A Retailer’s 1st Party Cookie Is Now a Strategic Asset

We’re about to fly into the identity storm that will have a major impact on how we market to consumers. If this was a TV weather report, the retail CMO’s would look like the weather channel reporters getting thrashed by the waves. Is the storm survivable? Sure, but with a new set of tactics designed for the new realities of post-pandemic retail.

Cookie Apocalypse: Two Storms Are on The Horizon

Two unrelated forces are merging to create the perfect storm. First, Google and Apple are eliminating 3^rd party cookies in their browsers. Retailers were among the primary beneficiaries of 3^rd party cookies and stand to be the most harmed by the cookie apocalypse. Second, Apple is eliminating the ability for ad networks to track users on their mobile phones. This is far more substantial than you think. Location data is used to learn where people live, work, shop, travel, and whether they stop and Starbucks or Dunkin in the morning. What will these changes mean to digital marketers?

The storm will hit the shores in Q2 of 2021, and we believe you will see three significant impacts:

1. Ad products that depend on 3^rdparty cookies will virtually disappear: Most retailers allow ad companies to “tag” customers for marketing purposes. For example, you might allow Criteo to drop a 3^rd party cookie on your visitors so you can retarget them elsewhere on the web. Retargeting is one of the highest performing ad categories, yet it will disappear almost overnight. Remarketing to your non-identified site visitors will become a thing of the past.
2. Acquisition targeting will require far more sophistication: The ad-tech ecosystem, which is made up of companies like LiveRamp, TradeDesk, and MediaMath, will be greatly impacted by the elimination of 3^rd party cookies and mobile identifiers. The current ad-tech ecosystem is based on cookies and MAIDS (Mobile Ad Identifiers), and their targeting abilities will be greatly impeded.
3. Facebook advertising will become less effective and more expensive: In the next update of the iPhone, version 14.5, Apple will require consumers to affirmatively opt-in to be tracked by each individual app. Users will now be specifically asked if they are willing to be tracked by Facebook, Snap, and others. Many analysts believe a majority of consumers will opt-out, which will greatly hamper the Facebook ad network, including Instagram, to serve targeted ads. This will reduce your ability to reach your target audience on Facebook and Instagram. Decreased ad inventory supply will likely result in higher auction prices.

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Why Your Identity Strategy is Now Strategic

A cornerstone of your relationship with the customer is identity. If you want to personalize experiences or enrich your customer file with 3^rd party insights data, which is now de rigueur, it’s critical to precisely identify the customer. You will no longer have the ability to retarget anonymous visitors; thus, the ability to target your known customers becomes table stakes in your marketing strategy.It’s a tall task to ask every customer to sign-in, although there are tactics to build, maintain, and leverage the first-party cookies you associate with your known site visitors. Here are three tactics we are recommending to our clients:

1. Upgrade your email marketing: Consumers don’t hate all marketing emails, rather they hate bad emails. One of the benefits of sending a personalized email, which includes content and offers that are relevant to the customer, is open rates increase dramatically. One benefit of an email open is that you can refresh your first party cookie which may have expired. An email open gives you the ability to stitch together a specific consumer and a specific product interest. We recently increased a customer’s email conversion by 3X by including personalized offers.
2. Make the mobile phone part of your brand’s experience, not simply another channel: If a consumer opens your app in your store it’s relatively easy to identify the customer. In the case of Sephora, they provide the ability to try-on make-up in the store using their app. There’s a virtual image of you in the app, and you can virtually apply make-up you are considering. Not only do they know you were in the store, they know which products you considered, your facial features, and what you purchased. Home Depot’s app provides precise navigation in their store guiding you to the specific aisle and shelf where you can find the nails, wood, or brackets for your project. They know you were there, the in-store products you viewed, and what you bought. Your mobile app isn’t a channel, rather its part of your brand’s data strategy.
3. Reward the crowd for improving your identity capture: I was recently with a brand that was frustrated that many of their captured emails were false. The consumers used fake emails, like test@test.com, simply to dispense with the request. We recommended giving the consumer a reward for providing a real email address. For example, a brand could offer a 10% coupon delivered by email, now or on their birthday. Clearly, this would incentivize giving you a real contact credential, andgive you the ability to drop a first party cookie.

The modern car has become a computer with four wheels. There’s an analogy with retail, where the post-pandemic survivor brands will be data platforms that have a website and stores. Zara is using data to press the velocity accelerator, now updating their product assortment every two weeks. The reward: the average Zara customer visits their store 17 times per year. Why? Customers love the excitement of fast product changes enabled by data. The new retail data platform will be insights led, built on a new consumer privacy construct.

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The pandemic resulted in a step-change, accelerating the industry’s transition to online by more than 10 years. We’re optimistic about investing in data-centric strategies for the new post-pandemic retail industry.