Ad business partnering with retailers for access to first-party data

Retail media is one of the fastest growing sectors within the digital advertising industry and retail media ad spend will reach  Euro 25 billion in Europe by 2026, advertising organisation IAB Europe forecasts. A survey by IAB and Microsoft-owned Xandr shows that 92% of advertisers and 74% of agencies are already partnering with retailers to reach consumers. Access to first-party data is a driving force for the cooperation. 

Of the small amount that are not engaged with retail media as an advertising channel, 88% of advertisers and 77% of agencies plan to do so in the next 12 months, IAB Europe says.

Access to data, and in particular first-party data, is mentioned by more than a third of ad buyers as a key opportunity for cooperating with retail media. Third-party cookies, enabling users to be tracked across sites, are on their way to be phased out. After several delays, Google is currently set to phase them out in Chrome by 2024. 

The majority in the survey are already working on their first-party data strategy. Whilst 91% of buyers have a first-party data strategy in place, 49% are still working towards scaling their first-party data strategy, IAB Europe says.

As with any new advertising channel, retail media is not without its challenges. A third of respondents cited ‘scale’ and ‘integration with other advertising technologies’ as their top two barriers. Buyers want to be able to purchase their advertising via one or a few technology partners and the lack of retail media ad tech integration remains a stumbling block, IAB Europe says.

Daniel Knapp, IAB Europe’s Chief Economist, says retail media in Europe is already a Euro 8 billion market and growing double-digit despite economic headwinds. 

“The pandemic-induced rise of e-commerce, paired with retailers’ first party data in a world of signal loss, and the ability to combine ad exposure and conversion into a single platform are key market drivers. We see further potential for off-site retail media to integrate retailer’s role more widely in the upper marketing funnel.”

“Our research with IAB Europe shows how third-party cookie deprecation has accelerated the adoption of this channel since it offers the benefits of first-party data with closed loop attribution. However, there are still pain points related to scale and technology that are creating challenges for retailers and brands,” says Paul Longo, Global Head of Retail Media Sales, Microsoft Advertising.