How Top Retail Media Networks are Monetizing 1st-Party Data

How Top Retail Media Networks are Monetizing 1st-Party Data
By Stephanie Nerby, VP, Marketing
March 20, 2024

According to eMarketer, retail media is going to be the fastest growing ad channel through 2027, growing by more than 20% each year. The category will likely surpass TV ad revenue for both linear and connected — and will approach social media as the second largest ad spend channel (with search in first place).

At a topline, this shouldn’t come as a surprise. Top retail media networks (RMNs) are sitting on a treasure trove of first-party customer data that can help brands identify, target and connect with both existing customers and new shoppers. 

Of course, RMNs can activate this data for advertisers on their owned channels, But they can also use audience or reach extension to find more of the desired audience across all media.

While the industry is still working to standardize performance and measurement, retail media networks are undoubtedly going to play an important role in the future of digital advertising. These four prominent brands are successfully harnessing first-party data to expand their reach and connect with target audiences.

And any retailer with first-party data can follow suit.

1. The Target retail media network: connecting off-site with first-party data

Target has made strides in harnessing the potential of first-party data to connect with their customers and advertisers. 

Using an RMN, an advertiser can choose to place ads within a retailer’s owned properties, including the website home page, search results page, and product detail pages, for example. But through Target’s Roundel, the retail giant allows advertisers to leverage its first-party data to reach Target customers off-site on more than 150 premium publishers, as well as channels like CTV.

This enables Target — and their advertisers — to create highly personalized campaigns that reach the most relevant audiences. 

One of the key strategies the company has adopted with the Target retail media network is localization. Using data analytics, Target tailors their campaigns to specific geographic regions and cultural groups. This hyper-targeted approach not only maximizes the effectiveness of their advertising — but also enhances customer engagement. 

For instance, Target can advertise winter clothing to customers in colder regions and swimwear to those in sunnier climates, all thanks to the power of first-party data.

“The advertiser’s goal is to achieve the best return on ad spend (ROAS), and the way to achieve this goal is by media agencies and advertisers practicing transactional transparency.”  —Stephen Dwyer, Senior Director, Partner Solutions Group, Roundel

2. Tripadvisor: Guiding travelers with personalized advertising

Tripadvisor has significantly expanded its advertising business by using first-party data. By analyzing the search and booking behavior of their users, Tripadvisor can deliver ads that align with individual preferences, interests, and travel plans.

For example, Tripadvisor can serve ads for ski jackets and ski pants to travelers who have recently booked a ski vacation. 

And through a RMN, Tripadvisor extends its reach beyond its owned media channels — to third-party sites and apps. This approach allows them to connect with potential customers who might not have otherwise discovered their brand. 

For instance, Tripadvisor can serve those ski jacket ads to travelers in their weather app or while watching ad-supported TV channels like Hulu or Pluto.

“We’ve found that our users are much more likely to engage with content, or an ad, or responsive content, if it makes sense to their user experience.” —Justin Reid, Senior Media Director of International Markets, Tripadvisor

3. The Wayfair retail media network: Furnishing the future with first-party data

Wayfair, a leading online furniture and home decor retailer, witnessed rapid growth in its advertising business by tapping into first-party data. The company's ability to create highly targeted advertising campaigns based on this data has enabled them to extend its reach and attract new customers interested in home furnishings.

Wayfair goes a step further by offering a self-service advertising platform, which empowers advertisers to craft their campaigns and reach Wayfair customers based on their browsing and purchase behavior. 

This offering is especially helpful for brands looking to stand out on big shopping holidays like Black Friday, Cyber Monday, Way Day, and Prime Day. 

For example, a furniture brand can target shoppers in the market for a new couch by sponsoring its latest line of products on the Wayfair site. Additionally, Wayfair can extend this sponsored initiative across email, social, apps, push notifications, and more.

“At Wayfair, we focus on providing a seamless experience for our customers, which means that data must be at the root of many of our decisions. Through a single view of the customer, teams can view the end-to-end journey of a customer.” —Wiliam Lee, Senior Product Manager of Identity, Privacy, and Audiences, Wayfair

4. Etsy: Nurturing a unique community with first-party data

Etsy, the popular online marketplace for handmade and vintage goods, boasts a highly engaged community of buyers and sellers. This community has also been a growth driver for Etsy’s retail media business, as the company requires sellers above a certain threshold to spend a portion of their revenues on advertising with its media network.

According to Etsy CFO Rachel Glaser on an investor call in 2023, this move helped fuel a 20% increase in advertising revenue. Additionally, performance marketing spending for the Etsy marketplace drove $2.5 billion in revenue in 2022, up roughly $200 million from the year before.

The incredible performance is in large part due to Etsy’s treasure trove of first-party data, which allows advertisers to target consumers based on their interests, preferences, browsing and purchase history. 

For example, sellers who produce Croc charms can target buyers who have bought these shoe accessories in the past. 

This approach not only enhances the shopping experience for Etsy customers — but also helps sellers maximize their reach to a relevant audience.

Create the next top retail media network

Cookies are on their way out, and, first-party data — especially from top retail media networks — is going to help guide retailers and advertisers into the future. Brands like Target, TripAdvisor, Wayfair, Etsy, can create a new and highly profitable revenue stream by monetizing first-party data to power advertising campaigns. 

But you don’t have to be an Amazon, Walmart, or Home Depot to make it happen. Just about any retailer with first-party data can take advantage of this opportunity.

Your first-party data can help advertisers to better understand their customers' behavior, preferences, and needs — to both deepen connections with existing customers and expand their reach to new ones.