Google is set to retire third-party cookies by the end of 2023. This may seem a little while from now, but it would mean the end of digital advertising as we know it. New user-privacy-driven technologies will replace the current ones, and the changes will benefit those who plan today.
The primary beneficiaries of the deprecation (of 3rd party cookies) will be the trio - Google, Facebook, and Amazon.
Two factors contributing to their success are - high engagement and consent (users willing to share their information on the platforms). At the same time, publishers and online platforms which can create their walled gardens will see exponential growth in their advertising revenues.
So what’s in it for retailers?
Like the Amazon advertising platform, all retailers are ideally placed to reap the benefits of retail ad-media dollars if they equip themselves with the right technology and onboard brands to run advertising campaigns on their platforms.
As per eMarketer’s report on top 10 trends to watch out for 2022, retail media finds a prominent place. With a growth of over 50% in 2020 and 2021, retail media is poised to account for nearly 20% of total digital advertising spending by next year.
Will other retailers/eCommerce players benefit?
Even though Amazon DSP dominates with more than three-quarters of the retail media revenue in the US, the new payers are already eating into its share.
The dent in Amazon’s monopoly seems small for now, but the trend will continue and pick up once more retailers join the bandwagon with innovative solutions.
Our previous article covered how Instacart, Ulta Beauty, & Gopuff launched their retail ad media networks and why these specialized stores have their own set of advertisers.
In another article, we talked about why traditional retail giants Walmart and HomeDepot giving access to offline and online user data to their advertisers would provide them with an edge over Amazon in the long run.
Here’s another reason for retailers (apart from Amazon) to rejoice.
Amazon’s search results page is getting cluttered. As per a report by Profitero, Amazon’s average ad load was 8.5 sponsored impressions on the first page of search results. At the same time, Walmart had an average of 4.0 sponsored impressions, while Target and The Home Depot had just 1.9.
This means an advertiser has a lesser chance of being noticed by the customers and will have a lower click-through rate or a higher CPC. This will eventually lead to a lower ROAS (Return On Ad Spend).
The new players will lower ads per search results give a better experience to their users apart from providing exclusivity to their advertisers.
This is one of the primary factors responsible for the retail media budget allocations shifting away from Amazon (as per a Merkle study). The share of retail media spending on Amazon dropped from 55% to 45% in just one year.
Why retail media is termed as the third wave of digital advertising?
After search (led by Google) and social network advertising (led by Facebook), it’s time for retailers to enjoy the ad dollars.
The pivot here is the deprecation of third-party cookies driven by the user privacy debate.
With data sharing becoming more complicated and regulated, first-party data will be even more critical. The dependency on third-party sources for user data will be a thing of the past. Advertisers will be looking for avenues to get their hands on credible customer data collected with consent. Retailers and eCommerce players need to build strategies to collect, store and keep the information updated from the users (customers) with explicit permission. With dedicated mobile apps, robust loyalty programs, and tech-infused offline presence, retailers should aim to get customers onboard on sharing their information while abiding by the current and future privacy regulations.
One aspect where the retailers (eCommerce players) will benefit the most in the privacy-first world is the closed-loop nature of the campaigns on their platforms. Post Apple’s anti-tracking initiatives, Facebook and Google are already finding it difficult to track users once they leave their platforms and convert on a portal outside of their ecosystem. With clear attribution and measurement techniques, eCommerce players and retailers get the edge here.
Another reason retail media is set to boom post third-party cookies is that ads on retailers’ properties fall in the sweet overlap of branding & performance. More and more brands are shifting their focus on e-commerce websites and apps to get their hands on sponsored display ads that come with the benefits of first-party retailer data for audience targeting and closed-loop sales.
The ecosystem is building up at an accelerated pace, and retailers need to be prepared for the advertisers to reap the benefits in the medium to long term. At Kritter Software Technology, we have seen the same. One of our commerce clients is currently seeing more than a billion ad requests on a daily basis in just 12 months of starting their retail media network.
Finding the right advertising technology or adtech partner will put retailers on course to establish their own media platform to create this high-margin new revenue stream.