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Shoppers are the Product Too
Shoppers are more than just buyers of products. Sometimes they ARE the product. 2021 may be the retailer-owned marketing platform renaissance.
Big-box retailers are big-time marketers, but they're also big sellers of advertising. Most civilians (aka consumers) might be shocked to know that their favorite stores run massive marketing businesses.
What's the top product inside these retailer-owned advertising businesses? You.
If you are using a free service, you aren't the customer; you're the product. There's no more perfect example than Facebook, Twitter, YouTube, etc. The user is the thing being packed up and sold to paying advertisers.
In the case of the retailer-owned advertising business, consumers are both the customer and the product. A glorious (highly profitable) double-dip!
Walmart vs Target
Today, I will use these two retailers as examples since they happen to operate two of the largest online marketing businesses and massive physical retail spaces.
Note: None of what is discussed in today's newsletter proprietary, trade secret, or otherwise confidential. As a matter of fact, everything discussed in today's newsletter is already freely available on the retailer's own website or trade publications.
What data they collect
Types of information Collected:
Phone (or mobile) number
Date of birth or age
Driver's license number
Credit/debit card number
Registry or list information
Your mobile device information (e.g., device model, operating system version, device date and time, unique device identifiers, mobile network information)
How you use our sites and mobile applications, search terms, pages you visit on Target.com and our mobile applications and application performance
Geo-location and in-store location
Media Information (e.g. Advertising engagement in social, digital, and broadcast media)
Special status designations (e.g., Teacher, College Student, Military)
Kinda more than you thought? It is pretty sobering when it gets listed out right in front of you. Anything jump out at you?
Name, Address, Email, Phone number, and credit card number are the nexus for most data-driven marketing applications. In a first-party database, these fields are the underlying keys that enable the portability of the customer data from one system to another.
Most marketers would be thrilled with just a name and email address, but platforms like Target.com have a unique ability to collect more.
In fairness, consumers have the rights and ability to opt-out. A consumer can delete their information or restrict its use inside any reputable retailer’s platform. Granted, if you buy something on Target.com and expect it to be shipped to your house, they're going to need your name and address...at least for a little while. However, you can opt-out of allowing that information to be used for anything other than shipping your stuff.
I happen to have picked Target as an example, but all of the major retailers have very similar descriptions of data capture in their privacy policies. What Target captures is certainly not out of the norm. If you are interested, here’s Walmart’s version.
How is it collected?
Today, most published privacy policies also include a description of how they collect customer information. The descriptions can be a little, shall we say, "high level." However, you can pull out some interesting facts.
Let's do a quick Walmart and Target strategy comparision. Loyal Target shoppers are familiar with the popular Target Circle program. It is Target's shopper loyalty platform.
Shoppers sign up, share a little info, and boom...in roll the savings. However, in doing so, Target can easily tie shopper transactions to a shopper’s detailed Circle profile.
This is the same basic setup for every grocery, pharmacy, and retail loyalty program ever created. Sign up for your local grocery store savings card, get the little keychain barcode tag, and scan it every time you come in to shop.
Speaking of loyalty programs in general, most consumers may not realize that these programs do not necessarily need you to scan your loyalty card every time. Most can still trace your purchases back to your profile information. If you've used your credit card once with your loyalty card, the linkage has been made.
Credit card number XXXX XXXX XXXX 1234 is linked to loyalty program member number 987654321.
Even though you may not use your loyalty card for every quick trip into the store for some milk, most stores still know it was you because you used the credit card linked to your loyalty profile.
What is different about Walmart? Walmart has a different mantra. "Every day low price" kind of negates the need for a loyalty program, right? If the whole idea is that I'm always getting the best Walmart deal possible, there should be no need for my 8th loyalty keychain tag.
Well, even at Walmart, the tune changed a bit. Walmart released Walmart+, which is often regarded as a competitor to Amazon Prime. Subscribe for $98/year, and you get all sorts of goodies like free shipping for online orders, no minimum spend requirements for "from store" grocery delivery, etc.
There's also a handy little function called "scan and go" that allows shoppers stand in the aisle of the store, select the items they want, and scan them with their phones. When the shopper is ready to check out, they are already paid in full. They just walk out of the store! Skip right past the checkout counter.
Side note: Unlike Target that states they use Bluetooth to track movements around the store, Walmart could assume that you're in the laundry detergent aisle because you just scanned a bottle of Tide with your phone using “scan & go.”
Pandemic driven acceleration
Across the industry, the COVID-19 pandemic created a once in a lifetime surge in first-party data capture. Purchases that were historically made in-store were forced online and made available through curbside pick up. This hockey-stick acceleration is on top of unprecedented growth in regular e-commerce transactions where items are shipped or delivered straight to the home.
In creating a safe, reliable, and convenient way for the customer to shop, companies like Target and Walmart experienced exponential growth in customer data capture that may have otherwise taken the better part of a decade to acquire.
Break it down
Two companies with two completely different plans for creating (virtually) the same data asset.
Incentivize consumers to create an account and provide their detailed information. Walmart + vs Target Circle.
Expand that detailed information to include everything from credit card numbers to customer movement around a physical store.
Use the linkage to join in-store, online, and mobile purchases into one cohesive record of the consumer.
Exciting times to be alive.
What does this mean for marketers?
Hey, thanks for sticking around. It was a long trip, but now it is time to bring it home.
Retailers did all the hard work of capturing consumer purchases and behaviors. They have attached those actions to a unified customer record, typically anchored by their loyalty or premium membership.
Now, enter the data nerds.
These are the toys that data scientists in the marketing industry dream of owning. Data specialists can begin to build out basic customer segments like loyal dog food buyers and periodic snack cake purchasers. They can separate consumers who average $35 per transaction from those that average $135. All of the segments, groupings, cohorts, and eventual machine learning models produce data-driven marketing gold.
No wonder the retailers operate marketing businesses.
How do markers activate?
The retailers' owned and operated websites have become major marketing properties in their own right. Many big-box retailers offer display and native advertising placements in their product detail and search pages. Additionally, the retailers provide their version of a paid search capability allowing markers to buy the "top paid listing" on product search landing pages.
Retailers then offered marketers access targeting data within the retailer O&O web properties. In all cases, marketers wanting to leverage these capabilities could only do so through retailer managed-service buys. Both the inventory and all the data goodies were kept under lock key, only accessible by retailer media employees.
Just recently, there was a shift. Walmart announced the rebranding of their marketer offering, now known as Walmart Connect. On the heels of that announcement was a new partnership between Walmart Connect and The Trade Desk. For the first time, marketers will be able to use Walmart targeting data in a self-service DSP.
The DSP in question is not the Trade Desk we all know and love. Instead, an entirely separate instance of the Trade Desk platform was stood up to power the new Walmart DSP. The DSP contains all of the Walmart targeting data goodness, plus inventory from third-party publishers that have been blessed by Walmart Connect. Additionally, this will be the only way to access Walmart.com and other O&O inventory in the future.
Let’s compare that to Target and Roundel's approach. Roundel has opted for simplicity, allowing marketers to bring their preferred DSP to the table. Roundel creates bundles of external publisher inventory, overlaid with proprietary Target audience data, and surfaces the package as a private marketplace/deal ID.
In theory, if you were a cereal brand wanting to target buyers of low-sugar cereals, Roundel could package up a deal ID to meet your needs. Roundel would combine inventory with their proprietary "healthy cereal buyer" segments and make it available to you through an Index Exchange deal ID. (Note: This was a completely made-up example. I have no idea if Roundel offers a healthy cereal PMP, but it would be cool.)
Sound like something you want to explore? Here are some next steps.
What's your preference?
Your own DSP, but limited flexibility and customization
Adopting yet another DSP, but having more hands-on control over the targeting and inventory levers.
Walmart and Roundel are different approaches attempting to solve the same problem for marketers. Walmart DSP seems to be focusing on controls and flexibility, but you have to adopt their DSP. Roundel allows the freedom of choice when it comes to DSP, but your configuration options are locked into the underlying deal ID.
DO conduct a "pros vs cons" exercise internally to determine which is more important to you.
DO plan on dabbling a little bit inside the platform you did not choose. Just because you opted to go with one platform over another doesn't mean the loser is dead to you. Keep experimenting and testing. Things evolve quickly!
DO prepare to spend big bucks. Some of the retailer platforms have high minimum spend requirements.
DO explore other retailer platforms. I focused on Walmart and Target today, but Amazon, CVS, Walgreens, Kroger, and others offer similar capabilities.
DO NOT take your eye off the ball. You should still be focused on building your first-party data asset in addition to exploring retailer use cases.
👹 Krystal says “don’t be a creep.” GroupM releases data ethics framework.
🏈 It is Superbowl commercial season. Wait, am I allowed to say that? Errr. I meant “Big Game” commercial season. Please don’t issue a take down notice. Forget I ever wrote that evil word. Sam Adams is already taking shots at Budweiser.
🎙 Speaking of Walmart Ads, Lex has a rap song in case you skipped this whole newsletter.
📺 Vizio can haz sportz.
🍎 Tim Cook says privacy and climate change are the top issues of our lifetime. No pressure.
🚀 Elon damn near broke Clubhouse the other night. Oh, you’re a forgotten Android user like me? You can catch up here.