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Paul Wright, General Manager - Western Europe and MENAT at AppsFlyer, explains the value of a Retail Media Network (RMN) for retail marketers, particularly in a privacy-first world.

Consumer privacy has been a global concern, leading in recent years to major turnarounds from Big Tech. Starting with iOS 14.5, Apple introduced App Tracking Transparency (ATT). And since 2020, Google has been promising to phase out third-party cookies in Chrome.

For the scores of businesses that rely on such data to build effective advertising campaigns, these developments have translated into challenges. Having evaluated the pros and cons of many approaches, collaboration now stands as the best way forward for marketers.

The rise of the retail media network (RMN) is a testament to how far we have come. A RMN is a platform that allows a retailer to leverage its first-party data and its digital and non-digital channel infrastructure on behalf of paying advertisers. The retailer works with the advertiser to design highly granular targeting methods that are the backbone of successful campaigns.

The growing popularity of RMNs makes sense in a region that is highly regulated, where data privacy is concerned, and is also doing more of its shopping on the Web.

Accelerated by the shelter-in-place reality of the early 2020s, online retail is a mainstay in the lives of regional consumers. By one estimate, 96% of shoppers in the United Arab Emirates (UAE) have embraced ecommerce to some degree. Neighboring Saudi Arabia shows a similar attitude shift, with 91% of consumers making the move to online and one in seven shopping daily.

This High-Street-to-Web migration is reflected in market figures. The UAE ecommerce subindustry is estimated to be worth around US$5.55 billion and expected to reach US$7.39 billion by 2028 – a CAGR of more than 7.4%. In Saudi Arabia, segment value sits at some US$13.2 billion and is projected to top US$19.16 billion by 2028, a CAGR of almost 9.8%. This represents a huge pool of third-party data on which to build a series of flourishing RMN businesses.

Choice, not compromise

The power of RMNs goes beyond mere replacement of legacy systems. Advertisers have an opportunity to build trust by preserving privacy rather than trying to find ways around it. Measuring ROI, engagement, and other metrics using legacy methods was problematic.

Through the retail media network, campaign designers can potentially get access to more advanced measurement standards, beyond attribution. If RMNs can prove themselves by improving upon the probabilistic methods and cookie-based measurement of years past, they will have gained much more than a foot in the door with advertisers. Hungry for measurable ROI and demonstrable value over time, advertisers will barely register the demise of traditional channels if RMNs can get it right.

Even before their toolboxes were constricted, advertisers had learned that actionable insights were scarce among metrics like visits, installs, and signups. The modern marketing professional has moved on to wallet share, basket share, and penetration rate – consumer-behavior indicators that were all but impossible to glean from traditional channel data. Because of their enviable access to first-party customer data, RMNs could deliver these advanced metrics. This gives them a competitive edge in today’s market. Retailers have data that can tell them and their advertising clientele everything about how a customer behaves, from mall outlet to online product page. Understanding of customer behavior does not get more granular than this.

However, such paradigm shifts often require small hurdles to be addressed before converting vision to reality. Our first test lies in the integration of disparate data sources. We must ensure compatibility across the ecosystem if offerings to advertisers are going to be plug-and-play. Retailers will want to give their advertising clients access to advanced machine-learning, cross-device compatibility, and unified data management. They will want to offer the capability to analyze down to the SKU level. And they must provide multichannel, multitouch performance. If they can deliver all this, RMNs will have given advertisers flexibility in terms of both budget and strategy.

The strongest link

With the right collaboration between trade, shopper, and marketing teams, the RMN can become a crucial link in the advertising chain.

Around the world, there are examples of retail giants providing RMNs that break down in-store purchase data to offer advertisers highly targeted messaging. But the big players are not the only ones who can leverage first-party data. Smaller businesses can also outperform traditional channels and do so ethically.

Regardless of the scale of the RMN organization, regional advertisers will look beyond tag lines and promises. The use of a Data Clean Room will send a clear signal of how seriously an RMN provider takes its responsibilities and the demands for transparency placed upon it by clients and regulators. Data Clean Rooms form the foundation of best practices for unified ad measurement and analytics. They allow organizations to more easily establish protocols for information security, such as differential privacy and secure multi-party computation.

Privacy is a vital deliverable for RMNs. To differentiate themselves in what may soon be a crowded market, RMN providers must be prepared to go beyond compliance when it comes to privacy, and hard-code the concept into their brand identity and their value proposition. A commitment to the integrity of consumer and advertiser data must be more than a message; it must be a demonstration. Only then can a retailer hope to earn the trust needed to monetize their media network.

Cookie cutter

As cookies become relics of the past, marketers are looking for ways to move on. An RMN that is built for granular measurement, trust, and flexibility presents a tempting path. These collaborative platforms will shape the future of advertising – of how campaigns are built, delivered, and analyzed. The retailer has a new revenue stream. And the marketing professional has a box of shiny new tools that can cut out marketers’ dependence on cookies.