DMPs are Dead: Cutting the Cord for a Brighter Future in Retail Advertising


Retailers must move away from outdated tools like data management platforms that rely on third-party data and adopt forward-thinking strategies.

In the realm of retail, customer privacy is in the spotlight. Customers are more aware and wary of how their data is used, what it’s used for, and who’s using it. That is having a great impact on data management platforms (DMPs).

With new privacy regulations, such as the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR), customers are more empowered than ever to have greater control over their information.

Yet, customers still crave personalized advertising and shopping experiences. As such, retailers must adeptly navigate this new landscape while still striving to personalize customer experiences.

Say Farewell to Data Management Platforms

Already, third-party identifiers are experiencing a staggering 50 to 60% drop in signal fidelity, with top industry players like Apple (iOS and Safari) and Firefox saying farewell to cookies. That’s left the once-esteemed data DMPs impractical. These platforms, heavily reliant on third-party identifiers and digital signals, are becoming obsolete as their effectiveness and reliability dwindle.

Major brands and industry-leading vendors have already started phasing out DMPs in response to industry changes. Retailers striving to stay ahead of the competition will need to embrace the new reality. Here are several effective strategies for retailers to navigate the evolving, privacy-focused landscape and meet consumer expectations while ensuring insightful consumer targeting.

See also: Accessing Trustworthy Second-Party Data with Data Clean Rooms

Build a First-Party Data Strategy

In the wake of third-party data, first-party data ascent to the throne. First-party data is collected directly from customers through interactions like loyalty programs, login information, cart items, or user preferences. This customer data, given with consent, empowers retailers to gain valuable insights into individual behavior and preferences, enhancing the customer journey. And as customers rediscovered the charm of brick-and-mortar shopping, it created a realm of hybrid shopping.

To effectively manage and use this treasure trove of customer data, retailers require robust data management solutions. One such solution is customer data platforms (CDPs).

CDPs serve as a centralized hub, bringing together disparate data sources into one cohesive warehouse. With all their customer data in one place, retailers gain a holistic understanding of their customers, enabling them to deliver seamless experiences across channels and drive meaningful engagement. Retailers can better understand customer behaviors and create more targeted and personalized marketing strategies to improve ROI and revenue.

Enhance First-Party Data with Data Clean Rooms

Data clean rooms (DRCs) are emerging as the linchpin in the data analysis arena, especially as DMPs grapple with the challenges of a privacy-centric world. DCRs are like a secure vault where marketers can dive into the depths of data collected by other companies like Facebook or Google without the risk of exposing personally identifiable information (PII). This protective layer ensures that PII is either securely encrypted or entirely removed.

In the sanctuary of a DCR, retail marketers can sift through aggregated, anonymized data to unravel patterns, consumer behaviors, and advertising efficacy. With such insights at their fingertips, they can craft finely-tuned advertising strategies that resonate with their audience. This is invaluable in an age where consumer trust is paramount, and regulations like GDPR and CCPA hold sway.

DCRs seamlessly blend security with analytics. They allow marketers to navigate the data labyrinth with a safety harness, ensuring that insights are accessed responsibly and without compromising data privacy.

Consider Retail Media Networks

In a post-cookie world, the retailer and their retail media networks (RMNs) are thriving and constantly changing. RMNs almost act like data management platforms for consumer packaged goods (CPG) companies as it has the signals they want. These networks, owned and operated by retail giants like Walmart, Amazon, and Kroger, allow other brands to advertise directly on these digital platforms using first-party customer data. For innovative brands, leveraging an RMN can offer several advantages, including:

  • Direct Access to Shopper Insights: Working with an RMN allows brands to gain a deeper understanding of customer behaviors, preferences, and purchase patterns.
  • Enhanced Targeting Capabilities: Brands can use the rich first-party data with retailers to refine their targeting efforts. By reaching the right audience at the right time with personalized messaging, retailers can maximize the impact of their advertising campaigns and drive higher conversions.
  • Strengthen Customer Relationships: These networks also enable brands to collaboratively foster deeper connections with their customers. By delivering relevant, personalized ads and recommendations, they can enhance the shopping experience, build brand loyalty, and drive repeat business.

Embrace Cookieless Media Buyer Options

In a world without cookies, there are several innovative alternatives reshaping the landscape for more effective and privacy-conscious audience targeting. Here are a few strategies retailers need to consider:

1) Contextual Targeting is an advertising strategy that delivers ads based on the website content rather than relying on individual user data or identifiers, an effective alternative in a cookieless environment. It takes into account factors such as the keywords, topics, or overall theme of the webpage to determine the relevance of the ad to the content being consumed by the user at that moment. Retailers can use contextual targeting to deliver relevant and tailored ads to their target audience without relying on personal data or tracking individual user behavior.

2) Identity-Free Audience Targeting refers to the practice of reaching and segmenting audiences for advertising purposes without relying on personally identifiable information (PII). It uses broader data sets, such as aggregated and anonymized information, to identify common characteristics, preferences, or behaviors among groups of users.

By analyzing patterns and trends within these data sets, retailers can create audience segments based on shared interests, demographics, or other relevant factors. Retailers can then tailor their messaging and campaigns to reach specific customer groups. This approach aligns with privacy regulations and ensures that user information remains protected while still allowing for effective and targeted advertising.

3) Walled Gardens like Meta and TikTok offer vast amounts of first-party data. These platforms create a self-contained environment where users engage with various content, services, and social interactions. The closed nature of these ecosystems allows for more accurate targeting and enhances the overall effectiveness of advertising efforts within the platform.

By partnering with these walled gardens, retailers gain access to the rich data reservoirs, including user demographic information, interests, behaviors, and engagement patterns. Retailers can then develop precise targeting strategies, tailor content, and optimize their advertising campaigns to effectively reach their intended audience.

The Future of Retail Advertising

The future of retail advertising lies in the willingness to adapt, embrace innovation, and prioritize privacy. Already, Google announced plans to slowly phase out cookies, starting with 1% of Chrome users no longer having cookies by the beginning of 2024.

By moving away from outdated tools that rely on third-party data, like data management platforms, and adopting forward-thinking strategies, retailers can position themselves at the forefront of the evolving landscape, delivering impactful, targeted, and privacy-compliant advertising experiences that resonate with their customers in a rapidly changing digital world.

Peter Ibarra

About Peter Ibarra

Peter Ibarra is the Head of AdTech Solutions for Amperity, a customer data platform company that uses AI to deliver a comprehensive and actionable Customer 360. In this role, Peter leads Amperity's product strategy across digital media, Retail Media Networks, second-party data collaboration, adtech partnerships, and post-cookie first-party activation.

Leave a Reply

Your email address will not be published. Required fields are marked *