Why retailers need to overcome today’s challenges with data monetization
We look at how retailers can leverage the opportunities around data monetization with data clean rooms powered by an encryption in-use technology called confidential computing, allowing retailers and brands to securely collaborate on first-party customer data that was not possible before.
Over 1 MB of data is generated by each person every second. This figure might seem trivial, but when most of this data is derived from people’s consumption and transactions, such customer data has the potential to be of immense value for both retailers and brands.
To the tune of $42 billion. According to Epsilon, that is the potential market size for digital cooperative advertising. In this instance, such cooperative advertising would refer to a brand buying ads from a retailer. Retailers have important data around customer transactions that brands do not possess.
With the impending phasing out of third-party cookies, many brands will be left without valuable customer data and insights. The pressure is mounting on brands to seek insights elsewhere by building up and collaborating on their first-party customer data with their partners, such as retailers.
Hence it is largely up to retailers to seize this multi-billion-dollar opportunity by collaborating on their first-party customer data with brands.
How does data collaboration enable retailers to monetize data and add value for brands?
Before we look at how retailers can leverage their first-party customer data, let’s first get into the main reasons why such a collaboration is so valuable.
When data is monetized securely and compliantly, retailers can generate insights that benefits brands that are already advertising or intending to advertise with the retailer.
1. Generate deeper insights for brands
By integrating first-party customer data from a retailer and a brand, there is a larger volume of data that can be analyzed. The brand would benefit from the analysis of data that it would not have had previously. This data collaboration would generate deeper insights for the brand.
Brands can now receive even more information around consumer behavior – vital in today’s increasingly customer-first landscape.
2. Grow the retail media revenue stream
With brands armed with deeper insights into their customers, they can be more precise with their ad targeting by activating precise customer groups with tailored messaging, and improve their return on ad spend.
This increased efficiency with advertising could lead to brands choosing to continue advertising on the retailer’s channels or platforms.
3. Enable brands to assess ROI of ad campaigns
With the integration of retailers and brands’ first-party customer data, brands can have greater transparency into the effectiveness of their advertising efforts by knowing which campaigns drove their audiences to purchase.
Why then do most retailers not monetize their data?
Monetizing data in this manner requires retailers to collaborate with brands on first-party customer data, which is extremely sensitive and confidential for both parties. This brings with it the following challenges for retailers as well as their brands.
1. Staying compliant with data privacy
From the EU's GDPR to Switzerland's FADP to the CCPA in the US, there is a growing list of increasingly strict data privacy regulations that businesses need to adhere to. Collaborating on sensitive first-party customer data is an increasingly complex matter.
2. Growing cyber security risk
New and advanced cyber threats are emerging daily, with an estimated 2,200 cyber-attacks every day. A potential breach of sensitive first-party customer data could potentially cost retailers millions of dollars.
Yet the immense value that can be unlocked should not put off retailers and brands from this data collaboration. This is why collaborating on sensitive first-party customer data needs to be done in a secure and trusted environment.
Retailers and brands need to remain in control of their own first-party customer data, even as they collaborate on it.
3. Difficulty joining first-party customer data together
Before any data can be analyzed and any insights generated, retailers first need to prepare their data such that it can match that of brands, involving internal teams and also external identity providers that need to be trusted with the sensitive customer personally identifiable information (PII) data.
How can retailers monetize their data today?
Retailers can overcome the challenges with data monetization by leveraging data clean rooms – secure environments where multiple parties can collaborate on sensitive and restricted data sets.
Powered by an encryption in-use technology called confidential computing, Decentriq’s data clean rooms guarantee that sensitive data cannot be accessed or viewed by anyone other than the data owner.
As such, retailers and brands can now securely collaborate on their sensitive first-party customer data, without ever exposing their data to the other party. Retailers and brands remain in full control of their own first-party customer data.
Confidential computing also guarantees that neither Decentriq nor the cloud provider can access any data uploaded in the data clean room. Hence, both retailer and brand can adhere to even the strictest data privacy regulations during their data collaboration. To further reinforce the security guarantees, this means that even in the event of a cyber-attack on Decentriq or the cloud provider, the data uploaded in the data clean room would not be exposed.
Here's an example
A consumer electronics retailer wants to monetize their first-party customer data, while a brand, in this instance an electronics company, wants to gain a better understanding of customer profiles and enrich their first-party customer data with that of the consumer electronics retailer.
The consumer electronics retailer can easily and securely integrate both companies' first-party customer data in a data clean room, without either party’s first-party customer data ever being exposed to the other party.
Both companies' first-party customer data are matched against PII in Decentriq's data clean room using its fuzzy matching feature, which allows data to be matched even when their attributes are not an exact match. Hence retailers can match their first-party customer data with that of brands more seamlessly without the need to share data with an identity provider.
Neither the other party, Decentriq nor the cloud provider can see the PII of the company’s customer data. All customer data remains encrypted and kept confidential in the data clean room even during analysis and computation.
With such processing of encrypted first-party customer data, the electronics brand receives augmented custom audiences, which can then be seamlessly integrated with their data management platform (DMP) or customer data platform (CDP) for future activation or directly pushed to their DSP of immediate activation.
Monetize data while staying compliant today
The matching and analysis of sensitive first-party customer data can now be done securely and compliantly in Decentriq's data clean room.
Thanks to confidential computing technology, neither the other party, Decentriq nor the cloud provider can see the first-party customer data. This provides both the retailer and brand with highest levels of confidentiality and data privacy guarantees.
Retailers can now provide brands with valuable data they need, while also unlocking a new revenue stream for the retailer’s own business.
Learn more on monetizing your first-party customer data with our platform or reach out to us for a quick discussion!
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