Leading retailers have changed the future of advertising with their successful retail media networks (RMN), capitalising on this exploding revenue stream. With the industry set to grow to $136 billion this year, brands looking to seize this new revenue opportunity must ensure they have a wealth of high-quality data.
However, achieving this standard is easier said than done. Retailers face several challenges including data availability, regulations around privacy and security and industry standardisation.
Here, we’ll explore how to overcome these challenges so you can begin launching your RMN.
The value of high-quality data
There’s no getting around it: only high-quality data will power a successful RMN.
Accurate, complete and consistent data that is kept up-to-date and relevant is critical to building a network that appeals to brands and consumers. In achieving this excellence, RMNs can leverage this customer data to provide personalised advertising experiences with precise targeting, ensuring ads then reach the most appropriate audiences.
In turn, these ads are more likely to perform better and provide greater impact, which increases the value of the ad space available. With this high performance, retailers can maximise revenue by offering in-demand and high-value space for advertisers.
Beyond advertising, this comprehensive understanding also improves customers’ experiences. A deep awareness of customer preferences and behaviours means that retailers can tailor their RMN to best suit their customers, enhancing their shopping experience.
However, customer data is not the only data that must be well-managed. Measuring the performance of advertising campaigns by tracking key metrics – such as conversion and return on ad spend – is critical to providing insights that fuel optimisation and improvements to the network.
Challenge 1: Data availability
For a long time, third-party data fuelled the advertising landscape. However, amid growing concerns and the subsequent phasing-out of cookies, the reliability of this data has quickly deteriorated.
Now, RMNs forge a path forward by leveraging first-party data, acquired by the retailers themselves to drive targeted advertising. The availability of this data is straightforward for retail leaders with large customer bases and long-standing data strategies. However, for smaller retailers with narrower customer bases, fragmented data and the lack of an effective data strategy, this provides a challenge.
The first step in moving towards an RMN launch must be building a data strategy that allows for a comprehensive, accurate 360-degree view of the customer. Smaller brands will want to work on building their customer base to grow this dataset, while others will want to focus on data collection itself.
Aside from data collection, retailers must also ensure that the data is available to leverage. Retailers often have data fragmented across different departments, making it increasingly challenging to feed into an RMN.
Instead, data should be stored in a single source of truth, such as a customer data platform (CDP), to avoid data silos, inaccessibility and interoperability.
Challenge 2: Data standardisation
The standardisation problem for retailers is twofold. In-house, retailers must ensure that their data, collected from various sources, can be aggregated. However, various data formats and standards present a challenge in doing so.
Secondly, as the retail media market grows, advertisers will look to compare networks for their performance and strengths. Currently, the various data formats and collection vary between RMNs, making it difficult for brands to assess and measure performance across channels.
While this doesn’t pose an immediate challenge to retailers, brands should prepare for standardisation across the industry.
Challenge 3: Data privacy
Handling vast amounts of customer data comes with privacy challenges. Retailers must comply with both local and global data protection laws, which can be complex for brands operating in multiple countries.
What’s more, many of these laws require companies to only collect data necessary for a specified purpose: a practice known as data minimisation. This can be a challenge for RMNs since a wide variety of data is needed to enhance targeting and personalisation.
Another roadblock is the sharing of data between an RMN and an advertising partner. To ensure a high-performing RMN, partners need to share insights and performance metrics to optimise marketing strategies. To accommodate this, some RMNs turn to data clean rooms, which offer a secure way to share data while remaining compliant.
Overcoming obstacles with a technology partner
Depending on your stage in the RMN build process, you may face several data challenges. Engaging with a technology expert early in the process allows you to identify your data maturity and determine where to focus your efforts so you can confidently move forward with your retail media strategy.
Whether you choose to buy a ready-made RMN solution or build your own, a technology partner can offer expertise to help reduce costs associated with the hidden data challenges you may encounter.
To discover more about launching a retail media network, download our whitepaper, Launch Your Own Retail Media Network.