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10/19/2020

How Traditional Brands Are Overcoming First-Party Data Challenges

Most of today’s brands use data to guide their customer relationship strategies and power their decision making. But the consumer goods industry has by and large been unable to access these same kinds of first-party data that marketers in other industries use to understand shoppers and optimize campaigns.

Traditional CG brands have historically relied on brick-and-mortar retailers to sell their goods, and have been increasingly looking for ways to move closer to a direct-to-consumer (DTC) model. The CG industry was already beginning to navigate a new future after Google announced earlier this year it was eliminating third-party cookies from Chrome, and now that the pandemic has created an influx of online shopping, it has potentially altered consumer behaviors and purchasing habits for good.

With the shift to digital accelerating faster than ever, here’s how CG brands can learn from their DTC counterparts and stay competitive amidst a digital transformation that’s been kicked into high gear.

Previous challenges for CG companies

When it comes to engaging customers digitally, most brick-and-mortar retailers have access to frequent shopper data and DTC brands have historical user search data. CG companies have had limited tech solutions available to them, with little to no ability to build datasets that can help them develop more direct customer relationships. Some are even predicting that the consumer packaged goods and household goods industries will have a particularly hard time adjusting to the demise of the cookie.

But things are starting to change as digital data becomes more ubiquitous, transforming how consumers discover and communicate with these businesses online. CG brands are moving towards omnichannel strategies that will help them engage and understand customers on a much deeper level, while tapping into frequent shopper cards where consumers contribute their purchase information in exchange for coupons and mobile rewards. Many are now using tools like Ibotta and Fetch Rewards to broaden their digital visibility and glean valuable demographic data and retailer insights that can help them achieve a greater return on their investments.

As more sophisticated CG companies begin to strike deals with publishers who own that end-consumer relationship, they’ll be able to enhance their in-house data to go along with the other first and third party data assets they already have.

Embracing the DTC model

COVID-19 has led to a massive increase in shopping from home, and recent data shows that half of U.S. consumers now prefer to buy products directly from CG e-commerce sites.

With consumer habits changing so quickly, many CGs are looking closer at the models of their direct-to-consumer competitors to help inform their customer outreach strategies.

It’s becoming mission-critical for CGs to invest in technologies that can correlate offline to online behaviors, and refine traditional marketing approaches to focus on relevant consumer marketing tactics across emerging channels and platforms.

CG companies are starting to catch on, and technology is lowering their barrier to entry. Now brands are investing in everything from building native apps to fully transitioning to a DTC approach.

Gillette, for example, launched its own shaving subscription model to compete with Dollar Shave Club, one of the original DTC startups. As traditional CG brands continue to evolve and behave more like their DTC counterparts, they will have access to a wealth of new user data and digital tools that can help them drive customer loyalty and anticipate future product needs.

By adopting a more rounded omnichannel approach, CGs can enhance their view of in-store and online sales, get a clearer snapshot of how actual customer behaviors lead to conversions, and improve their chances of building long-term brand loyalty.

How Investment in Digital and Identity Can Help CG Navigate Its Future

It’s becoming mission-critical for CG players to invest in technologies that can correlate offline to online behaviors, and refine traditional marketing approaches to focus on relevant consumer marketing tactics across emerging channels and platforms.

Having quality first- or second-party customer data is extremely valuable to brands, as it allows them to understand granular customer behaviors and purchasing habits like which stores they frequent and typical time of day they’re shopping.  Lookalike modeling and better targeting solutions built around identity will be key layers that bring these disparate datasets together to unlock value tied behind understanding consumer behavior.

Grocery giant Kroger is an example of a large retailer pushing to give CG brands first-party solutions that will impact how they measure campaigns and engage with their target audiences.

In a future without third-party cookies, CG brands will need the right technology to achieve the scale needed to meet their objectives, and should find the right identity partners who are both trusted and global that can help give them the data intelligence needed to take advantage of the entire web ecosystem, not just the walled gardens.

They will also need to embrace methods for collecting some of that data themselves, including brokering partnerships in the digital realm, whether it’s CTV data or online browser behavior data to augment and enrich the first-party data they already have.

Even in uncertain times, the outlook for traditional CG brands is bright, so long as they can collaborate with the right technology vendors, integrate with trusted identity solutions, and stay nimble in their approach to building customer relationships.

Ajit Thupil is chief product officer of Tapad, where he leads the company’s product, business development, as well as platform solutions. Ajit joined Tapad from Oracle Data Cloud where he led identity solutions globally. As a co-author of “Cross Device Identity Solutions Request for Information (RFI) Template,” Ajit was named one of OWI's Top 100 Influencers in Identity for 2019.

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