Unlock Personalization in Retail Media to Improve Customer Engagement

Many companies are confident they deliver personalized experiences, but consumer feedback tells a different story.

Deloitte found that most retailers (92%) think they deliver intense personalized experiences, but only 48% of consumers perceive these efforts as satisfactory.

This disbalance causes retailers to enhance their strategies constantly. How real users behave gives retailers powerful insights for personalizing their marketing. By understanding what different customers want and buy, stores can create more relevant experiences and product recommendations that resonate with specific groups of shoppers.

What Is Personalization in Retail Media?

Consumers today have high expectations - they want to feel like stores genuinely understand them, not just treat them as another sale. They're used to personalized experiences everywhere, from streaming services to social media. For retailers, getting personalization right isn't just about keeping up with competitors - it's a real opportunity to build deeper connections with customers and drive sustainable growth.

When done right, personalization for retail media is a powerful tool for serving, engaging, and turning users into repeat customers. When done wrong, it can frustrate and push them away. Imagine the confusion of a sunburnt San Diego resident receiving a promotion of a new winter line. Or, say, a bakery store serves product recommendations for audiences buying weight loss supplements.

Personalization ensures the best user experience for every customer simultaneously. It relies on the interaction of multiple elements that comprise modern-day shopping behaviors.

Benefits of Personalization for Retail Media Businesses

✔ It accelerates revenue

Data-backed personalization strategies directly impact revenue uplift, as seen from continuous retail media measurement results. Besides, it is one of the ways retailers can meet customer expectations:

Personalized retail media ads:

• increase conversion rates and average order values;
• present relevant offers;
• adapt to changing shopping behavior;
• suggest complementary items.

Complete alignment with individual preferences encourages faster buying decisions, which results in higher profits for retailers.

Personalization also leads to revenue growth as it helps increase purchase frequency and lifetime value. It is one of the best tactics for encouraging consumers to return and experience the same attitude and respect for their real-time needs and preferences.

Besides, when shoppers feel valued, they’re more likely to stay loyal to a brand. This connection keeps them returning to your online retail store and eventually turns them into brand advocates.

✔ It brings costs down

Retailers can overcome budget constraints and optimize their investments by focusing on personalization.  High-quality data, reliable insights, and tools that help deliver personalized messages at scale contribute to more efficient resource allocation. Here’s how:

• Reduce wasted ad spending. Personalized campaigns aggregate exclusive first-party data and behavior insights to target shoppers with the highest conversion potential. As a result, retailers can use advertising budgets wisely and avoid spending money on ads that fail to resonate with consumers. 
• Lower customer acquisition costs. Unlike generic ads that target broad audiences, personalized product recommendations are triggered at the best time for individual users. This approach ensures that each lead has access to appropriate content. Over time, more of them will likely convert into paying customers, which keeps acquisition costs down.

✔ It improves customer engagement across all touchpoints

Modern consumers currently interact with ads and promotions on multiple channels. While retailers can control the messages inside their digital and in-store properties, focusing on offsite channels is equally important. Luckily, data-driven retail personalization helps kill two birds with one stone.

By using real-time insights on audiences and campaign performance, retailers can adjust creatives, tailor the number of ads per session, and prioritize specific content on every channel. Dynamic changes help mitigate ad fatigue and minimize bounce rates. Moreover, they enable retailers to capture consumer attention and cut through the noise of similar offers.

Customer engagement improves when personalized advertising content remains consistent and unified across every interaction. Audiences should feel connected to the same brand when browsing online, in-app, or on social media. A customer-centric experience improves satisfaction, creates a sense of trust, and contributes to better loyalty.

Best Practices for Successful Retail Media Personalization

1. Build an efficient data infrastructure.

First-party data collection is the backbone of successful retail media businesses. However, having piles of unsorted records in spreadsheets makes it nearly impossible to deliver a personalized customer experience for retail media.

Retailers require a strong infrastructure of modern data storage solutions and advanced tools to assemble different elements. It helps extract in-depth data and build a single view of their customers at each step of their shopping journey. Instant access to accurate, up-to-date, and reliable data helps tailor the ad content, messaging, and recommendations. The more you advance in this direction, the more efficient and personalized your marketing efforts become.

A strong data infrastructure requires retail media businesses to:

• Integrate a CDP (Customer Data Platform)

A CDP acts as a centralized repository of first-party data from different sources. Unlike other identity resolution systems, the platform helps create a 360-degree view of each customer and enriches it with real-time data. As continuous live updates flow from all touchpoints, a CDP can become a scalable foundation for advanced predictive modeling tools.

How CDPs enhance personalization?

Retailers leverage a single source of truth about audiences to deliver relevant advertising messages more efficiently. Using a CDP, a retailer might watch a customer who viewed products online but never purchased them. The platform instantly refreshes their profile. Next, it serves an ad for those products through social media and sends a follow-up email offering a discount. When these efforts are consistent, retailers improve their performance by better understanding how to target individual customers.

• Implement high-performing storage solutions

The ability to manage vast pools of data ensures your business stays agile and competitive in a data-driven retail media ecosystem. It helps personalize consumer interactions, predict trends, and adapt to market fluctuations. However, several challenges prevent retailers from harnessing these advantages:

• First, a data foundation should be capable of storing and processing structured and unstructured data without roadblocks. 
• Second, it must scale the capacity based on growing demands. 
• Other crucial requirements include optimal flexibility, real-time syncing, and interoperability with external and internal tools and platforms.

Cloud storage solutions and modular architecture address these needs by providing unbounded room for growth and uninterrupted performance:

• Public (AWS, Azure, Google Cloud Storage) and hybrid cloud-based tools can easily adjust storage capacity without downtime. As a result, retailers can store and process structured data like transactional records and raw data like user clicks, even at peak loads.
• The modular architecture facilitates uninterrupted connection with tools and platforms used to personalize retail media ads consecutively. For instance, if a CDP identifies an activity spike in a specific product category, it triggers a recommendation to cloud-stored ad campaign templates.

How scalable storage and modularity enhance personalization?

This powerful combination helps companies deliver personalized retail media experiences to large and ever-growing audiences. Businesses can adapt to customer preferences, optimize campaigns in real time, and continuously increase ROI without worrying about technical and performance issues.

2. Manage data privacy and ensure compliance

With access to detailed customer information, retail media companies must carefully navigate today's stricter privacy landscape. Getting clear permission to use customer data and following data protection rules isn't just good practice - it's essential for staying in business, securing more advertising partners, and maintaining trust with their audiences.

Beyond complying with industry standards, data privacy management opens up new growth and differentiation opportunities. It helps create a customer-centric business model, which improves customer loyalty and encourages repeat purchases. Moreover, laser-focused attention to transparency and accountability sets you apart in a competitive market.

Here’s a quick overview of the top strategies to unlock these advantages:

• Establish CMPs (Consent Management Platforms)
  Consent management focuses on obtaining permission from customers to use their personal information. The process should be consistent and systematic to ensure that:
  • Users have peace of mind about their data;
  • Businesses meet legal requirements.

Retailers can streamline this complex task by using Consent Management Platforms (CMPs). These solutions take the complexity of consent collection off retailers’ shoulders. CMPs collect, monitor, and manage consent records in a unified location. In addition to their built-in data collection pipelines, CMPs typically provide easy-to-use portals where users can adjust their consent preferences.

• Develop transparent data collection rules

Retailers demonstrate respect and accountability for users' privacy by clearly explaining data handling practices. Such attention to individual preferences can be seen as another form of retail media personalization, as it showcases the company’s desire to treat personal information with care.

• Align with regulatory changes

Whether it’s GDPR, CCPA, or emerging local standards, the continuous introduction of minor updates creates confusion. Businesses must extend their retail media research to regulatory changes, especially when they collect personal data across multiple jurisdictions. Hefty fines, loss of customer trust, and reputational issues may await those who fail to comply. To avoid these consequences, it’s worth considering:

• Consulting with privacy experts and attorneys;
• Integrating with compliance tools;
• Developing an internal compliance program.

Why are compliant retail media operations a must for retailers?

Ensuring compliance with regulations is one of the drivers of long-term success for any business collecting personal data. However, retail media companies benefit not only because they mitigate risks. Compliance is also one means of maintaining trust in their customers, which is crucial for increasing their loyalty and engagement. Over time, these gains translate into better conversion and retention rates, which, in turn, lead to revenue growth.

3. Create and improve audience segments

With the right infrastructure and ethical data usage practices, retailers can focus on increasing the value of collected information. They can leverage basic and advanced audience segments that pave the way for first-party data activation. As a result, retailers better understand their target audience, leading to more precise marketing campaigns and significant revenue gains. The ability to deliver measurable results to brands and advertisers is another effect of high-quality targeting. It provides partners with peace of mind regarding data control and stability of profits.

• Segment audiences based on historical and real-time data

Retailers can divide customers into broad groups based on different types of live data available in their CDP. They can customize campaigns and create separate ads that target one of the following segments or their combinations:

• Behavioral;
• Geographical;
• Psychographic;
• Demographic;
• Transaсtional.

• Detect and micro-target top-performing customers

Next, analysis of each segment will help identify common trends and patterns in the behavior and intent of the most valuable individuals. For instance, they may share the same purchase frequency, bounce reasons, and browsing history. Retailers can use these insights to micro-target ad campaigns throughout each stage of the funnel:

• Predict customer behavior to adjust campaigns

Additionally, retailers can implement predictive models to enhance the understanding of their customers based on historical information. These models help automatically analyze past behaviors to predict future actions, such as the likelihood of purchase or cart abandonment. Other examples include:

• The price elasticity model helps segment customers based on their sensitivity to pricing fluctuations;
• The purchase intent model predicts which customer cohorts will be prone to buying complementary items;
• Response modeling determines the audience groups most likely to engage with future promotions.

How advanced audience segmentation drives value for retailers?

The above tactics pave the way for hyper-personalization, which has become a staple for modern retail media operations. By combining advanced micro-targeting and predictive modeling, retailers can design personalized advertising experiences throughout every stage of the shopping journey. As a result, they can better meet the unique needs of individual customers and increase engagement rates.

4. Establish omnichannel personalization

The most successful retail media campaigns share a key approach: they create consistent advertising across all channels. When done right, personalization can deliver powerful results at scale. Take Sephora - by connecting their online ads with in-store experiences, they saw their conversion rate jump 15x.

Companies need to personalize their marketing where customers spend time to get these results. As a result, they feel valued and will likely return and continue their relationship with the retailer.

Here's what makes a successful multi-channel strategy that reaches customers at every step of their journey.

• Complete integration of marketing processes

Every interaction point, from online platforms to physical stores, should deliver a seamless, cohesive, and tailored customer experience. If a user views a product ad online, the same recommendations should appear in emails, app notifications, and in-store displays. In this scenario, retailers provide one clear storyline that ties the customer journey together.

• Real-time data synchronization

As mentioned, modular architecture and centralized data storage are worthy investments. They facilitate data exchange under heavy loads and are instrumental in scaling retail media operations across multiple platforms. They integrate all touchpoints, sharing the same customer data, which receives real-time updates.

For example, when customers search for a product online, their preferences appear on other channels. They will receive personalized emails suggesting similar offers or obtain loyalty points in-store. A seamless information flow creates one consistent experience, ensuring customers feel valued wherever they engage with a brand.

• AI- and ML-driven automation

It is hard to imagine retail giants like Amazon manually adjusting campaign settings for each user. Luckily, thanks to large-scale automation, there is no need to waste time on these activities. It enables retailers to react to customer behaviors with relevant messaging and offers without time-consuming actions.

AI and ML play vital roles in these processes, augmenting manual capabilities with ultimate accuracy. These technologies can simultaneously analyze first-party data from multiple channels, detect patterns, and forecast customer behavior. In addition to generating high-value insights in seconds, AI and ML facilitate real-time decisions regarding omnichannel campaigns and strategies.

Here’s how:

• AI-driven recommendation engines analyze data from all customer touchpoints and suggest relevant offers to individuals. These recommendations can appear on a website, email, app, or retail store.
• ML-powered segmentation algorithms can enhance existing segments by automatically updating statuses using vast omnichannel data.
• Dynamic content delivery systems use AI to boost engagement using automated content customization methods.

The impact of omnichannel personalization on retailer’s success.

Personalized and consistent shopping experiences on every channel can become a differentiating factor in a cut-throat retail media market. They help approach each customer with timely and relevant offers, which is one of the primary expectations of modern consumers. As a result, they can boost customer loyalty and lifetime value, which further leads to increased conversion rates and ROI.

Conclusion

Personalization creates real value when it becomes a core part of your marketing approach. It helps meet customers' needs now while building lasting relationships that keep them returning tomorrow.

Here’s what you must do to pursue these goals:

• Blend a scalable data infrastructure, privacy-focused practices, and advanced audience segmentation. 
• Next, integrate processes, synchronize touchpoints, and automate retail media campaigns using AI and ML.

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🏆These efforts help increase conversions, achieve revenue goals, and build stronger customer relationships across every channel.

Build your personalization strategy with Geomotiv. We'll help you connect with your customers in ways that drive sales.

Don't hesitate to contact us.