Table of Contents:

• How Can First-Party and Retail Data Be Used Together to Strengthen Audience Strategy?

• What Are the Most Effective Ways to Segment and Activate Audiences across Retail Media Networks?

• How Can Continuous Testing and Optimization Improve Retail Media Audience Performance?

• How Can Marketers Measure Success and Prove ROI Across Retail Media Campaigns?

• Balance Personalization and Performance In Retail Media Audience Targeting with an Expert Partner

Retail media networks (RMNs) have become an important part of today’s omnichannel strategies, offering brands new and effective ways to engage with consumers at pivotal points in their shopping journey. To achieve a high incremental return on ad spend (iROAS), the focus must shift from simply spending more to investing budgets wisely. This hinges on a strategic approach to audience optimization, built on data and a commitment to continuous improvement. By refining how you define, segment, and engage with shoppers, you can transform your retail media investments into measurable business growth.

How Can First-Party and Retail Data Be Used Together to Strengthen Audience Strategy?

The foundation of a successful audience strategy is the combination of a brand’s own customer data with the rich insights provided by retailers. This collaboration creates a powerful synergy, allowing for the creation of detailed, accurate audience profiles based on verified shopping behaviors.

A brand’s first-party data offers a clear picture of a direct customer base, but this view is often limited to a company’s own sales channels. Layering in retailer data, such as transactional data and loyalty data, provides a more holistic and accurate view of customer behavior across different stores and categories. This comprehensive perspective reveals critical shopping patterns. For instance, a customer who seems uninterested in your product based on your own data might actually be a frequent buyer of similar items from other retailers.

This granular, purchase-based information is crucial for differentiating between two key shopper groups: current customers and potential customers.

• Current customers: These are your loyal buyers. Transaction and loyalty data can illuminate their purchase frequency and average spending, helping you create targeted promotions that increase their lifetime value.

• Potential customers: This group includes new shoppers or those who have previously purchased but have since lapsed. Analyzing their purchases in adjacent product categories can uncover opportunities to attract them with relevant offers and messaging.

What Are the Most Effective Ways to Segment and Activate Audiences across Retail Media Networks?

The next phase involves segmenting identified audiences and activating them across various RMNs. The factors that most significantly influence retail media performance are tied to purchasing habits. These include how often someone buys, their shopping patterns, and their affinity for certain products.

Truly effective segmentation moves beyond basic demographics. While demographic information can provide scale and context, segmentation based on behavior delivers the precision needed to boost your return on investment. This means building audiences based on their actual actions. Key segments include brand loyalists who consistently purchase your products; lapsed buyers who have not bought from you within a specific timeframe; category shoppers buy products within your category but not from your brand, and competitive buyers who predominantly purchase from your competitors.

This behavioral approach helps identify untapped opportunities that your competitors might be missing. For example, a breakfast food company might find a high-potential audience in shoppers who buy snack bars and children’s cereals but not their specific brand. Targeting this group with a value-oriented message could expand their customer base and offset sales lost due to a recent price adjustment.

Activating these segments requires customizing your creative assets, ad placements, and timing for each retail network. A simple reminder ad might work for brand loyalists on one platform, while a more compelling introductory offer could be necessary to convert category shoppers on another.

How Can Continuous Testing and Optimization Improve Retail Media Audience Performance?

Consumer behavior is always changing, and RMN campaigns must adapt accordingly. Continuous testing and optimization are essential for achieving sustained performance improvement. A successful retail media strategy involves periodically experimenting with different campaign elements to discover what resonates most with target segments.

One powerful technique is to test different audience definitions to find and engage consumers who are receptive to your message. Brands can also experiment with various messaging styles, imagery, and calls-to-action to see what drives the best results.

A common challenge when testing across multiple retail platforms is the lack of standardized measurement. It is vital for brands to establish a unified framework for evaluating performance to enable accurate comparisons. Based on these data-driven insights, audience parameters and creative elements should be refreshed regularly to stay relevant and effective.

How Can Marketers Measure Success and Prove ROI Across Retail Media Campaigns?

To justify investments in retail media, brands need to demonstrate the value of such networks with clear, business-focused metrics. Although digital metrics like click-through rates are useful indicators, the most meaningful metrics capture real business impact. These include iROAS, the acquisition of new buyers, and overall buyer penetration.

A complete view of performance requires connecting offline sales data with digital campaign exposure. Closed-loop measurement systems are designed to track whether households exposed to an ad later purchased the product, either in-store or online. This allows you to measure the incremental lift directly generated by your campaign.

Using competitive and category-level benchmarks is also key to validating your strategy. Comparing your campaign’s performance against the broader market provides valuable context and pinpoints areas for refinement. If your campaign is lagging behind category benchmarks, it could be a sign that you need to rethink your audience targeting or messaging.

Balance Personalization and Performance In Retail Media Audience Targeting with an Expert Partner

As brands deploy RMNs to reach consumers with personalized messaging, they must also follow privacy protocols. Purchase-based targeting, built on verified household purchase data, offers a privacy-compliant way to reach relevant consumers. This method groups consumers based on shared buying behaviors rather than individual identities.

Circana provides a variety of retail media solutions that foster collaboration among retailers and brands and lead to effective outcomes while delivering privacy compliance. Through those solutions, brands, retailers, and marketers can link shopper analytics to activation, ultimately lifting the iROAS.

Frequently Asked Questions about Maximizing RMN Spending

What’s the Difference Between Retailer First-Party Data and Brand-Owned Data?

First-party data, or brand-owned data, is the information a company collects directly from its customers. This includes details from website interactions, direct purchases, or loyalty programs. While valuable, this data is limited to a brand's own sales channels and doesn't capture a customer's full shopping behavior.

Retailer first-party data comes from a retailer's systems and includes transactional and loyalty data across various stores and product categories. It provides a much broader and more accurate view of consumer purchasing habits. Integrating brand data with retailer data identifies current and potential customers for effective tailored messaging.

How Can Brands Prevent Audience Overlap and Wasted Retail Media Spend?

Preventing wasted spend starts with strategic audience segmentation based on actual purchasing behavior rather than just demographics. By creating distinct audience segments, such as brand loyalists or category shoppers, you can customize messaging and avoid showing the same ad to irrelevant shoppers across different RMNs.

What Are the Top Challenges in Scaling Audience Precision Without Losing Reach?

One of the main challenges is moving beyond basic demographic targeting.  Demographics provide scale but often lack the precision needed for a high ROI. The most effective strategies are built on behavioral data, which allows for precise targeting.

Another significant challenge is the lack of standardized measurement across different RMNs. To overcome this, brands should establish a unified measurement framework to evaluate success.