Unlocking the Power of First-Party Data for Retail Media Success
Retail leaders are increasingly turning to first-party data as a cornerstone of their marketing and media strategies. Not only is this resource crucial for digital marketing purposes, but it is also an important input for designing ads and other content on retail media networks (RMNs).
With the impending demise of third-party cookies and growing privacy concerns, gaining access to and effectively utilizing first-party data has become crucial for improving customer engagement, driving sales, and boosting revenue through this channel. According to eMarketer's latest research, the 2024 forecast for US Retail Media Ad Spending has increased by over $4 billion since spring 2023, indicating significant growth in this sector.
This blog post will explore the importance of first-party data in retail media and provide actionable insights for retail leaders looking to harness its power.
The Value of First-Party Data
First-party data refers to information collected directly from customers through their interactions with a company's owned channels, such as websites, mobile apps, and in-store purchases. This data is inherently more valuable and reliable than third-party data because it comes directly from the source and is unique to each business.
According to a collaborative study by Google and Boston Consulting Group, key marketing activities leveraging first-party data resulted in a 2.9x increase in revenue and a 1.5x decrease in costs compared to those that don't. It enables retailers to create highly personalized campaigns, improve customer experiences, and make data-driven decisions.
For retail leaders, first-party data offers several key advantages:
- Enhanced personalization: By leveraging first-party data, retailers can create highly targeted and personalized marketing campaigns that resonate with individual customers.
- Improved customer insights: First-party data provides deep insights into customer behavior, preferences, and purchase patterns, enabling retailers to make data-driven decisions.
- Increased marketing efficiency: With accurate first-party data, retailers can optimize their marketing spend and improve return on investment (ROI).
- Compliance with privacy regulations: First-party data collection, when done transparently and with consent, aligns with evolving privacy laws and builds trust with customers.
First-party data is also vital for building lasting relationships with customers. By continually collecting and analyzing data from interactions with customers, companies can create long-term strategies that prioritize and cater to customer needs.
Some of the most common examples of first-party data include:
- Customer demographics (age, gender, location)
- Purchase history (what products they have bought)
- Browsing behavior (what products they have looked at but not purchased)
- Website engagement metrics (time spent on site, pages visited)
- Email subscriptions and click-through rates
- Customer feedback and reviews
As privacy regulations tighten and third-party cookies phase out, first-party data becomes increasingly critical for retailers to future-proof their marketing strategies and maintain a competitive edge in the digital marketplace.
Strategies for Collecting First-Party Data
To effectively leverage first-party data for retail media and marketing, retailers must implement strategic approaches to data collection.
Loyalty Programs
One of the most powerful methods is through loyalty programs, which incentivize customers to share their information in exchange for personalized rewards and experiences.
For instance, Sephora's Beauty Insider program has been highly successful in gathering valuable customer data while providing tailored recommendations and exclusive offers. According to one report on Sephora’s loyalty success, the company’s program is so successful in part because of its personalization capabilities.
"When members join Sephora’s Beauty Insider program, they’re invited to fill out their beauty preferences and basic appearance information,” the report said. "With this, Sephora is able to tailor recommendations effectively for both its new and long-time members. Done right, this level of personalization makes members feel closer to the brand — while the tailored content makes it more likely that members will take an interest in products and buy them.
Website and eCommerce Interactions
Website interactions and eCommerce transactions are also rich sources of first-party data. By implementing robust analytics tools, retailers can track customer behavior, preferences, and purchase history across their digital platforms. This data can be used to create detailed customer profiles and inform targeted marketing campaigns.
Amazon, for example, utilizes its vast trove of first-party data to power its recommendation engine and personalized shopping experiences.
"Consider for a moment, that Amazon has far more first-party data available than any other advertising platform, including Google,” says a report by Dealer eProcess. "With 91% of US adults as their customers, Amazon knows where their audience lives, they’re shopping history, and purchasing patterns, creating near-perfect behavioral data as a result.”
Mobile Apps
Mobile apps present another significant opportunity for data collection. By offering features like in-store navigation, exclusive deals, or mobile payments, retailers can encourage app adoption and gather valuable data on customer preferences and behaviors.
Starbucks' mobile app is a prime example, collecting data on purchase history, favorite orders, and location to deliver personalized offers and streamline the ordering process.
Email Marketing
Email marketing remains a powerful tool for data collection when used strategically. By segmenting email lists and creating targeted campaigns, retailers can encourage subscribers to update their preferences, participate in surveys, or engage with personalized content.
By implementing these diverse strategies for first-party data collection, retailers can build a robust foundation for their retail media and marketing initiatives, driving personalization, customer engagement, and ultimately, revenue growth.
Leveraging First-Party Data for Retail Media Success
Retail media networks have emerged as a powerful way for retailers to monetize their first-party data and create new revenue streams. By leveraging the rich customer insights gathered through owned channels, retailers can offer highly targeted advertising opportunities to brands and suppliers.
Amazon Advertising Reaches Consumers at the Right Moment
One of the key advantages of retail media is its ability to reach consumers at crucial moments in the purchase journey.
For example, Amazon's retail media network, Amazon Advertising, which accounted for 75.2% of the US retail media market in 2023, allows advertisers to target customers based on their browsing and purchase history, product preferences, and other behavioral data. This level of targeting enables brands to deliver relevant ads to consumers who are actively considering purchases, increasing the likelihood of conversion.
Walmart Connect Deploys Powerful Omnichannel Advertisements
Walmart Connect, another major player in the retail media space, demonstrates how first-party data can be used to create powerful omnichannel advertising solutions. According to a report by MarketingDive, Walmart’s retail media network saw 11 billion impressions in Q1 2024 while No.2 Target generated fewer than 7 billion impressions.
By combining in-store purchase data with online behavior, Walmart enables advertisers to reach customers across multiple touchpoints, including in-store displays, website placements, and connected TV ads. The brand also has data-sharing partnerships with other large platforms and publishers, including TikTok and Disney.
This integrated approach allows for more cohesive and effective marketing campaigns.
Target Roundel Creates a Holistic View of the Customer
To maximize the value of first-party data in retail media, retailers should focus on creating a unified view of the customer across all channels. This involves integrating data from various sources, including e-commerce platforms, loyalty programs, mobile apps, and in-store interactions. By doing so, retailers can offer more sophisticated targeting options and provide advertisers with deeper insights into consumer behavior.
For instance, Target's Roundel retail media platform allows advertisers to leverage Target's first-party data to reach customers not only on Target's owned properties but also across more than 150 premium publishers and channels like connected TV. This extended reach, combined with Target's rich customer data, enables advertisers to create highly personalized campaigns that resonate with their target audience.
Wayfair Media Solutions Empowers Brands with Innovative Ad Formats
Retailers can also use their first-party data to develop innovative ad formats that enhance the shopping experience.
Wayfair Media Solutions, the RMN of eCommerce furniture giant Wayfair, offers a self-service advertising platform that empowers brands to create targeted campaigns based on customers' browsing and purchase behavior. The company has its own engineers and data scientists, and it has created much of its advertising technology in-house.
This approach is particularly effective during major shopping events like Black Friday or Cyber Monday, where personalized recommendations can significantly impact sales.
Leveraging Advanced Analytics
To achieve success in retail media, retailers must invest in advanced analytics capabilities. By applying machine learning and AI to their first-party data, retailers can uncover deeper insights and predict consumer behavior more accurately. This not only improves targeting for advertisers but also helps retailers optimize their own merchandising and marketing strategies.
The effectiveness of retail media networks powered by first-party data is evident in the rapid growth of the sector. This growth underscores the value that advertisers see in accessing retailers' unique customer insights.
Collaborate and Connect to Leverage First-Party Data in Retail Media
As the retail media landscape evolves, retailers should also consider collaborating with other data sources to enhance their offerings. For example, some retailers are exploring partnerships with financial institutions or telecom providers to gain additional insights into consumer behavior while maintaining privacy compliance.
By leveraging first-party data effectively in their retail media strategies, retailers can not only create a lucrative new revenue stream but also strengthen relationships with brand partners and deliver more relevant experiences to their customers.
To learn more about these opportunities, don’t miss Commerce Media Brand Summit 2025. It’s happening from March 10th to 11th at the Westin Buckhead in Atlanta, Georgia.
View the agenda and get tickets to the event today.