Since its unveiling in January, Google's plan to kill third-party cookies has cast a long shadow over the marketing world, adding new threads to an already complex web of data privacy legislation and platform policy tweaks. The changes to the tech giant's Chrome browser, expected to take effect before 2022, carry significant implications for most marketers, but will rattle some categories more than others, potentially spurring a wave of innovation as lagging sectors try to keep pace in the scramble for first-party data.
Consumer packaged goods firms, for instance, face steeper challenges based on disadvantages built into their established business model. CPGs have not typically commanded large amounts of first-party data — a form of increasingly valuable digital gold — because retail partners and platforms like Amazon own the point of sale where consumers share that information. Many channels where brands directly accrue information like email addresses and phone numbers are also not in the usual CPG wheelhouse.
These are problems the category has tried to redress for years, but the sunsetting of cookies adds renewed urgency to the matter. In the months ahead, consumers could expect to see a fresh crop of experiments in areas like e-commerce, direct-to-consumer (DTC) dealmaking and content marketing as CPGs look to recenter on owned media experiences and close the gap. Whether those experiments will stick is anybody's guess, but a harsh reality is that it might be a tough pitch to get people particularly invested in household products.
"Me, I'm one person. I don't have a relationship with my toothpaste," Mike Woosley, chief operating officer of ad-tech firm Lotame, said of CPGs. "By and large, they're only getting a sliver of their customers. It's hard for them, ultimately, to capture 80% of their customers with first-party data."
Wave of disruption
While a game-changer, the deprecation of third-party cookies is also just a single piece of a larger wave of data disruptions primed to turn digital marketing on its head.
Laws like the EU's General Data Protection Regulation and the California Consumer Privacy Act make data acquisition trickier terrain to navigate. Apple also plans to require opt-in consent for its Identifier for Advertisers (IDFA), a randomly generated code assigned to devices that helps brands track users' online activities. Fifty-six percent of marketers expect the IDFA change, which received enough initial pushback to get delayed until next year, to negatively impact their business, an AppsFlyer survey found.
All of this is to say the road ahead for CPG marketing isn't getting any easier, even as the category experiences a windfall from pandemic-driven buying habits. The transition to digital marketing's next phase could be particularly painful given the positive strides CPGs have made in bettering marketing efficiency and effectiveness in recent years.
"What's happened with digital, obviously, is the tools have gotten better and better for [marketers] to microtarget their customers like it's a one-to-one type of marketing, even though they're a mass marketing enterprise," Woosley said. "That's how it went for years until one day, privacy and regulation came."
But if the near-term picture isn't necessarily rosy, the coming months could also serve as a proving ground where brands will be able to prove their worth and secure longer-term loyalty.
"I think it's very easy to look at those regulations and for people to say, 'oh man, I'm going to lose my ability to email consumers,'" said Josh Blacksmith, Kimberly-Clark's senior director of global consumer relationships and engagement. "On the flip side of that, if you earn a consumer's trust, you earn the right to actually be seen in an inbox as opposed to being one of a million messages to just get excused as spam."
Getting the house in order
Trade consortiums and ad-tech companies are now moving fast to devise an alternative to what's been a bedrock of online ad targeting. The Trade Desk, a demand-side platform, is seeing traction for an open-source tracking technology intended to replace the third-party cookie. And Lotame recently introduced what it purports is the first "cookieless" solution for identity called Panorama ID.
For CPG marketers, the moment serves as a time to look inward and realign operations for a future that will require more independence and digital agility. Packaged foods giant Mondelez is prioritizing a layered approach to marketing that blends behavioral targeting with the type of context-focused solutions that are blooming in response to third-party data's decline.
"We're training everybody to be digital marketers of the future and ensuring we have the right talent in-house. We still, as an organization, understand the role that agencies can play."
Senior director of global consumer relationships and engagement, Kimberly-Clark
Kimberly-Clark, which owns brands like Huggies, Cottonelle and Kleenex, has made broader adjustments to center on digital. In June, it created the new role of chief digital and marketing officer, appointing Zena Arnold to the position.
"The first place is definitely getting our first-party data house in order," Blacksmith said of Kimberly-Clark's investment strategy.
Speaking at Advertising Week in October, Blacksmith detailed how Kimberly-Clark is expanding its approach to promotions past traditional economic incentives, such as coupons, to spotlight deeper brand values like utility, community and exclusivity. To make those connections with consumers, the marketer is striving to lessen its dependence on paid media to drive engagement, while leveraging more owned and shared media experiences to accomplish those goals.
"If we get a consumer to our owned experience, we want to close the sale within our owned experience," Blacksmith said in a follow-up phone interview. "We're pushing for frictionless buying experiences as much as possible."
That can be a hefty order to fill, but Blacksmith said his team has made promising progress, including through a recent weeks-long initiative to enable smarter investment decisions across Kimberly-Clark's owned channels. As other marketers cut budgets and curtail agency relationships in the quest for stronger in-house capabilities, Blacksmith said Kimberly-Clark's level of third-party partnerships is unlikely to change, even as the skill sets it seeks in external providers evolves.
"I don't know if it's more [stuff handled in-house], I think it's just a different upscaling of talent," Blacksmith said. "We're training everybody to be digital marketers of the future and ensuring we have the right talent in-house. We still, as an organization, understand the role that agencies can play."
Walled gardens everywhere
Another factor affecting CPG marketers' decisions around data is the proliferation of retail media networks that change the equation for an industry that's so far had to rely largely on a handful of dominant players like Google, Facebook and Amazon. Big-box stores, grocery chains and major pharmacies alike are placing bigger bets on advertising becoming a piece of their revenue stream.
Walmart over the summer introduced an omnichannel analytics suite to its fledgling marketing platform, and CVS in August debuted the CVS Media Exchange, which gives advertisers access to its online and offline channels to help measure the effectiveness of their campaigns. A big differentiator for these services compared to digital rivals are the troves of first-party shopper data that CPG marketers crave, but the trend poses new obstacles to those same marketers.
"As those walled gardens are stood up, I think the reality is that it unfortunately forces the hand of many manufacturers," Blacksmith said, including Kimberly-Clark in that assessment. "It takes your marketing investment, your marketing spend, and splinters it even further because you're needing to make sure that you're buying that audience across every one of these platforms to ensure you're hitting the reach that you need."
In ways large and small, CPGs are testing methods to wean off a dependence on walled gardens. PepsiCo in May rolled out two DTC sites to capitalize on a pandemic-driven boom in at-home snacking, wresting greater control over the point of sale. Even more lighthearted activations could provide greater utility than they have in the past.
"They're all looking for that pot of gold ... systematically, when it's fast-moving consumer goods and CPG, they're never going to own the attention of 99% of their customers."
Chief operating officer, Lotame
Mondelez's Oreo earlier this month launched a web experience that lets people order customized cookies for the holidays. Earlier in the fall, Mucinex introduced a capsule collection of branded loungewear designed to comfort people who have a cold. Offerings like pillow hoodies and retractable eye masks were sold through a microsite operated by the Reckitt Benckiser brand, providing a potential source of first-party data consumers otherwise wouldn't be interested in sharing with the marketer of a cough medicine.
Some experts remain skeptical of whether such tactics are scalable or sustainable in a big-picture sense.
"There are certain things that are going to take off ... and every marketing CMO is going to look for that campaign," Lotame's Woosley said. "They're all looking for that pot of gold, that big hit, but, systematically, when it's fast-moving consumer goods and CPG, they're never going to own the attention of 99% of their customers with one of those types of campaigns."
Still, the pandemic has provided a silver lining in accelerating the consumer shift to online shopping. It's a trend that savvy CPG marketers could seize on for the critical holiday period, assuming they have the proper owned media experiences in place. PepsiCo's Frito-Lay division last week started selling a line of holiday-themed apparel through Snacks.com, one of its two new DTC sites.
"Because of the year that we've had with the pandemic, with the economy, we are seeing more and more brands start their seasonal holiday-slash-Christmas campaigns earlier," said Kerel Cooper, senior vice president of global marketing at LiveIntent. "Because of the [spike in] online shopping, there's going to be the opportunity for more and more brands to figure out their first-party data strategy or collect more information."
Heating back up
Just as a chapter closes on third-party data, other tactics could see opportunities start to emerge. An important factor for marketers in the CPG space and elsewhere is to not wait for a single, comprehensive replacement to something as ubiquitous as cookies, experts said.
"We don't tell everyone or pretend to think that email and the email address is going to be the end-all, be-all to your first-party strategy," Cooper said. "Some of this goes back to context, some of this goes back to [customer relationship management], some of this goes back to building up second-party data relationships."
Kimberly-Clark is exploring several areas more closely, including second-party data relationships with publishers and leveraging those in tandem with audience-based targeting, according to Blacksmith. The marketer is also ramping up investments in personalization, he said, while trying to steer clear of pitfalls like leaning in too far on one-to-one marketing, which has previously disappointed CPGs.
"You can look at a segment of 20,000 consumers or 100,000 consumers and deliver a message that feels personalized because you're driving relevance," Blacksmith said. "We're definitely in a space of making sure we're not going down the rabbit hole of hyper-personalization and what that can do to sort of drive your production and content costs up."
Dealmaking spaces that have cooled amid the pandemic's economic impact could heat up again as well. Prior to COVID-19 roiling the U.S., CPG conglomerates like Procter & Gamble were picking up acquisitiveness of DTC startups to round out product portfolios and better key into customer relationships. With positive vaccine news and the potential for an economic recovery in 2021, some experts forecast the ball will once again start rolling toward more M&A activity.
"Absolutely, I think it will be a trend we will see in the future," Cooper said of DTC acquisitions. "Why wouldn't a Procter & Gamble love to acquire more companies that have shown that they produce a product that people want and they can also acquire this first-party data asset?"