Commentary

Retailers May Take Individual Targeting In-House

Targeting real people is the holy grail of retail marketers because individual targeting and attribution methods deliver better value to the end consumer by producing more relevant messaging and calls to action. 

This, in turn, is good for retailers. It’s why so many of them do business with Facebook.

Why is it, when individual targeting is the goal, ad exchanges, DSPs and other advertising techs all seem to focus on audiences instead of people?

The short answer is that retailers and ad tech providers are misaligned. Ad techs gear their products toward partners that can spend at scale, because it’s self-serving, not because it’s more efficient and smarter for retailers or consumer other brands.

For their part, retailers often don’t have the in-house tech solutions or people power to target at an individual level, though they sit on a mountain of data. They also struggle with how to integrate and extract meaning from omnichannel consumer data and apply that 1-1.

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As a result, retailers end up going with the same old third-party tech providers.

But as retailers become more savvy about the opportunities of owning and controlling fresh first-person data, some forgo outsourced solutions providers and develop the skills in-house to master individual targeting, with a number of implications for both retailers and ad techs.

Retailers: Own the data, master the tools

The key to changing the vendor-reliant paradigm for retailers is sorting out a way to target individuals at scale. Do it by creating products that mirror what publishers with identity data have to offer, then leveraging tools and methods that are repeatable, easy to implement, track and measure.

Retailers are ideally suited as early adopters.

They just need a path to taking controls in-house, getting their people trained and establishing new criteria for individual targeting and attribution. Some retailers may go the route of taking control of their entire martech/ad tech stack. (The option is to leave management of the tools to agencies, which are woefully behind in applying modern ad and marketing tools.)

As retailers evolve to embrace individual targeting strategies, it is the current ad tech community that stands to suffer the most. All the demand side players (DSP's, exchanges, agencies) will see their already highly commoditized business squeezed and will struggle to stay relevant.

Why? Because their trade and bidding practice is built on audience. As brands’ perceptions of individual targeting change, and they begin rethinking how to reach consumers,  it will be a wake-up call to the current ad ecosystem.

Will any ad tech players listen (and respond to) to retailer’s evolving demands?

Ad techs: Evolve or die

For those on the demand side that want to survive, identifying the best technologies for retailers to reach their own consumers is a start. But it is also imperative to identify and focus on developing use cases and metrics for retailers that want to validate the individual targeting approach and show enough wins to justify taking control in-house.

This will require the ability to highlight traditional KPIs around insights, lift, performance and reporting, for starters. Some of the key to-do’s for ad techs to evolve with individual targeting and deliver solutions of value to retailers include:

  • Ensuring clarity - Now that retailers have access to individual targeting tools, what will they do with them? What is the business value?
  • Establishing metrics - What insights and reporting can be garnered to validate data and measure performance of individual targeting? Aligning KPIs to what retailers already understand is valuable.
  • Education - Introducing new tech to a market means there will be a learning curve and retailers will want help to accelerate their knowledge base. Relevance, efficiency and quality must be the pillars of conversations.  Summits, thought leadership and case studies will help.
  • Leverage partnership networks - the MMA, IAB, Moat, eMarketer and others have an important role to play

Conclusion

A focus on first-person data and individual targeting will empower retailers to have more control and yield net-new business intelligence, including a treasure trove of metrics around what works.

By reconstructing how they approach consumers, retailers will reach across the digital divide, connect online and offline data sets and bridge the gap between engagement and activation in both the digital and experiential realms.

As retailers become more self-sufficient, ad techs and agencies that have long benefited from their lack of control over first-person data will see their audience-based models abandoned in favor of individual targeting models that give brand retailers more control.

2 comments about "Retailers May Take Individual Targeting In-House".
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  1. Corey Buller from Harmelin, June 29, 2016 at 4:06 p.m.

    Great article, Chris! I wholeheartedly agree that a 1:1 brand/consumer conversation is the future of marketing, but there is still an issue of bridging the offline-online gap. Finding a way to connect digital data to a real person without invading their private life or misusing PII data is the first problem that needs to be solved before truly personalized conversations can be had with consumers. Figure that out and you might not need to work another day in your life.

  2. John Grono from GAP Research, June 29, 2016 at 7:50 p.m.

    Is it possible to agree and disagree at the same time.

    I agree that the best retailer proposition is 1:1 marketing.   I disagree that connecting digital data to a real person is the panacea.

    Surprisingly, the best 1:1 marketing is a disappearing commodity.   The sales assistant.   In the endless pursuit of downsizing they are being dispensed with.   You get outsourced call centres instead of local knowledgeable people.  On line you get automated bots.   In the grocery store you scan and pack your own bags - heaven help you if you can't find a product on the shelf because finding staff is like finding the proverbial needle in the haystack.

    So yes - bring back 1:1 marketing.

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