Retail Media: Recipe for a cookie-less world

Molly Turpie

May 12, 2022
3 min read
Retail Media

Can you imagine an internet search without tracking devices sharing huge amounts of personal data with hundreds of companies… well, soon it won't be an imagination, but the reality of the cookieless future.

Let’s go back to basics: What types of cookies are there?

First-party cookies are stored by the site a user is directly browsing on, these cookies can track data such as language settings and analytics; primarily, their function is to enhance the user experience and is only accessible to that original domain.

Third-party cookies are created by other third-party domains than the site a user is visiting, such as an AdTech company; they track retargeting, ad-serving, and cross-site tracking.

Would also like to give a mention to Salted caramel and white chocolate cookies and the author’s favorite recipe here!

So, what’s the change; who’s happy and who’s not?

The debate between third-party advertising and privacy has been ongoing since pretty much the beginning of advertising. Should ad services have access to so much data? Should ads be so intensely personalized and, is it intrusive? All valid questions.

Finally, to the happiness of many, 2022 marks the time that privacy prevails with some browsers already blocking the use of third-party cookies with Chrome to join them in 2023. It marks the happiness of many end-users who felt some ads were too intrusive.

The dismissal of third-party cookies comes as negative news to many AdTech companies (no surprise there!). With many companies building an entire business around the use of third-party ads, they’re being forced to adapt. In fact, IAB research found that when cookies disappear, publishers could lose up to $10bn in ad revenue and stand to lose 50-70% of their revenues if they don’t take a new approach to ads and audience data.

What do retailers think?

Every retail company has different thoughts over disappearing cookies, but one thing is for sure, they know they need to adapt. The ad industry is moving more in the direction of intense ad relevancy through retail media.

With one in eight digital ad dollars being spent on e-commerce advertising in 2021 and the retail media industry is expected to hit $52.2b by 2023, large-scale retailers are looking closely into these networks.

Is Retail Media the way forward?

Unlike ads that follow you across different sites, retail media gives retailers the ability to access first-party data and “close the loop” as reported by BCG. This closed-loop implies that ads across a retailer's site will be exclusively offered to brands and vendors who sell on that site. In this way, there’s no need to track externally, as all the data will be stored and used on one site.

This first-party data is key to following and understanding consumer behavior, trends, and mapping segmentation whilst measuring effectiveness at touch points along the customer journey.

With brands and vendors paying to advertise, they increase their impressions. The retailer typically charges a cost-per-click on the ads, providing a scalable revenue stream.

Recently, Boots CMO, Pete Markey said: "A couple of years ago, only about 7% of our media was booked using first-party data, it's now over 40% and growing". Boots aren’t the only company moving in the retail media direction, Best Buy, Kroger, Walmart, Instacart and Nordstorm are all companies leveraging this opportunity.

Final Thoughts

One thing is for sure: digital advertising will be changed forever. With Amazon leading the way generating $31b of the $100b retail media opportunity, retailers that want to partake as early adoptors must act now.

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