Artificial Intelligence: A Goldilocks Moment for Commerce Media

June 22, 2023

Some years ago, our industry hoarded “Big Data” with the understanding that it was the “new oil.” Analytics partners were tasked with corralling all this wild data into patterns and trends, but even the dashboards became overwhelmed. “Small Data” – bitesize, informative data – was the natural reaction, but advertiser demand for deeper customer insights made simplicity impossible. Conclusion: we need a “Data Goldilocks” with actionable customer insights that are “just right.” 

The AI Opportunity in Commerce Media

Artificial Intelligence (AI) couldn’t have come along at a better time, especially for ad channels with multiple data sets like retail media networks (RMN), post-transaction partners, and others within the commerce media category. For advertisers, commerce media sits at the crossroads of demographic data, first-party customer data, product SKUs, and real-time data signals from individual customer journeys. Artificial Intelligence, applied correctly, will reveal robust and actionable customer insights and deliver relevant ads catered to consumers’ needs in real time. 

This isn’t just about processing more data faster. AI can synthesize traditional demographic data with granular customer journey data like browsing and purchase history and online interactions. This turns previously unquantifiable factors – like customer sentiment – into actionable insights. Personalization at this level enhances the customer experience with ads that feel more like timely offers and opportunities. The end result is a deep and nuanced perspective on the customer while they shop, research, and make purchases. 

The Path to Achieving Commerce Media Greatness

But before we celebrate the discovery of advertising’s Holy Grail, it’s important to recognize that we aren’t there yet. Commerce media will be impactful no matter what, but its superpowers take form when ecommerce businesses up their game to become true media partners.

Standardized metrics

Although it is unlikely to happen without government oversight, an agreed-upon set of performance metrics is the only truly reliable way for advertisers to measure and compare audiences across ecommerce partners. With standard metrics, walled gardens become “hedged gardens,” allowing everyone to peek at each other’s performance (the same way network television ratings are visible to all).

Certainly, some competitive edge would be lost, but the overall business would benefit due to increased spend in the category. Without standard metrics, each partner would define KPIs like attribution, views, and impressions differently. But similar to social media’s growing pains, a cottage industry around commerce media will emerge to offer some measurement and analysis.

Better reporting

For online retailers operating on razor-thin margins, a new revenue stream like commerce media is a lifesaver. But the opportunity comes with the expectation of good reporting so advertisers can track the effectiveness of their campaigns. Ecommerce businesses are at different stages of maturing into good media partners and need to get there as quickly as possible to help sustain the growth of commerce media.

Optimization tools

There is one KPI that has been the key to the increased investment into commerce media: sales. However, optimization tools are readily available across the digital advertising landscape, and advertisers expect the same from commerce media. Improved ROAS, right pricing, and better targeting are all possible with optimization, and advertisers will demand it. IOW: sales are great, but more sales are better. 

Consumer privacy

Protecting customer data must come before everything else. This is a sensitive topic, and rightfully so. As an industry, we have an opportunity to build commerce media into a lower-funnel powerhouse with positive implications across the entire industry. Invest in the security of your data and hire experts who know how to institute best practices. 

The Future of AI & Commerce Media  

Insider Intelligence predicts that by next year, ad spend across online retail media channels will be bigger than traditional TV spend. Most of that will be incremental dollars, which is good for the ad industry as a whole. But more importantly, commerce media is a chance to make advertising more relevant to the consumer. That’s how everyone wins. And artificial intelligence holds the potential to make this vision of a more seamless and personalized customer journey a reality.

If you want to learn how Fluent can help your brand leverage the power of commerce media, get in touch with us here.