Retail advertising has always had two purposes: Drive consumers to the stores, and then get those consumers to buy products. The two goals are self-reinforcing, which is why it has made sense for vendors to join forces with retailers. In the old days, this might have meant spiffs (bonuses for selling a specific product) for sales associates. Today, it means sharing data.
For the past few years, Target has been at the forefront of this movement. Target Guest Access, the retailer’s private marketplace for supplier brands, leverages both the brands’ first-party data and Target’s in-store data, letting vendors look at who’s buying their products and then target them with programmatic advertising. In an example cited by Digiday, allergy-relief spray Flonase used Target Guest Access to learn that Flonase purchasers were likely to be 24- to 44-year-old women with kids and to have incomes likely ranging from $25,000 to $99,000 a year. Flonase used this data to inform a campaign that included programmatic, and the campaign boosted sales by 40 percent.
It’s Not Just Target
Rival retailers are catching on as well: Amazon Advertising Platform (AAP) is similar to Target Guest Access. AAP leverages data from billions of Amazon transactions over the years for retail advertising. Marketers can also use it to execute programmatic buys on Amazon.com, IMDB, and via ad exchanges. One such vendor, Nespresso, beat its cost-per-acquisition goals by 70 percent and drove sales three times higher than projected, according to an Amazon Advertising case study.
As AdExchanger has pointed out, Walmart Exchange (WMX) offers a similar service for vendors. Like APP and Target Guest Access, it harnesses purchase data to help vendors make better-informed ad-buying decisions.
While Target, Amazon, and Walmart have pioneered the idea of homegrown programmatic platforms for vendors, they aren’t alone. In 2015, AdvertisingAge reported that “as many as 20” retailers, including Safeway/Albertson’s, ShopRite, Food Lion, Dollar General, and Meijer, were experimenting with similar programs. The majority of the retailers on that list are supermarkets, a notoriously secretive industry category, which would explain why those programs have received so little publicity.
Peering Down the Pipeline
Target, Amazon, and Walmart’s foray into data-sharing and programmatic comes as many brands are leaning on data-management platforms (DMPs). A recent survey from The Relevancy Group referenced by AdExchanger found that 41 percent of marketers were using a DMP. Retailers like Target, Walmart, and Amazon are currently filling a void, as marketers are still exploring the space and trying to determine, among other things, the difference between advertising and trade spending. Since those three retailers deal with such large scales of transactions, smaller retailers might also benefit by joining forces in order to create rival offerings.
Target, meanwhile, is pressing its advantage. Most recently, the retailer dabbled in addressable TV, points out AdExchanger. It’s also looking into applying its data to linear TV. And Target’s innovation with advertising doesn’t stop there—according to the Star Tribune, the retailer also boosted its TV ad budget by 21 percent this past holiday season, running promotions in November that offered $10 off a $50 purchase in different product categories (including toys, groceries, and apparel) and offering free shipping on any-size orders. But as Target’s in-store sales fell 1.3 percent during the 2016 holiday season, according to Fortune, there’s still plenty of room for competitors looking to hone programmatic tactics of their own.