The Biggest Problems With Retail Advertising, And How You Can Solve Them

There are always new challenges facing retail advertisers as the industry rapidly changes due to technological evolution. With this in mind and given the overall COVID 19 global scenario, it is not surprising that maintaining a digital presence has become a minimum requirement for successful retailers during the pandemic. The decline of shopping at brick-and-mortar stores has led to a sharp rise in online purchases and the proliferation of e-commerce platforms. As a result, we have seen many companies evaluate their existing digital experiences and refocus their efforts on this growing market. This is where digital advertising stands out as an essential strategy to increase awareness, drive more traffic, and convert visitors into consumers, which could explain its rapid increase over the past two years.

In 2019, retailers’ spend on digital advertising in the United States amounted to 27.38 billion U.S. dollars and this value is expected to continue rising to 35.5 billion dollars by the end of this year. Considering that retail has the largest digital ad spend in the U.S and the fact that across sectors, digital ad spending is estimated to reach approximately 172 billion U.S. dollars in 2021, understanding the challenges facing retail advertising in the digital space becomes highly relevant for retailers in order to maximize their return on investment.

Offering Value While Protecting Privacy

In the wake of the ongoing debate about targeted advertising, respecting customer privacy has become fundamental for advertisers. Respectfully managing the valuable customer data that is required to create relevant and personalized experiences that matter to the customer stands as a differentiating factor in the retail industry, mainly because consumers expect protection of their data while still getting a seamless, personalized experience throughout their cross-channel customer journey.

With the end of third-party cookies next year, advertisers are racing to develop their first-party data capturing and management to identify the best approaches to establish a consumer’s purchase intent to continue engaging their target audience through cross-media channels in a way that protects customer privacy. This consented first-party customer data may then reveal valuable insights into consumer behavior for specific customization and conversion strategies.

In order for this to work, retailers must clearly articulate the value exchange in order to gain customer trust. Whether it’s a more personalized experience, a loyalty program, or another incentive, the problem is to give and explain that value to people. It should begin with a description of how data will be used so that customers may select whether or not to grant access. By overcoming these concerns retail advertisers should be able to establish rapid engagement with new clients while also strengthening long-term connections with current customers.

Obtaining A Seamless Online-offline View of Customers

Given the current global climate, as well as ongoing advances in the E-commerce industry to give the best customer experience, it’s no surprise that online spending will account for 21.3 percent of total retail sales in the United States by 2020. 73 percent of Americans, on the other hand, say they shop through numerous channels. Highlighting the fact that customers’ buying patterns are constantly shifting between traditional brick-and-mortar stores and online shopping.

Today’s consumers are willing to choose retailers they know are capable of managing these transitions and offer personalized service at the same time. Especially with the growing trend of showrooming, where clients would use physical stores as a showroom to see and sample products before purchasing the same items online, usually at a lower price.

As a result, for retail advertising, there is a huge amount of valuable data spread over a variety of disconnected systems and media channels -in-store, online, social media-, making it difficult for retailers to decide which data to focus on and how to integrate it all into one streamlined platform to obtain a comprehensive view of their customers’ interests and preferences.

On the other hand, retail advertisers are aware of the fact that potential buyers want to feel like they are receiving a customized experience while transitioning between online and in-store shopping. This means, having track of all the customer’s interactions across sell channels -from online to offline- in order to deliver personalized ads based on their past behavior, e.g. displaying product recommendations they may be interested in or presenting the most recent version of an item they have previously purchased.

Therefore, creating an omnichannel marketing strategy that allows retailers to collect and integrate both offline and online data becomes crucial when it comes to building a seamless experience based on specific consumer profiles, while still bringing relevant content to engage with them in every touchpoint of their customer journey.

Lack of Transparency in Delivery and Reporting

One of the biggest issues in digital advertising is the lack of transparency in the delivery and reporting of ads, particularly with the removal of third-party cookies as already touched upon. However, advertisers will most likely be able to get a better picture of the changes to come once processes begin to adjust following the end of third-party data tracking.

This lack of fully effective tracking capabilities combined with the tendency within the industry of positioning advertisements alongside trustworthy and reliable content to ensure a favorable customer perception means that retail advertisers must be cautious and have full clarity about where their advertisements are presented. Nevertheless, due to its complicated media supply chains, programmatic advertising has been accused of contributing to a lack of transparency by making it difficult for companies to know where their budgets are spent and having complete visibility of where advertisements are shown.

Without an end-to-end view of where their advertising spend is going and data limited to overall combined metrics, retailers are justifiably skeptical about spending their marketing budgets where they are not able to analyze the full return on spend. Therefore, it’s essential to increase transparency in the advertising industry among all parties, whether this is through enhancing relationships between brands, agencies, and programmatic partners; establishing effective policies to reduce ad fraud, or clarifying consumer data use.

Understanding Retail Advertising Seasonality Peaks

Have you noticed that many retail shelves are already filled with Halloween sweets and Christmas cards before the kids start back to school? Companies plan their product and marketing strategies months in advance to ensure high retail advertising sales in this industry.

Retail advertising is more effective at certain times of the year. The retail business ebbs and flows with consumer trends — December, for example, is a particularly lucrative month thanks to the holiday season — and knowing the ins and outs of seasonality may help you capitalize on it.

It’s much more likely that ad sales dollars will be used as envisioned if significant campaigns are scheduled around the launch of seasonal goods as well as peak times for specific retail purchases. Following trends means attracting buyers at the most profitable times.

Digital Consent & Privacy as a Competitive Advantage for Retail Advertising

When it comes to dealing with the problems of a fast-growing industry like retail advertising, it’s evident that establishing a strong competitive advantage is essential. This benefit is highly tied to acquiring the proper data from a streamlined consented data source capable of offering relevant insights about the customer’s cross-channel journey in this scenario.

Retail advertisers know they’re facing a demanding and uncertain market, where the only way to stand out seems to be through offering the most personalized customer experience possible. In order to achieve this, companies need to figure out a solution to track all the consumers’ interactions between offline and online channels to create effective campaigns that will engage the customer based on the stage of the buying process he’s in and at the right time of the year in some cases. By filling these gaps in the marketing strategy, retailers may benefit from an increase in their advertising revenue and conversion rates as they can rely on valuable analytics to see the impact of digital campaigns across their different media channels.

Originally published at https://www.advendio.com on June 14, 2021.