We Can Have Retail Media Networks And Privacy: 4 Principles

Retailers are finally sharing their customer data with other companies in ways that should deliver higher return on investment with each insight. But when opening their doors to buyers, are retailers creating the right experiences by inviting their customers in, as well?

The looming demise of third-party digital consumer trackers, such as cookies, has forced brands and retailers to establish their own affordable ways to reach consumers. And in doing so, they are seeking to upgrade to more reliable, direct-from-consumer insights than cookies provide.

First-party data, which companies collect directly from customers, and zero-party data, permission-based information from customers, are the two most customer-friendly data collection methods.

Retailers already own a treasure trove of such data through their digital presence and reward programs, in which members opt-in and share preferences, feedback and context. So retailers are using this data as a selling point for their own retail media networks, which sell ad placement on their websites, apps and elsewhere.

This is a smart, profitable solution, but concerns about privacy cast a long shadow over this trend.

Chipping Away At Crumbling Cookies

The pending demise of cookies on Google GOOG , in 2022, also underscores how critical the privacy issue could become. In announcing its decision to terminate third-party digital identifiers, Google stated on its blog: “If digital advertising doesn’t evolve to address the growing concerns people have about their privacy and how their personal identity is being used, we risk the future of the free and open web.” 

Yet competition for those advertisers is already becoming fierce. An industry of online zero-party data platforms is emerging outside of retail media networks_.

But some retailers got a head start in packaging their data for market. Among them:

The Macy’s Media Network, launched in 2020, offers clients the first-party data capabilities of its Star Rewards program for digital ad placement. As of October, Macy’s, whose Macys.com and Boomingdales.com sites counted nearly 600 million unique visitors, has run about 900 campaigns for more than 200 advertisers.

Lowe’s One Roof Media Network, introduced in October, combines its data insights and behavioral predictions with customized ad placement on Lowes.com, the Lowe’s app and its social media channels. Brand partners – 100 participated in the beta test – are promised in-depth measurement and closed-loop reporting.

Walmart’s pending automated ad exchange, in partnership with ad-buying platform The Trade Desk, gives Walmart’s WMT access to all ad inventory available through The Trade Desk. The first-party platform is fueled by the shopper data Walmart gathers from its website and stores.

Kroger’s recently announced self-service platform differs from other offerings by letting brands use its customer data and identification on their own or third-party platforms. Brands can track metrics such as household penetration, incremental sales activity and ad effectiveness.

It’s worth noting that Kroger’s KR consumer insights arm, called 84.51°, was purchased from UK-based Dunnhumby, a subsidiary of Tesco, which operates its own media network.

Regardless of Platform, Privacy Remains A Core Issue

Cue the demand for privacy laws. No doubt all retailers and brands are thinking about it. (Walmart’s platform, for example, will link data to Walmart identifiers, to help brands plan for privacy rules).

Anonymized identifiers will help, but more consumer-facing privacy practices could make the difference. They build the trust required to retain customers and profits. And it isn’t difficult. Here are four common-sense guidelines.

1. Give customers control of what they share. Lack of control, or not knowing who has access to their data, is a leading concern among consumers. By giving them the choice of how to share their behavioral data, brands and retailers provide a sense of empowerment that could lead not only to more data-sharing, but also to more accurate data. 
2. Prove to customers that they will benefit. It’s plain: 94% of people are more likely to be loyal to brands that are transparent. All opt-in notifications should include easy explanations of how the data collected will enhance the shopper experience. A visual example could walk through how the user’s online activity leads to a special discount on a browsed item, for example.
3. Show customers how their data will be protected. Also as part of the opt-in process, brands and retailers can embed a button that links to information detailing how they protect and respect customer data. This should not be a 5,000-word form – that’s a turnoff. An infographic would serve the purpose well, and likely keep the potential shopper engaged in the opt-in process.
4. Respect their space. Be realistic: The number of people who want twice-daily emails is small. Retailers and brands should ask consumers – before they hit the “agree to share” button – how often they want to receive notifications, if at all. Less-than-daily emails are more likely to be read than daily ones, and 69% of people have unsubscribed from brands because of too much messaging.

Retail Media Networks Work, If They Work With Consumers

There’s a reason customer membership programs are so popular, and effective. But only those that work closely with their members are better positioned to retain them as active customers, simply by gaining their trust. This is the future of digital advertising and, as Google put it, retailers shouldn’t risk that.