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Bloomberg reports on how retailers, inspired by Amazon’s success in converting its massive amounts of data into manufacturer advertising dollars, “are quietly courting big brands with a sales pitch that goes something like this: Facebook might know what your customers like, and Google might know what they want, but only we know what they actually buy.”

It isn’t just Amazon’s example providing the fuel for these initiatives. The story points out that competing in the current climate can be expensive - it costs money to build effective websites, improve supply chain logistics and establish legitimate and efficient delivery and BOPIS (Buy Online, Pickup In Store) services. These expenses “crimp earnings,” while at the same time “the tailwinds retailers enjoyed last year from tax cuts and brisk consumer demand will dissipate in 2019, and looming Chinese tariffs could muddle the outlook further.”

All of this means that retailers have to identify “alternate revenue streams” that can help fund all these new initiatives.

Bloomberg points to the potential: “The potential is vast: Last year U.S. ad sales hit a record $208 billion, according to researcher Magna, and for the first time ever 50 percent of that spending was online. Facebook and Google combined gobble up more than half of those digital dollars, according to data tracker eMarketer, while Amazon gets only 5.5 percent.

“That’s an opportunity for retailers, which already have long-standing relationships with the big consumer brands that quietly pay them millions every year for prime shelf space … But Walmart and its ilk will have to move fast: Amazon’s ad business doubled in size last year, and 97 percent of brands who advertise on Amazon find it valuable, according to a survey by Feedvisor, which sells advertising and pricing software used by Amazon sellers.”

“Kroger wants to generate $400 million in additional profit by 2020, with some of that coming from a new marketing unit that places web ads for the likes of Unilever and General Mills Inc,” Bloomberg writes. “Target’s in-house media network has hundreds of clients including Oreo cookie maker Mondelez International. Walmart has hired executives from NBC Universal and CBS to help boost its advertising business.”
KC's View:
It long has been an article of faith around here that data is the ultimate differentiator for retailers - the ones that not only have actionable data, but then also act on it, are the ones best positioned to win.

I do think that retailers have to be careful, lest their customers begin to believe that their data is being improperly shopped around and sold to third parties. But it seems to me that if retailers control the data and the access - like it seems Ahold Delhaize-owned Peapod Digital Labs is doing with Coca-Cola in two current campaigns that provide ROI without giving away specific customer information - then it can be a winner all around.