Starved of first-party data by online marketplaces, brands turn to commerce media

Even though direct-to-consumer brands do not need to build their ecommerce platforms, the desire to own first-party data has seen brands like Lego investing in their commerce platforms on top of selling on online marketplaces.

The Danish toymaker saw its sales across its commerce platforms and online marketplaces grow 50% in 2021 compared with the same period in 2020. The growth came after it made significant investments in its commerce capabilities as part of its long-term strategy.

Campaign Asia-Pacifc understands agencies are hearing increased complaints from brands that they cannot do personalisation or testing on Amazon, Lazada or Shopee marketplaces. Brands are also unhappy that they are missing the opportunity to own their first-party data and understand their consumers' behaviour.

Mark Johnson, president of commerce at Sitecore, says these marketplaces are disintermediating the brands. He notes most brands are diversifying into marketplaces and distributing in their owned marketplaces, so they do not lose contact with their customers.

"If you want to test new markets and don't want to go through many marketing challenges, these marketplaces can make sense, but you will not own your first-party data. However, a brand can use these marketplaces and undertake digital marketing to build its online storefront brand," Johnson tells Campaign Asia-Pacific.

Clockwise from top: Mark Johnson, Joshua Wilson, Sonal Patel, Taranjeet Singh

Brands and retailers that build their commerce platforms are keen to take advantage of commerce media, essentially the digital infrastructure that enables relevant ads to achieve more engaging and meaningful consumer experiences.

According to Criteo's Shopper Story survey, two out of five shoppers in APAC search directly on a retailer or a brand website for products they want. One in four shoppers also said retailer and brand websites have become more influential in their purchase decisions over the last two years.

Two in three said they browse products online and buy them in a retail store. Similarly, two in three said they made purchases online after seeing the product at a retail store.

"Brands must keep investing in building their digital infrastructure to engage shoppers," Taranjeet Singh, managing director for Southeast Asia and India at Criteo, tells Campaign Asia-Pacific. "However, it is more critical for brands and marketers to optimise the shopping experience seamlessly throughout the consumer's shopping journeys, not just when they visit their commerce platform.

"Many brands strive to get their name and product out there. However, as consumers shift their shopping habits online, there is vast data, and reaching out to every available audience is almost impossible. Hence with commerce media, brands can gain insights into the right consumers with flexible audience targeting by employing targeted ads to reach those most likely to purchase products and utilise the entire marketing funnel for discovery, conversion, and retention."

Making full use of first-party data

With ongoing changes to privacy regulations and shifting addressability capabilities in the industry, first-party data will enable brands to maintain addressability and personalise customer experience.

For example, consumers are sensitive to increased prices of items. As a result, brands and their teams can understand shifts in consumer behaviour and preferences over time with real-time data like purchases, reviews, repurchase information, and context, allowing them to tweak their offerings accordingly.

However, as utilising first-party data to engage shoppers is complex, Singh says brands need high-quality first-party data to ensure their data is privacy-compliant and find ways to turn it into impactful advertising.

Singh explains that this will allow brands to execute addressable advertising campaigns to reach customers from discovery to purchase throughout their shopping journey.

"With the eventual end support of third-party cookies—a reality we all need to be prepared for—first-party data will be the way forward. Commerce media can help secure and activate privacy-safe first-party data to meet the brand's objectives," says Singh.

Sonal Patel, managing director for Asia at Quantcast, says data from the demand-side platform shows that online demand for speciality grocery stores is outpacing larger supermarkets in the US, particularly among younger demographics compared to older generations.

She predicts we will likely see similarities in Asia due to the increasing influence of younger consumers with greater affluence than their parents.

In addition, she notes that ecommerce platforms tend to work on small margins, including associated costs of packing, shipping, managing third parties and payment gateway charges. For example, a study by consultancy firm Alvarez & Marsal forecasted pre-tax margins for retailers in key European countries will sink to 3.2% by 2025.

"Brands building their commerce platforms to own first-party data will need to have direct conversations with FMCG brands, explore different business models to engage with them to collect that data and communicate the value exchange there," Patel tells Campaign Asia-Pacific.

"I see them evolving into 'curators of the shop window' to lure in existing or new consumers. Programmatic can be most compelling through this evolution because of its real-time buying mechanism and ability to enable real-time messaging."

Creating 'shoppable moments'

The world is entering a state of constant commerce where every online moment can become a shoppable moment. As a result, it is a delicate balance for brands to engage consumers in relevant ways during these moments, requiring skill and precision.

Commerce media, which uses tools like Dynamic Creative Optimisation (DCO), will enable brands to advertise to consumers on a website, ecommerce site or app when they are actively researching a product or looking to buy it.

Joshua Wilson, commercial director for JAPAC at Crimtan, says the key benefit of 'shoppable moments' is that it instantly brings customers to the checkout page, regardless of whether they are new or have been exposed to the brand before.

These moments shorten the purchase journey to just one step. However, Wilson says the challenge is to get these customers across the finish line, like driving sales.

"Using DCO, advertisers can personalise the ad creative and ad copy they would like to show based on their target audience's demographics, location, interests, purchasing habits and more. In addition, brands can integrate their product feed and show similar products via a "you may also like" section," Wilson tells Campaign Asia-Pacific.

In addition, Singh says when using commerce media, brands can use the data to improve experiences and link ad spending to results. The commerce data will allow brands to connect with audiences throughout the shopping journey on brands' and publishers' platforms.

"By directly linking marketers and media owners, commerce media addresses the fragmentation problem and makes it simple to monitor the effects of digital campaigns on KPIs (such as sales, leads, and visitors), both online and offline," explains Singh.

Respecting consumers' privacy

In personalising the customer experience and creating 'shoppable moments', brands that want to build their commerce platform have to remember that most consumers in APAC are concerned that brands are using their data without their consent.

However, the appeal for more control and transparency doesn't mean that consumers are no longer interested in relevant experiences. On the contrary, balancing these needs while also continuing to drive revenue is now the top concern for marketers and media owners.

In exchange for the consumer's consent, Singh says brands and marketers can use innovative customer services as every touchpoint allows brands to engage transparently with consumers step-by-step.

For example, brands that nurture transparency strategies can further establish consumer loyalty and trust, which commerce media can offer. Consumers need to feel safe knowing their rights are respected and protected.

"Total transparency is critical for consumers to understand what they should opt into and why. In essence, consumers need to be able to build and manage their online data profile just as they are responsible for the information they share in their day-to-day lives," Singh explains.

"To achieve this, brands need to rewrite the rule book and create a brand-new identifier for online advertising that gives total control back to the consumer based on consent and privacy. The rule book needs to include the consent to have their data collected and the privacy of an encrypted ID that does not store or link data, all with the ability to change or adapt preferences at any given time. When it comes to the safe storage of user data, an independent and non-browser entity needs to implement a centralised management system and manage it."

The future of brand commerce

As video streaming continues to gain popularity in APAC and more brands funnel more ad dollars to video advertising, it is increasingly crucial for brands to invest their resources in the right video advertising approach or risk being overcrowded and overlooked. 

According to the Shopper Story survey, three out of five consumers in APAC regularly watch streaming video on smart TVs, smartphones, and desktops. As consumers stream more video content than ever, connected TV advertising is not optional for brands anymore.

The survey also found more than half of consumers would search for the goods and services they encounter in video advertisements, with this proportion rising to two-thirds among Gen Z and millennial mobile device users.

A significant finding from the survey was that most APAC consumers use the same email address to access video streaming services and shop online, signalling their intent to share their data with advertisers to see more relevant and personalised video ads.

"To scale video creative and get the most return on creative investment, it is essential to run CTV ad campaigns together with all other video campaigns through one advertising partner. One great video creative can drive brand awareness across streaming devices, OTT services, desktops, mobile web, and in-app," Singh says.

"When using the correct data to build video audiences, ads reach the most valuable consumers for the brand's business when they are hyper-engaged, allowing brands to spend most efficiently. Brands in APAC can level up their video advertising strategy by creating well-timed, entertaining, and interactive ads and leveraging first-party and commerce data to reach addressable audiences."