Retail Media Networks Poised For Rapid Growth In 2022: What’s Driving This $50 Billion Market?She Marketplace
Retail Media Networks Poised For Rapid Growth In 2022: What’s Driving This $50 Billion Market?
The retail industry has faced rapid changes in recent years, which have been accelerated by the pandemic. Ecommerce has surged across nearly every brand category, and consumers’ purchase habits have settled into a new shopping normal.
I have been a privacy advocate for nearly 2 decades and have written frequently in this column on the topic and shared consumer attitudes towards digital privacy via our monthly surveys. I have also been involved in the creation of hundreds of privacy compliant audience models and research regarding privacy with leading universities and academic journals since 2010. Threading the needle between privacy impacts on consumers and state privacy regulations is the main issue in 2022 for digital marketing. Marketers need new accurate privacy compliant data inputs in order to be successful in today’s privacy ecosystem.
With this context, I spoke with Brenda Tuohig, senior vice-president of Global Data Partnerships at The Trade Desk, a global leader in digital advertising, about the growth opportunity for brands as their relationships with consumers continue to evolve. She sheds some light on how retail media networks are driving this opportunity to help brands better connect with consumers and tie their marketing campaigns to sales.
Gary Drenik: What are retail media networks and why is this area taking off?
Brenda Tuohig: Let me start by addressing what the retail industry is facing right now. Savvy consumers are increasingly finding new ways to digitize all aspects of their daily lives, and there’s no industry where that’s more apparent than in retail. Ecommerce was growing well before Covid-19, but the pandemic was certainly an accelerant. Nearly 34 percent of consumers are shopping more online as a result of the pandemic, according to a recent Prosper Insights & Analytics Survey. This shift to online is also driving growth for the digital advertising industry, where spend is estimated to reach $191 billion in 2021, a 26 percent increase from the year before.
As a result of this shift to ecommerce and all things digital, we’ve seen major retailers launch their own media networks, making their valuable shopper data available to brands that want to better connect with consumers. A retail media network is essentially an advertising business set up by a retailer that allows advertisers to buy advertising space across the retailer’s online properties and throughout the open internet, using shopper data to connect with consumers across the entire buyer journey.
Our research shows that the number of marketers who said they intend to use sales data very frequently is expected to nearly triple in the next 12 months. Our research also shows that 74 percent of brands have dedicated budgets for retail media networks. It’s clearly a space to watch for future growth.
And this shift will only get bigger as marketers prepare for third-party cookies on Chrome to go away and want to unlock the value of loyalty and ecommerce data in a safe and secure way that reflects the contemporary digital marketplace. The same Prosper Insights & Analytics Survey survey found that 60 percent of consumers feel concerned about the privacy of their identity when shopping online, which puts even more pressure on marketers to implement new tactics that don’t compromise consumer privacy and control.
Drenik: How are shifting consumer preferences driving this change?
Tuohig: The growth in ecommerce is undeniable, but our research indicates consumer shopping preferences are not as definitive, and their shopping preferences sway between online and in-store. The reality is that consumers are increasingly becoming more tech-savvy, but do still value the in-store experience. Our survey found the majority of consumers – about 53 percent – still mostly shop in physical stores. In fact, despite all the hype surrounding grocery delivery, 70 percent of shoppers say they prefer shopping in-store for their weekly grocery run.
Building trusted, long-term relationships with consumers has long been a major goal for brands. Given the complexity of the modern consumer, the fact that consumers are open to engaging with retailers means brands have an opportunity to evolve those relationships in new ways. It is increasingly important for brands to understand the nuances in shopper behavior, which they achieve by gaining access to richer consumer data through retail media activations. Retail media networks are able to help brands make the connection between marketing activities and consumer purchases, essentially closing the loop on all sales. This is fundamentally changing digital marketing by enabling brands to optimize toward what matters – sales.
Drenik: What’s the opportunity with retail media for marketers looking to grow their businesses in today’s changing media landscape?
Tuohig: While the shift toward digital presents an opportunity, it’s also created a fragmented media landscape. We’re bouncing from different devices or platforms every day – whether we’re shopping on a retailer’s website on our laptops, watching connected TV in our living rooms or listening to a podcast on our phones. That’s why it’s so important to reach consumers through relevant advertising at the right time, wherever they are, to continue to build connection points all the way to the point of purchase. More marketers are turning to retail media networks to help them reach consumers with relevant advertising along the purchase journey, as well as measure the effectiveness of that advertising.
It’s also important to point out that there’s no one-size-fits-all approach for brands to engage with their target consumer. Brands must determine what retailers their target consumers have an affinity for and create an effective strategy that best meets their business objectives. Marketers have long sought to connect their marketing investments to consumers’ online and offline behaviors, and retail data is bringing them a step closer to achieving what is largely considered the holy grail of marketing.
Drenik: What are retailers doing to benefit from this new opportunity?
Tuohig: Retailers are constantly looking to find new channels of growth, and the savviest retailers realize their valuable shopper data gives them a new revenue opportunity with brand marketing budgets. How they engage in this new landscape depends on how far along they are their digital transformation journey. Do they have the resources and infrastructure in place to leverage their data in service of advertisers? Where are they on the maturity model as far as data and digitization is concerned? How can they best capture the convergence of shopper and brand advertising dollars?
For example, Walmart, with arguably the world’s largest supply of shopper data across a massive array of consumer products, launched its own demand-side platform (DSP), supported by The Trade Desk. For the first time, they are making this shopper data available to advertisers in a scaled and self-serve way. Many of the world’s other leading retailers are also working on their approach to unlocking the value of their shopper data. And while their approaches might ultimately vary, the idea is still the same, which is to harness rich data sets to better connect with consumers through relevant advertising.
Drenik: What does this mean for the future of retail marketing?
Tuohig: Consumers have shown us they are both complex and sophisticated. Their shopping habits and relationships with brands are ever evolving. Looking ahead, retail marketing will center around the omnichannel shopping experience and, for marketers, how they can better understand and navigate the path to purchase with consumers, as well as have the availability to activate across fast-growing media channels such as digital, mobile and CTV. Retailers are relying on their own shopper data to help brands more effectively plan and activate media through audiences and ultimately measure the results of their marketing efforts. Brands and retailers are increasingly looking to partners like The Trade Desk who can help them determine the right media buying strategies, as well as support them with measurement and real-time campaign optimization. With shopper data helping to connect the dots, marketers can have a clearer picture of how advertising impacts consumer actions and be able to adjust their tactics more strategically both online and offline.
Drenik: Thank you so much for your insights and expertise on this subject, Brenda. What an exciting time for the retail industry and for The Trade Desk as you support many of these brands on their digital transformation journeys. It will be fascinating to watch how the retail industry implements these new strategies and leans into their shopper data as a growth driver for the year ahead.
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