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How retailers can use customer data to add value to brand partnerships

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Written by
Stefan Deml
Published on
July 13, 2022

As third-party cookies step off stage, first-party data is stepping into the spotlight. This article explores the opportunities that customer data presents to retailers and the impact it can have on consumer targeting.

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Privacy considerations are generally perceived as devaluing data – and, by extension, devaluing the media and advertising space. But that isn’t accurate. In fact, the opposite is true.

We’re making a case for first-party data as a viable alternative to third-party cookies and its role in the booming retail media market. Along the way, we’ll tell you exactly how retailers can extract value out of consumer data using data clean rooms (DCRs) and use it to support brand partnerships.

Why should retailers turn to first-party data?

The death of third-party cookies

By now, you probably know that third-party cookies are being phased out. After all, it’s been the subject of every major tech and marketing publication for the past year or so.

And for the increasingly privacy-conscious consumer, that’s pretty good news. For retailers, however, it’s an apocalypse-level event. Okay, that’s an exaggeration. But the point remains. The demise of third-party cookies will permanently alter retail.

The re-birth of retail media

Powered by first-party data, retail media networks (RMNs) are basically advertising platforms that are owned and operated by retailers. And, for all intents and purposes, they are the new home of targeted advertising for brands.

Alright, so you may have realized that retail media isn't really anything new. In fact, most major players have had their own RMNs for a pretty long time. That said, as we move on from third-party cookies, the global retail media market is growing at an unprecedented rate.

Why's that? Because customer data is arguably more valuable to both retailers and their brand partners. It’s personal, behavioral and demographic data that retailers collect themselves – so it's highly relevant to the retailer's market – and can form the basis of any brand's shopper marketing strategy. For example, a retailer and a consumer packaged goods (CPG) partner brand could leverage their first-party data to collaborate on top of the funnel (TOFU) marketing initiatives, like running TV ads to boost awareness within a certain demographic.

In other words, it's the best way to understand a customer's preferences and needs, meet them … and then hurry the customer along to the till (or online checkout).

Collaboration without compromise

But why would a retailer want to collaborate anyway? Because it’s a win-win. Brands will rely on this first-party data to run targeted ads. Remember, these ads are specific to the retailer’s owned and operated channels, so, a boost in brand sales conversions would directly translate into a boost in the retailer’s bottom line.

That said, turning to first-party data presents its own set of challenges. On one hand, any retailer that goes through the trouble of collecting data will want to take full advantage of it. And, on the other, data collaboration isn’t without its risks.

So, the problem here is finding a way to collaborate – to offer brands deeper audience insights and advanced targeting across retail media – without compromising control, security and consumer privacy. The solution? Data clean rooms.

Leverage invaluable data. Support valuable partnerships

Taking the insecurity out of data collaboration is, surprisingly, simple. All you need is a data clean room. If you’re not familiar with the tech, don’t sweat it, we’ll get you up to speed.

In the simplest terms, a data clean room is a secure, protected environment where data is encrypted to enable collaboration between parties. So, a retailer could use DCRs for data collaboration with its partner brands to drive ad revenues.

Let’s consider an example:

A cosmetics brand is interested in audience insights to better inform its shopper marketing strategy. The goal being to attract new customers and boost sales. Of course, any number of factors can influence sales volume. So, it would be valuable for the brand to see more than the number on its balance sheet to assess the value of this specific marketing effort.

This means we're looking at three use cases for DCRs in retail media: monetization, activation and measurement. With this in mind, let's explore how our example would play out:

  1. Using a DCR, the retailer and the cosmetics brand match their first-party data. The result? Insight into the segments purchasing the product from the retailer.
  2. With these insights at hand, the cosmetics brand can build lookalike audiences and implement a targeted activation campaign – across the retailer's owned and operated channels, of course. To get new customers, the brand targets by exclusion.
  3. Finally, to determine return on investment (ROI), the cosmetics brand can match its transaction data with the retailer's impressions data. And that kind of ad effectiveness data is unmatched in retail marketing.

By now, the opportunities DCRs can offer retail media should be clear. However, although this is a great solution on paper, it’s important to know that not all data clean rooms are created equal. While the very definition of a data clean room implies absolute data privacy and security, that’s not necessarily true. Many DCR providers can see your data because it's not encrypted throughout the process, which raises questions about privacy, and rightly so. Total privacy, security and control is a guarantee that's pretty hard to come by. Hard. But not impossible. For instance, Decentriq – an on-demand DCR provider – is one of the few that offers that guarantee,  meaning your data is encrypted at every stage, so neither Decentriq nor its cloud provider can see it.

So, what's the takeaway? When retailers give more value to their brands, they get more value, too. Give more, get more. And, with the help of DCRs, retailers can offer collaboration while maintaining control over the data. But remember, DCR providers don't offer the same guarantees, so choose wisely.

Looking to make the most of your customer data? Get in touch for a secure and streamlined data collaboration solution.


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