CPG brands in a cookie-free future: Brushing off the crumbs, moving forward

As you might already know, Google plans to stop supporting third-party cookies in Chrome starting in January 2022 (see editor’s update below). Safari and Firefox are already blocking third-party cookies, but with Chrome’s 64% of the market, this means that nearly 90% of users will have third-party cookies blocked next year.

This change will have a tremendous impact on digital advertising, especially for CPG brands. Today, most cross-site, personalized offers are handled using this technology.

Third-party cookie deprecation is going to impact the consumer products industry more severely than other industries, as many consumer products brands are running their digital campaigns with advertising firms that use this technology.

The main reason is because most CPG brands don’t have a direct relationship with their consumers, as traditionally, they  sell indirectly through distributors and retail partners.

Third-party cookies, CPG brands, and direct marketing

For many years, cookies have been used by advertisers to create consumers profiles of anonymous users to create and execute targeted marketing campaigns. The value of third-party cookies has been diminishing over the years, but now its end is near.

These kinds of changes in platforms and regulations are driven by the rise of consumer awareness and privacy concerns. The lack of transparency about who is collecting consumer information, how it’s being stored, shared, and used has eroded people’s trust over the years.

Consumer demand for data privacy and control control is leading companies to shift away from ad campaigns based on third-party data to focus on known consumers and retaining existing customers.

But without a direct connection with consumers, CPG brands haven’t been able to create profiles and obtain consent of known consumers to execute direct digital marketing campaigns, or get consumer insights to execute “consumer look alike” digital campaigns.

On the other hand, digital-native consumer products companies that have been selling direct to consumer are in a less vulnerable position. Creating consumer profiles, obtaining consent, and executing targeted digital marketing campaigns is business as usual for a digital-native CPG brand.

Forging ahead and taking control

Big changes bring big challenges, but also big opportunities. The entire ecosystem is working on ways to take advantage of the white space that third-party cookies will leave behind.

1. 1. Google is working on what they call “Privacy Sandbox,” which is an alternative provided to the ad industry to keep delivering targeted ads, but using a more privacy-friendly technology.
   2. Publishers are creating customer profiles from known subscribers and using first-party cookies to understand anonymous users. They know about the importance of quality content to build consumer engagement.
   3. The growth of direct to consumer

With less third-party data available, first-party data becomes even more relevant. Retailers that already have a direct relationship with consumers are expanding their digital presence and services, collecting additional information and consumer consent to broaden their reach, but also for analytics and insights to serve consumers better.

CPG brands need to keep an eye on the different advertising opportunities that the new offerings will bring, but they also need to move into the driver seat and use this opportunity to create a direct relationship with their consumers. This will allow CPG brands to execute direct digital marketing campaigns and get the insights for better targeted digital advertising anywhere.

Up close and personal: CPG brands direct to the consumer

For CPG brands, the value of first-party consumer data is much more than just in marketing. Consumer information is crucial for new product development, pricing and offer strategies, product assortment, retail partner negotiations, demand planning and many others.  A holistic view of the value of consumer data across the organization is necessary to take full advantage of the opportunities ahead.

Creating a direct relationship with consumers is all about value exchange, not just about what a CPG brand can get from the interaction but also and most importantly, about what the consumer is getting from it.  Each product category and even geography is different, and therefore the value proposition might be also different and needs to be tailored accordingly.

There are many ways to bring value to consumers, including: D2C and subscription models, additional product information, detailed sourcing information, social and environmental responsibility transparency, new product development influence, exclusive promotions, additional product options, personalized products, guaranteed supply, etc.

Consumers and manufacturers alike will benefit from a direct relationship with one another. Today’s technology can make it happen, and there is no better time than the present.