The Media Network Boom Is in Full Swing: From Hotels to Airlines, First-Party Data Monetization Accelerates

Marriott International took the lead earlier this month by launchingthe hospitality industry's first media network, a move that is unlikely to be the last of its kind among hotel owners. Marketers should not be surprised if, in the coming months, other industries from airlines to financial services pursue similar first-mover advantages.

With the demise of third-party cookies approaching in 2023, the demand for first-party data will not fade. Companies that possess large amounts of identifiable personal information from digital assets such as apps and websites are increasingly aware that these assets have significant monetization potential—enough to even open upnew revenue segments. But as these media networks proliferate and scale, questions arise: do they alleviate complexity for brands, or do they add another layer to a landscape already known for being difficult to navigate? Marketers faced with too many choices may become more selective in choosing partners and place greater emphasis on transparency, thereby narrowing the competitive field.

"After third-party cookies disappear, companies that have large amounts of first-party transaction or sales data as well as customer data truly realize this is a real source of competitive advantage," said Julie Jeancolas, Head of Global Media & Customer Engagement Solutions at Dunnhumby. Dunnhumby partners with retail media major Walmart to build a customerdata sharing platform。

called Luminate. "Any industry that can access addressable first-party data (and has customer consent), or any industry that owns large media assets (such as a large media matrix), can build a retail media network," Jeancolas added.

Retail is leading the way in the media network space, and its growth has been astonishing. From large retailers like Walmart and Target to niche and local players, numerous companies are racing to launch solutions that blend advertising sales, technology, and commerce. Beauty brand Ulta in Maylaunched the UB Media network, showing that companies in specific categories are also embracing the concept. Its competitor Sephora was also recruiting for related positions earlier this year to build a similar platform.

According to Michael Harrison, Managing Partner at Winterberry Group, retail media is the fastest-growing media segment after connected TV. The consultancy's research shows that US retail media spending alone will double to $40 billion in 2022. The pandemic is a major factor underpinning growth, as it forced companies to accelerate digital transformation investments and shift to e-commerce and mobile channels. This process has been bumpy, but it has brought clear benefits at a time when all parties are focusing on first-party data.

"They are riding the wave of everything becoming increasingly digitally driven," Harrison said. "The shift to commerce is driving the emergence of all these retail media networks or media networks. You will continue to see this trend."

Old wine in new bottles?

What makes Marriott's announcement notable is that its platform relies on the Bonvoy loyalty program with 164 million members and is explicitly positioned as a "media network" rather than a traditional marketing arrangement.

"Marriott has historically sold targeted advertising for guests staying at its hotels," Harrison said. "They used to do it on a one-off or email basis, more like a newsletter than a true media network. Now, they have enormous traffic from properties they own and operate, which they can leverage to drive media revenue."

UB Media takes a similar approach, relying on its Ultamate Rewards loyalty program. Although Ulta has run marketing operations for years, this is strictly its first retail media network.

Other categories adopting the media network name acknowledge retail's success in branding and may see it as a means to attract more advertiser dollars. These companies can "reposition, re-platform, and resell existing marketing partnerships, loyalty programs, or display programs, making them more sophisticated and modern," said Chris Parker, Founder and Managing Partner of advertising agency Scrum50.

"The more interactions you have with customers, the more you know about them, the more preferences you capture, the more you can personalize."

—Julie Jeancolas, Head of Global Media & Customer Engagement Solutions at Dunnhumby

But this does not mean that all media network launches are just old wine in new bottles. Marriott's media network has entered into a comprehensive technology stack partnership with Yahoo, leveraging its sell-side and demand-side platforms.

Nevertheless, it is not hard to foresee other companies examining their marketing offerings and using the media network craze to consolidate and expand them. Mastercard acquiredcustomer data platform SessionMin 2019 to improve its marketing personalization and loyalty programs. According to Harrison, automotive trading platforms like Carvana and Cars.com may in the future peddle media to insurance providers or ancillary companies. Even intermediary platforms like Instacart and GoPuff are alsoexploring integrating more advertisinginto their platforms.

"Airlines will be next, because you have a lot of data knowing where people are going, and then financial services," Harrison said. "They are all trying to build this infrastructure that can sell media."

Key to differentiation

Retail may be the model for building media networks, but some pages of the playbook may be easier to replicate than others. Experts say that emerging industries entering the space must consider what type of data they have, whether that data is addressable, and which activation methods truly appeal to target advertisers.

"The more interactions you have with customers, the more you know about them, the more preferences you capture, the more you can personalize," said Jeancolas of Dunnhumby.

This model favors businesses like grocery stores, because people visit frequently and tend to repeatedly buy the same items. But it may not directly apply to the hospitality industry, except in special cases like business travel.

"If you look at Tesco, Target, or Kroger, they have frequent interactions with customers. Marriott does not. I don't think you will visit Marriott daily or weekly," Jeancolas said. "How will Marriott deepen its understanding of customers and its loyalty database?"

"There has to be some shift toward transparency... Which of the large retail networks will be the first to break through?"

—Michael Harrison, Managing Partner at Winterberry Group

Jeancolas believes that alliances with complementary brands are a potential solution. Marriott's partnership with Yahoo also shows that many brands will rely on external technical assistance to launch their media networks.

"You will see partnerships very similar to Yahoo-Marriott," said Parker of Scrum50.

"Even though Marriott is already quite mature and advanced in digital, they recognize that this is a constantly changing, tricky, and politically charged technology area," Parker added. "They will rely on someone with strength in scale and experience, and frankly, someone they can turn to when problems arise."

Partnering with third-party solution providers is also crucial for operating certain aspects of a media business, such as campaign measurement and marketing mix management. Retailers thrive on the pitch of "closed-loop" measurement: they can run an ad for Coca-Cola, measure in-store foot traffic, and then track through point-of-sale systems whether anyone actually made a purchase. This is structurally very different from running a hotel.

"It's more around driving awareness or consideration, and possibly less about sales," Jeancolas said of how a hotel media network might operate. "That is clearly different from the responsibility of a grocery store."

Growing frustration

The broader adoption of the media network concept also coincides with the gradual fading of the retail honeymoon period. First, the number of retail media networks may be approaching a saturation point. Brands will naturally gravitate toward platforms with the broadest reach and best value. It is increasingly clear thatthese platforms often tend to be the same names that already dominate physical retail and e-commerce。

"Brands or agencies in particular will try to find platforms that give them the largest inventory," Jeancolas said. "There will be some consolidation."

How retailers keep brands within their ecosystems can also be frustrating at times. Retail media networks are often touted as a breakthrough against the long-standing digital advertising walled gardens of Google and Facebook. Marketers have made it clear that these alternativesmay be just as opaque. As media networks become a larger part of retail growth strategies, they may also become mandatory spending quotas for CPG partners rather than value-added extras.

"Six months or a year ago, people were talking about Walmart Connect, Kroger, and Target's Roundel as ways to grow sales," Harrison said. "Now, you start to hear them referring to it as a tax, trade promotion disguised as a retail media network."

While this is a potential warning sign for industries new to media networks, it also indicates they have an opportunity to break the existing model in substantive ways.

"There has to be some shift toward transparency," Harrison said. "The interesting thing is which of the large retail networks will be the first to break through? Once one does, it seems all the others will follow."