Everyone both buys and sells ads

In Pleasantville, retailers buy ads to drive people to their stores. Publishers make content, and sell ad space in that content. Fortunately for those who enjoy living in interesting times, this black and white picture is nothing like the color we see around us. Retailers from Target to Family Dollar have retail media networks which are growing like mad, taking over $45b in US ad spend this year. Publishers are now often multi-channel conglomerates, with movies that tie to their streaming networks and licensing deals that put branded merchandise on retailer shelves. Publishers also buy advertising. For example, Disney spent over $7b on advertising in 2022.

Increasingly, everyone is both an ad seller and an ad buyer. This goes way beyond just retail media, to the broader category of Commerce Media. Commerce media is the collection and use of a company’s first-party data used to power advertising experiences. More categories than just retail are hopping on the bandwagon, including financial services and travel. The opportunity is huge. McKinsey predicts that Commerce Media could drive $1.3 trillion in enterprise value by 2026.

First-party data is the fuel that powers this ecosystem because of the deprecation of the third-party cookie. Snowflake’s flexibility, scalability, and performance has made it the choice for many to break down data silos within their organization, making it a great platform for a Customer 360, which is a great place to start. As companies now look to monetize the data they have thoughtfully gathered, Snowflake’s Secure Data Sharing and Data Clean Room capabilities allow collaboration outside their own organization to happen in a privacy-safe way.

What companies should hop on the commerce media bandwagon? Companies need two ingredients to capitalize on this trend.

1. First-party data that is valuable to non-competitive companies. A good place to start is to think about what partners your company may already have. Why do those partners make sense? What data could they benefit from? Do you have a big enough customer overlap that would make a clean room useful? What identifiers (email, phone number, IP address) do you both have?
2. A place to show ads. A commerce media platform can always use their data across publisher partners to extend their reach, but having a base of owned inventory is the best place to start. There are many creative ideas from the world around us. Websites and mobile apps, of course, but also seat-back screens, displays built into gas pumps, electronic device home screens, and many other places can give your company differentiated inventory.

When these conditions are met, the hard work of building a platform starts. Some tips on building your commerce media platform:

1. Choose a data platform that is flexible enough to handle all of the relevant data and is scalable enough to handle the scale of impression-level data.
2. The 1st-party ad server is foundational to your commerce media network, choose one that makes data exchange with your data platform easy.
3. Think about how Clean Rooms can power interaction with your advertisers and with social platforms that might be used for audience extension.

When complete, an effective platform based on Snowflake could look like the below.

Commerce Media Reference Architecture

The collection of customer data is reminiscent of a “Composable CDP,” but here the data is used to power the creation of audience data that would be interesting for advertisers. Similarly, the collection of ad data is similar to how an advertiser might collect and analyze ad data for their own purposes, but here the data is used to power measurement and reporting for advertisers.

There are likely to be many changes and additions necessary based on the type of commerce media network. For retail media, product catalogs and endemic advertisers need to be considered in a way that is different from what would be necessary in travel, for instance. In travel, geography is likely to be important. This architecture, however, should contain the most important “common threads” that would be needed across commerce media.

Many companies across many different industries are considering adding commerce media as an additional revenue stream to drive monetization of their valuable first-party data. Snowflake can serve as an ideal foundation for these efforts.