E-commerce Meets Digital Ads, But Privacy Concerns Persist

The convergence of e-commerce and digital advertising has become a focal point for businesses globally, with retail media gaining significant momentum in Mexico. Contrary to common misconceptions, Mexico's digital market has evolved into an innovation hub, keeping pace with some of the most advanced markets worldwide, according to Fernanda González, CCO & Co-Founder, EPA Digital. Nonetheless, concerns about data privacy and safety persist.

Integrating e-commerce strategies with digital advertising seamlessly enhances brand visibility and drives sales. Jonathan Fasano, Product Leader, Walmart Connect Mexico, highlighted that the Mexican market is not trailing in innovation. “There are many aspects where we are on par with mature markets like the United States and Europe,” he noted. Retail media advertising targets demographics based on online behavior, typically tracked by cookies, to offer personalized discounts or products, becoming a billion-dollar industry.

In 2023, Amazon reported US$46.9 billion in advertising revenue, followed by TikTok with US$14.15 billion, which has risen as a marketplace and ad platform player. Meanwhile, Walmart and Mercado Libre had US$3.4 billion and US$716 million respectively. These figures illustrate the varying scales at which different platforms leverage advertising investments to capture market share and drive growth.

Given the expanding retail media market share, “Mexican companies are leveraging data to make informed decisions, optimize campaigns, and improve customer engagement. The ability to manage campaigns and make real-time decisions through advanced platforms has been a game-changer,” said Andrés Felipe Palacio Calle, Director, Rappi Turbo Mexico. However, the impending challenge posed by the “death of cookies” will necessitate reevaluating and enhancing data strategies.

“The art lies in reaching the right person with the right promotion at the right time,” said Palacio. “This level of precision in targeting is made possible by the sophisticated use of data, enabling businesses to deeply understand consumer behavior and preferences.” This shift requires developing new strategies for data collection and user targeting. Platforms rely on contextualization and artificial intelligence to understand content and user behavior without cookies, ensuring a seamless advertising experience even as the industry undergoes significant changes.

Another major challenge is integrating disparate data sources to provide a unified view of the consumer. “We need to create contexts where data can be shared securely among brands, retailers, and third parties,” said Fasano. This collaboration is essential for developing more effective media executions and achieving better business outcomes.

Having clear data strategies aligned with business objectives is crucial for effectively targeting consumers, according to Mariana Trejo, Head of E-commerce, Sanofi. “We need to ensure that the data we collect is used effectively to optimize campaigns and drive growth," she said. This includes understanding the specific needs of different stages of the consumer journey and tailoring strategies accordingly.

Using data at different touchpoints of the customer experience, businesses need to move beyond viewing consumers through separate online and offline lenses. Instead, they should adopt a holistic view that integrates all consumer interactions, says Trejo. This approach will enable more comprehensive and effective marketing strategies, ultimately leading to higher customer satisfaction and loyalty.

“By analyzing the context and sentiment of the content a user is consuming, the platform can deliver advertisements that are significantly less intrusive and more relevant. This method contrasts sharply with the older practice of bombarding users with irrelevant ads based on broad search terms, which often led to user frustration and ad fatigue,” said Linda Ruiz, Regional Director, MGID, in an interview with MBN.

Ruiz explained that understanding user behavior through data allows for more granular targeting, which not only improves conversion rates but also enhances the overall user experience. “The beauty of digital marketing lies in its ability to reach each user in a highly precise manner,” she noted. “This precision ensures that users receive ads that are timely and relevant, reducing the likelihood of ad blocking and increasing engagement.”

To enhance targeting specificity, experts recommend data collaboration between different platforms and retailers, especially after the death of cookies. However, Ruiz emphasized the importance of maintaining user privacy and security. “While sharing data across platforms can provide more personalized experiences, it is crucial to do so transparently and with the user's consent,” she stated. Ensuring that users feel secure and that their data is handled responsibly is paramount.