table — it’s time to put them together and illuminate the path to new revenue streams.
STEP 4: ACTIVATION
By this point, you’ve collected, unified and — most importantly — understood the value of your data. Now, it’s time to activate it and bring in the golden goose. Even though everyone understands data is valuable, comparatively few monetize it correctly. It helps to have a customer data platform (CDP) framework that you can work with, but as it stands, this is a luxury generally only open to industry leaders such as Walmart, which has been making huge waves in this space in recent years.
During the big rush signaling the start of the post-cookie era, more aggressive businesses will likely look to partner up with vendors that have established CDP frameworks and modeling already in place. This mobility will be essential to retailers looking to establish themselves in the new age quickly.
However it’s accomplished, being crystal clear about the data and what it means is how you maximize the value of a retail media network. By this point, a retailer should have fully closed the loop and now understand how to transmute information into revenue. If a brand comes forth with $150,000, the retailer should, at this step, have a clear idea of segmentation value and how to deploy that $150,000 and activate segments in a way that will demonstrably drive sales for the brand.
STEP 5: REALIZATION
If everything so far has gone well, then the retail media network should be generating revenue for the retailer and sales for the brands. Everyone’s happy — but how can we take this further? Fully realizing the potential of retail media is a nigh endless journey, but if you’ve made it this far, you have a chance to think about what comes next.
Maybe the next step will be creating predictive modeling to increase yield, or perhaps it will be capturing and sharing data points that brands have never been able to see before with clear incrementality. The beauty of first-party data is that it removes the guesswork and obfuscation that we’ve seen in this space for the last 20 years. Whichever path a retailer chooses to pursue further potential, the power is ultimately in their hands — nobody else’s.
