Delivering on customer experience demands deep data insights

Every marketer has heard the adage about media spending: “Half of my advertising spend is wasted; the trouble is I don’t know which half.” Now, history has forgotten exactly who said it, or if it was an invention of savvy ad men to illustrate their value to partners. Either way, it’s stood the test of time because the issue at its heart — an inability to precisely and effectively target the right people — has yet to be addressed in its entirety.

It turns out, though, that the impact of the “spray-and-pray” approach may extend beyond the oft-cited “lost half.” In today’s hyper-personalized market, failing to target the right consumers with the right message does more than waste money; it ruins the experience.

Are more eyes always better?

Thanks to a lack of segmentation capabilities, advertising has had to be an inexact science, guided by—at best—a broad understanding of channel audiences and a rough vision of the ideal customer. Since specificity was out of reach, the approach has worked well enough for certain products and industries.

But today, specificity is more than within reach; it’s the core offering of retail media networks (RMNs).

With their proprietary first-party data, retailers understand their customers’ shopping behaviors in an unprecedented way. Retailers can now see who is buying, what they’re buying, when they’re buying, where they’re buying and what channels they’re shopping on. And that data can inform highly personalized and relevant campaigns that are also more measurable and attributable than anything we’ve seen before.

As we build a better understanding of the channels and the audiences, we are building better tools for engaging with them. We’re expanding our knowledge of which channels they buy on, how to drive them to stores or digital properties, how to convert from store to digital, and vice versa.

That’s really the special sauce of retail media.

There has always been a distance between marketing to your audience and their ultimate purchase, but those distances are getting shorter and shorter, thanks in large part to retail media.

No matter how good a product is, relevance is what resonates. Though “I hate ads” is a common refrain, even the most ad-averse consumers know that framing is hyperbolic. Research shows that 90% of people in the U.S. who use adblockers say they don’t hate ads, and 83% are happy to be presented with marketing materials they find relevant to their lives.

To meet modern consumers where they are, brands need access to better and more specific data that shows how, when, and why individuals decide to make purchases.

First-party data—which is specific to a single enterprise’s customers—paints a deeper, more nuanced picture of how people interact with products, allowing advertisers to create more relevant and satisfying experiences for them. These insights can lead to:

1. Messaging that resonates. First-party data, which is specific to a single retailer’s customer, offers a comprehensive understanding of their consumers’ interactions with products. This depth of insight enables advertisers to craft more relevant and satisfying customer experiences, which can result in increased engagement and improved outcomes.
2. Better targeting. Given the individual and personal nature of this shopping data, retailers have insights into specific consumer behaviors. This allows advertisers to segment audiences more precisely, using demographics, purchase history, purchase intent, and other variables to figure out what makes people tick.
   
   It also allows advertisers to connect the digital and physical shopping environments in ways that we’ve never seen before. Retail media networks have the capability to track shopping behavior on their digital platforms and seamlessly link it to in-store transactions for a comprehensive view of consumer activity. On its own, this capability holds immense value. However, with the deprecation of third-party cookies, advertisers are facing substantial signal loss, posing significant challenges in both running and measuring campaigns.
3. Contextualized messaging. These insights ensure that ads are strategically placed, targeting consumers who are actively searching for products during pivotal moments in their shopping journey. These first-party insights help increase relevance, minimize ad fatigue and foster a positive experience for consumers.
4. Real-time adjustment capabilities. First-party data paired with analytics can leverage real-time signals to drive customized messages effectively. This can help advertisers and RMNs refine customer insights from external factors such as environmental conditions. For example, this could let an OTC allergy brand activate a campaign when the pollen count gets above certain levels, or a bottled water brand activate when a customer’s local temperature is above a certain level.
5. End-to-end reporting: Retail media networks own the customer journey from start to finish, with the ability to reach customers on and off their digital platforms and in their stores. While reach and targeting helps create better advertising experiences, some of the most valuable insights for advertisers come from the ability to “close the loop” on the campaign activity and report back actual sales, new-to-brand customers, and other performance metrics that helps assess the campaign and inform future campaigns. This focus on efficacy, on proving a quantified ROAS tied directly to sales, gives the advertiser a yardstick by which they can truly understand the impact of the media buy on their business.

The result is a more seamless, satisfying, and relevant customer experience that fosters positive sentiments. Still, creating a tailored customer experience across channels and pulling together data from various touchpoints — website visits, mobile apps, in-store interactions, loyalty programs and more — can be a challenge.

Changing the story by changing the model

Retail media networks (RMNs) have emerged as a solution to this need for more personalized and more relevant advertising, and they’re gaining popularity at a rapid clip. RMNs are uniquely suited to the task. Thanks to customer data platforms (CDPs), they contain the sum total of all the interactions consumers have with an enterprise, whether that’s online or in-store. Data clean rooms expand these capabilities, allowing RMNs to share insights with brand partners while enabling privacy and compliance. When co-mingled with other stakeholders — like social media platforms — they can drive even more precise targeting.

Given their proprietary data, precision targeting, real-time optimization, and highly attributable end-to-end reporting, brands are embracing retail media networks at a rapidly increasing rate. Experts forecast that the retail media market will grow more than 20% annually over the next three years, faster than any other ad channel across media. This is no doubt because partnering with RMNs means getting the advantage of working with established retailers who have access to decades of customer insights and the ability to bring those insights to bear on very precise, attributable campaigns that create more relevant, more positive product discovery experiences for consumers.

This op-ed represents the views and opinions of the author and not of The Current, a division of The Trade Desk, or The Trade Desk. The appearance of the op-ed on The Current does not constitute an endorsement by The Current or The Trade Desk.