Amazon is upping the ante when it comes to connecting brands to customers. At the 2022 Amazon Accelerate conference in September, the retail giant announced a new offering in beta testing called Tailored Audiences. It’s a tool designed to help Amazon sellers reach more audiences beyond those that follow their page—including loyal, high-spending and new shoppers. Sellers can engage these audiences through email marketing messages, tracking click-through, delivery and opt-out rates, as well as sales and conversions for closed-loop measurement.
As e-commerce sales wane, Amazon is turning to digital advertising as a new revenue generator. In 2Q22, online retail sales decreased by 4% year over year to $50.86B. By contrast, ad sales were up 18% year over year to $8.76B. Tailored Audiences, set to release early next year, also responds to brands’ expressed desire to boost customer lifetime value.
More brands want the retailer’s insights (and channels)
Amazon’s new strategy, and the seller motivations driving it, offer insight into how retailers can improve brand relationships while also monetizing their customer data through advertising networks. As retailers ride the wave of rapidly shifting consumer spending habits, advertising is proving to be an increasingly viable – and appealing – alternate revenue stream.
According to GroupM, retail media spend represents 18% of global digital advertising and 11% of total advertising and is projected to increase by about 60% and reach $160B by 2027. In the next 1-3 years, competition in retail media will also increase as data decouples from inventory and non-endemic brands, or brands that don’t sell directly through retailers, begin to participate more. These brands are interested in advertising on the retail media network to access new audiences (and hence drive sales).
More data, more insights, more measurement
For non-endemic brands, CPG partners and Amazon sellers, the appeal of the retailer’s advertising channel or network has everything to do with access. Brands are looking to directly reach new customer segments pre-vetted for, or predisposed to, their category and most likely to become loyalty members or repeat customers.
In other words, they want to take advantage of the retailer’s customer data.
Examine your existing customer data sets. To what degree do they represent the entirety of your base? Are you relying too much on loyalty data? If you have brick-and-mortar locations, can you provide the same level of insight on these shoppers as you would with online ones? Can you identify which products sell best, and where? Consider the value of a partner with identity resolution capabilities who can also enrich your existing data with additional insights to increase the number of attributes at your disposal.
But keep in mind, what CPGs really want is to hire you to do the legwork (capturing, contextualizing and activating customer data) and deliver the metrics to prove ROI. You not only need to make sure you have enough scale to satisfy these expectations but also the right analytics and activation mechanisms in place. A closed-loop measurement is extremely important, as it allows brands to justify the continued expenditure in their advertising budgets. According to Boston Consulting Group (BCG), to stay competitive against other networks, you need to fulfill brand expectations for a variety of analytical capabilities and metrics, including:
- Self-service media buying and performance review
- Attribution modeling
- Creative engagement
- Channel performance
- Incremental revenue impact tracking
- And more
Consider how much more granular your insights need to be as these networks continue to gain in popularity. Can you deliver the specificity that a non-endemic brand is after by helping them reach customers based on their purchases of complementary goods and services?
Become a strategic partner
Achieving the proper scale with your first-party data and ensuring a depth and breadth of reporting capabilities is critical to deliver value through the retail media network, but it’s not automatically enough to keep brands happy in the long term. Once your CPG partners can see the results of their media investments, they are also looking to their retail partner as a strategic consultant who can help them grow their presence in the network.
In a recent study by BCG and Google, 20% of respondents identified strategic support as the most important aspect of the RMN collaboration. Many retailers already offer their brand partners real-time reporting, guidance on investments, optimization opportunities and more.
Attract more brand partners with Bridg
We help our customers identify the actual individual behind card transactions and our offline identity resolution solution is the first to unify insights on all customers—loyalty and non-loyalty, known and unknown. Our advanced customer intelligence helps solve any audience insufficiency problems and begin maximizing your return on investment.
Take advantage of SKU-level purchase histories, along with hundreds of demographics, socioeconomic and lifestyle attributes to enhance your targeting marketing capabilities and serve up the granular shopper insights brands are looking for. Plus, when your CPG partners have access to our data and audience platform, they can effectively measure incrementality themselves through self-graded measurement.
With Bridg, you can stop calculating your cost—and start adding up your return. Contact us today to learn more about how we can help you become the retail media network everyone wants to join.