By Naomi Gould, Data Science Consultant Manager at LiveRamp
With inflation at a thirty-year high, marketers and data scientists are grappling with uncertainty around forecasting and measurement. One of the most widely used measurement tools among advertisers today is econometrics, which uses statistical techniques on daily aggregated data to estimate the impact of various marketing activities and media investments. Often referred to as ‘Media Mix Modelling’, econometric measurements allow advertisers to measure the impact of multiple channels at the same time through omni-channel reporting.
In times of marketplace stability, econometrics provides marketers with a useful way of deciding how to allocate and weight their media budgets towards the channels delivering the best results for them. However, in less certain economic times, like right now, high inflation and sudden shifts in consumer behaviour can skew the outputs of econometric measurement, making it less reliable for advertisers at a time when they need it the most.
While econometrics remains relevant as a top-level media planning tool, the economic realities of 2023 mean that more and more brands are looking beyond econometric modelling. Instead, they are also incorporating ‘sales lift’ measurement to generate a more accurate and granular picture of campaign performance and ROAS. Indeed, by showing the incremental increase in sales during a specific promotional time period, sales lift measurement allows both retailers and advertisers to better calculate the effectiveness of a brands’ marketing efforts and promotions.
The key questions are where and how do you access the sales data you need?
The benefits of data collaboration
Over the past decade, the growth of programmatic advertising infrastructure, the maturing attitude of the industry to data protection and privacy, and the continuing development of technology around data collaboration, have all laid the groundwork for the rapid emergence of an important new marketing channel: Retail Media.
Retail media gives retailers a way of monetising the huge data resources they’ve been building since the launch of a new style of loyalty card in the 1990s. It gives brands a way of using that opted-in first-party data to target and measure their advertising more accurately, to understand customer behaviour more deeply and, in turn, to provide customers with better campaigns, better offers and a better overall experience.
The power behind retail media rests in the retail media network. These are the retailer-owned platforms that marketers can use as media properties to reach the retailer’s customers with their marketing messages. They can include the retailer’s online environments like its website, its apps, and any other digital properties. It can also include its offline channels like in-store and direct mail.
By combining the ad exposure data of brands with the sales data of retailers, brands can get a much more detailed picture of their customer base and the direct impact of their media campaigns on sales uplift. This also allows them to answer questions that econometrics cannot. For example, what was the best creative mix? What was the most effective frequency of exposure? What’s the best time of day to serve an ad?
However, the area of ‘data collaboration’ can often be a tricky one for marketers to negotiate. In the case of working with retail media networks, brands first need to audit their own data and technology. There’s no point in building a strategy based on data sharing if the data is incomplete, scattered around the organisation in silos or stored in incompatible formats.
The future of collaboration
Moreover, a key component of any kind of data collaboration is technology that can help partners to extract the most out of data in a way that protects privacy and is secure. Thankfully, the advancement of privacy-enhancing technologies (PETs), most prominently used in data clean rooms, has made data collaboration possible at scale, in a way that meets privacy policies from partners and which is compliant with evolving regulation.
Up until recently, retail media networks have been mainly the preserve of Amazon and the major grocery chains – Walmart, Target, Carrefour, Tesco etc. However, more specialist retailers – such as Boots in the UK – have now moved into the space with great success. This trend is likely to gather pace as retailers and other data-rich businesses start to realise the value of the more targeted data they hold.
The time is right for advertisers to start to incorporate the rich, valuable sales and granular customer data available via retail media networks, within the top-level, econometric modelling they use to allocate and optimise their media spending. Faced with continuing economic uncertainty, this hybrid approach to media measurement provides brand advertisers with the enhanced view of the customer they need at this crucial time.
*LiveRamp is a client of Bluestripe Communications, owned by Bluestripe Group, publisher of NDA