Retail Media Should be Data Thrifty
“Retail media” refers to advertising on retailers’ websites, apps, and physical stores. The ad units include display ads, videos, sponsored product listings, email, and more.
eMarketer estimated 2022 revenue from retail media in the U.S. at $40.8 billion, representing 16.4% of all digital ad spending. As retail media advertising grows, so will the need to carefully manage consumer data.
It starts with data thriftiness.
Data thriftiness is being mindful of the types of data collected, how it’s gathered and used, and how long it’s stored. It balances privacy concerns and marketing goals and informs shoppers what is being collected and how they can opt-out.
It’s the opposite of greedily collecting all possible info.
In many ways, retailers and retail marketplaces are becoming ad platforms.
Retail media allows brands to reach shoppers very near the point of purchase. Enterprise retailers and marketplaces such as Amazon, Walmart, Macy’s, Lowe’s, and Kroger use the data collected from their ecommerce sites and point-of-sale systems to offer advertisers laser-focused targeting based on shopper behavior, buying history, and purchase intent.
“Retail media is following in the footsteps of search and social as digital advertising’s third big wave and has already established itself as a force. Built on a foundation of valuable first-party purchase data, contextually relevant ad experiences, and closed-loop reporting, retail media is seeing advertiser budgets quickly migrating in its direction,” write Andrew Lipsman, principal analyst at Insider Intelligence, in a September 2022 eMarketer article.
Lipsman has argued that retail media in the U.S. will be larger than search or social media advertising and, by 2024, could represent one in every five digital ad dollars.
Therein lies the temptation.
Brand advertisers that demanded more return on investment, tracking, and data from Google and Meta’s ad platforms could do the same with retail media.
Benefits of Data Thrift
In a post-GDPR (E.U.), post-CCPA (California) world, thoughtful and thrifty data collection is imperative. It also has many benefits.
Regulatory compliance. Collecting only the necessary shopper info to support ad placements helps retail media comply with privacy regulations.
Data protection. Retailers reduce the risk of data breaches by collecting only the essentials, lowering the chance of legal and reputational harm.
Shopper experience. A data thriftiness policy could lead to shorter forms and checkout processes.
Data management. When it gathers relatively less information, a retail media network could operate more efficiently, with reduced storage and processing requirements. Fewer bits and bytes could boost network performance and lower costs.
Better ad performance. Focusing on the most impactful, vital customer data could improve ad performance.
Frugality or Gluttony?
There is no one-size-fits-all for data frugality. Each retailer should work out its own approach. There are, however, principles to guide data thriftiness:
- Tell shoppers about the data collected, its use, and how they can opt-out.
- Collect only the essential info.
- Don’t keep information forever.
Retail media could become a top form of digital advertising in the U.S. and worldwide. As it grows, retailers, marketplaces, and advertisers will decide how data is collected, stored, and used. Choosing frugality over gluttony will earn the trust of shoppers — and legislators.