Walmart, Target and Other Mega-Retailers Leverage First-Party Data to Become New Media Giants

With all the media chatter now swirling around Twitter, smart CMOs are keeping tabs on broader long-term trends and thinking about how retailers are at the forefront of the most recent digital media disruption. . In Walmart’s latest earnings report, there was more evidence, if it really needed it, that retailers today have gone from advertisers on the media of others to sellers of advertising on their own. media platforms.

Now that Walmart is reporting that its own ad sales business has surpassed the $2 billion mark, it’s clearer than ever that marketers are spending their ad dollars like they never have before and that the competition for brand advertising has reached a new level of fragmentation, with retailers themselves becoming sellers and not just buyers of ads on others’ media platforms. Retailers have forged a path to reshape traditional relationships and definitions of ‘buyer’, ‘seller’ and ‘media company’.

Whether physical or “hybrid” with new businesses in digital, or born and native still online, today’s retailers have been able to collect a rich set of permission-based first-party data on their customers. And just like ad tech companies or media companies, they can then use the data they have to collect paid advertisements from brands they sell in their stores or online. So, like the media and credit card giants of the past, which they can now bypass if they wish, these retailers know what their consumers want, when they want it, what they spent, at what how often they buy it and what they buy it with. And retailers can communicate directly with their own loyal customers and allow other brands to access all this information as well, without using “media” as we know it.

Additionally, as Walmart has shown, the creation of automated media stack tools like Connect takes retailers not only into the paid media space, but also turns them into ad tech companies, giving them an edge over the do-it-yourself advertising of the platforms. They can do search, pay-per-click, display and other advertising tricks, just like big media players – with the benefits of not relying on cookies, just as privacy concerns have changed the nature of how platforms and publishers interact with their users and readers. Retailers’ first-party data relationships are more valuable than ever, and this has only increased the value of the assets savvy retailers have.

What retailers have is a killer combination of data and direct selling capabilities that could one day eclipse the power of all current publishers and platforms combined.

“Retail media networks are storming ‘adland’ as they are finally able to give marketers the holy grail – insights and access to high-quality, first-party data that tells them how their customers actually make decisions to buy a product or service,” says Michael Kassan, Founder and CEO of MediaLink, a digital expert and advisor to marketers and media companies across the value.” At a time when more safeguards are being put in place to protect consumer privacy in walled gardens, retail media networks offer a rare opportunity for marketers to gain insight into the customer journey. and to provide messages that are both beneficial and non-intrusive”.

Nine of the 10 largest retailers in the United States have already decided to bet that expanding retail advertising is a thing including Walmart, Target, Kroger, Lowe’s, Best Buy, Walgreens and Albertsons. Inspired in part by Amazon – which recently launched its own advertising business for the first time, revealing that it earned just over $31 billion in 2021 – direct-to-consumer digital natives like DoorDash, Instacart and Gopuff have come together. also launched in the sale of online advertising for a considerable new source of income. These retailers not only have verified email addresses and credit card numbers, but they’re also often a grocery store, drugstore, clothing store, and auto center all rolled into one. In other words, they know more about their customers than any company. already.

These retailers’ incredible collection of first-party, real-time data has enabled them to become high-end providers of inventory and advertising data, sliced ​​and diced, as well as any ad tech middleman . And for brands and advertisers, this inventory is addressable and targetable with very high-intent signals. No traditional media publisher has ever gone beyond that kind of gold.

The proof of this change in “who plays the media” is in the results.

McKinsey reports that retail media offers a three to five times greater return on ad spend than traditional media buys. With that kind of ROI, brands would be foolish not to make retail media a big part of their advertising portfolio.

“Now the space is reaching a pivotal moment – retail media is finally realizing what I call the era of ‘brandformance’,” says Kassan. “This concept refers to the infusion of the same data into brand marketing as they would in performance marketing, removing the artificial distinction that existed between them. For a long time, retail media received revenue primarily from client marketing budgets, but as more and more brand marketing dollars start pouring into the space, we’re going to see a lot more sophistication in the types of messages and how they are delivered to customers. Retail media will not only become a venue for the right message, at the right time, in the right place – it will also fully embrace “surprise and delight” marketing that pays significant dividends to brands over time. »

The traditional customer trust first-party data model, where publishers alone held all the gold, has undergone a transition to real, actionable loyalty programs that retailers can offer marketers for their paid participation.

For example, globally, 240 million customers visit Walmart-owned properties each week, either in-store or online, and 150 million are in the United States. Meanwhile, Walmart’s operations sale advertising on its branded properties soared to nearly $2.1 billion in 2021. Smaller but no less powerful, Nordstrom has 411 out of 32 million luxury shoppers, and a 2021 trial selling ads to brands grossed $40 million in the first three months. Other success stories abound.

Instacart has gone one step further by launching a new retail media ad technology service that serves ads on grocers’ sites and apps. Given that Instacart has slashed its valuation by 40% for its core delivery business, this side-hustle of ad-tech could be a key way to sustain its revenue streams against volatile gas prices, disgruntled delivery drivers and other “turbulences”.

In the past, it was exclusively the publishers who had the audience, they had the data and they had the cachet. With contemporary new media anomalies, companies that were previously advertisers on media properties owned by traditional publishers and platforms have mutated to understand and sell their own ability to reach consumers for other brands. It’s sort of the apotheosis of endcap in digital heaven. Retailers and their advertising retail customers can disintermediate major media players, whether publishers or platforms. And these retailers know their consumers better than publishers ever have, including their loyalty and the personal information they’re willing to divulge for profit.

We’ve said it before and we’ll say it again: The internet is still incredibly competitive, and that’s a really good thing for everyone. For brands, retail media is a golden opportunity to directly access first-party data that aligns perfectly with purchase intent. For marketers, this is a golden opportunity for powerful and precise customer targeting in the age of demise of cookies and IDs. And for retailers, it’s a golden opportunity to diversify their revenue streams and get into advertising under the guise of retail.