The nation’s top retailers — including Amazon, Walmart, Target and Home Depot — are using data on shoppers’ purchases to sell more online ads on their eCommerce sites, as well as in stores to manufacturers, to pump in advertising revenue from top brands, according to a Wednesday (Nov. 17) report from Reuters.
Considering recent growth in retail sales, advertising through top merchants, as opposed to other marketing channels, could be most lucrative. U.S. retail and food service sales surged in October to $638.2 billion, an increase of 1.7% over September and besting economists’ projections, according to PYMNTS. October was the third month in a row with increased sales.
See also: October Retail Sales Beat Forecasts as Shoppers Get a Jump on the Holidays
Major retailers are opting to bring advertising in-house in part because of changes Apple Inc. rolled out in April. With the privacy change, apps on iPhones must ask for permission before tracking user activity and showing personalized ads. Users can — and have — opted out of seeing ads, according to PYMNTS.
Social media platforms, including Facebook, Twitter, YouTube and SnapChat have lost nearly $10 billion in advertising revenue stemming from the change, according to PYMNTS.
Related: Social Media Firms May See $10B Loss in Sales From Apple Changes
To further complicate the ability to effectively target consumers through advertising, Google has said it intends to phase out third-party cookies beginning in 2023, according to PYMNTS. Dubbed the Privacy Sandbox, the project aims to safeguard users’ digital privacy, which could further complicate online advertising.
See also: Google’s Proposed Chrome Privacy Sandbox Delayed Until 2023
Despite the challenges, in-house advertising is paying off for some retailers. According to Reuters, Amazon’s annual ad revenue exceeded $15 billion, while Walmart netted close to $1 billion in advertising sales last year.
Meanwhile, the Consumer Financial Protection Bureau (CFPB) could be another potential monkey wrench in the online advertising landscape.
The CFPB is seeking to safeguard consumers’ information, and will be sending 55-page questionnaires to Facebook, Amazon and Google inquiring about how consumer data is collected, shared and stored. The aim is to protect consumers and their privacy, as well as ensure sufficient competition in the consumer financial services realm, according to PYMNTS.
Read more: CFPB Expected To Query Tech Giants Over Financial Data Handling
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