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The fruits of collaboration: how US retailers are monetizing their data

30-second summary:

  • To tackle pandemic-driven uncertainties in 2020, Publicis Sapient helped a retailer tap into less-known avenues of customer data to drive revenue
  • In Q2 2020, the retailer generated over $35m in revenue advertising from the customer data platform (CDP)
  • Giant retailers such as Walmart, eBay, Target, and Kroger are grossing billions in sales through their CDP
  • More insights on how retailers monetized their high-value data and plan to use data technology to activate more, cross-channel marketing and customer touchpoints

When a well-known, US-headquartered retailer launched a proprietary customer data platform in early 2020, its sales were flagging in common with those of many other consumer-facing companies because of pandemic-induced uncertainty.

In a strategy designed to boost online sales, the retailer formed a partnership with consultancy Publicis Sapient to create a customer data platform (CDP) that, essentially, harnessed vast volumes of hitherto untapped information about buyers in a way that turbo-charges revenues.

Content created in partnership with Publicis Sapient. Click here to read ‘The data collection & consent survey’.

In short, the company set out to monetize the data.

The results came rapidly. In the second quarter of 2020 alone, right in the middle of the pandemic, the retailer generated over $35m in revenue advertising from the platform – or media network — that it shared with suppliers and other partners in a proprietary network.

Other retailers have had similarly spectacular results. While ecommerce in general in the US accounted for an average increase in revenue through 2020 of 45 percent as locked-down consumers moved to digital buying channels, one retailer that adopted a CDP saw ecommerce revenues rocket by 242 percent in a three-month period.

As these retailers are learning, the results of monetizing their high-value data through media and social platforms can be powerful for all the parties involved. And a growing number of companies have got the message. Led by Amazon whose platform attracts an estimated 90 percent of advertising by US media buyers, other giant retailers such as Walmart, eBay, Target, and Kroger are achieving billions in sales through their CDPs.

One of the more recent retailers to build a CDP was a giant grocery chain. In the first three quarters of 2020, digital sales leaped 225 percent. The chain is so encouraged by the performance of the platform that it has embarked on a multi-year roadmap designed to produce new and optimized advertising that harnesses the power of digital technologies.

For instance, the retailer expects to woo customers with multi-wave, multi-channel communications using a variety of online tools such as Adobe Campaign that make offers through a variety of channels.

As these companies are learning, media networks create a virtuous circle by attracting audiences – or consumers — via the open web that drives extra traffic to the retailer. In turn, this traffic provides data that is mined to understand better the buying characteristics of the audience.

Many consultants now believe that media platforms represent the future of commerce as retailers and other consumer-facing companies increasingly relate to their market through online, highly digitized channels.

Shorn of the technicalities, the underlying principle of CDPs is simple enough. By sharing each other’s data on the platform, both retailers and suppliers are able to access proprietary customer-rich information and deploy that to build new streams of revenue.

Retailers and other consumer-facing companies are creating their own media networks that aim to utilize huge volumes of actionable information. For instance, by learning more about customers’ buying behavior, they can channel products or offers to them based on knowledge acquired at the point of sale. Or through media impressions learn more about their customer bases purchasing intent and journey.

CDPs are much more powerful than long-standing loyalty programs and other sales campaigns because they orchestrate more frequent contact points with consumers, provide deeper insights into their market, and deliver higher levels of granularity – all near real-time.

In effect, through these platforms retailers and their partners create an echo-sphere in which they enjoy a mutually beneficial relationship with customers that is based more on their experience than on a mere transaction.

CDPs are particularly valuable for suppliers of products and services because they typically do not have a relationship with the end-buyer, only with the retailer. Through a shared network, they can however gain insights from which they were previously barred, but with fresh data, suppliers can, for instance, launch campaigns jointly with the retailer.

Privacy-related regulations are also driving retailers and other big consumer-facing companies into partner media networks as authorities clamp down on the terms of data ownership. For example, the EU’s General Data Protection Regulations, which bolster the rights that EU citizens have over their data held and processed by organizations, essentially block companies from exploiting the information without explicit permission. Penalties have been imposed in many cases.

In the US, the similarly acting California Consumer Privacy Act is seen to be taking privacy laws in the same direction. As Publicis Sapient explains, these laws “are driving retailers to a cookie-less world.” And without cookies to help drive advertising loyalty and repeat purchase are the only persistent ways to have relationships with customers and prospects.

Regulations aside, when supported by advanced software these media networks become virtuous circles. First, they drive traffic to the retailers’ digital and physical properties with campaigns paid for by cpgs and branded manufactures. Second, they use real purchase performance for customer insights. Third, by leveraging proprietary information accumulated by the retailer and partners, they produce a range of mutually beneficial intellectual properties that massively optimize the supply chain. For instance, the partners can more accurately forecast demand while also enabling a more experiential relationship with buyers.

As Publicis Sapient stresses though, the value of the media network crucially depends on the quality and quantity of first-party customer data. Building on these insights into the transactions and the linkages between customers and their purchasing, retailers can then develop relationships with common-interest advertisers in the form of publishers and other platform companies.

Here retailers have a distinct advantage because they “own the last click” that provides the deepest and most up-to-date insights. Thus they deploy that information to connect advertising directly to what the purchase has revealed about customer preferences. And through the platform, the information is shared with other partners. The “walled garden” rivals do not own the last click, as consultants point out.

Thus as retailers build CDPs, they in effect become media publishers while also boosting revenues. “The retailer is also acting like an advertiser,” the consultancy explains.

Technically, CDPs have several levels of maturity. The first stage delivers compatible technologies with partners that connect them through open-web activation. Under stage two, cross-channel activation is implemented with a variety of communication systems. In stage three the number of partners is expanded in a variety of ways. Now the system enables the partners to integrate the resulting intellectual property – the fruit of the collaboration — to greater advantage. Technically the network has expanded into what is known as custom data science models.

Under the fourth stage, the offering becomes fully omnichannel. That means that large and small ecommerce partners are engaged through “federated custom and automated decision making and data science.” The way is also open for dynamic integration with next-generation physical experience connecting offline and online.

“It’s all about driving high-value prospects,” Publicis Sapient concludes.

The post The fruits of collaboration: how US retailers are monetizing their data appeared first on ClickZ.

Reblogged 1 week ago from www.clickz.com

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