Cookies – not of the baked variety – refer to data stored on an internet user's browser, such as user identification. Combined with tracking scripts, third-party cookies can be used for retargeting, user tracking, and conversion attribution. They are an essential tool to modern day marketers.
“Third-party cookies are often used by marketers and advertisers to track users’ activity across multiple sites, to better understand their behaviour and preferences, as well as to create tailored, relevant advertisements,” Daniel Schmidt, biz dev and FMCG Director at loyalty solution provider Loylogic explained.
In June last year, Google said it will phase out third party cookies from Google Chrome by late 2023. The tech giant said the move should be part of web community efforts to develop ‘open standards’ that ‘fundamentally enhance privacy on the web’, giving people more ‘transparency and greater control over how their data is used’.
This is a big shake-up in the world of marketing, and FMCG brands are no exception.
What does a data drought mean for personalisation?
The way that food and beverage brands interact with consumers has evolved as the digital environment has become more pervasive. “Before the age of the internet, food and beverage brands relied on middlemen - retailers and mass media – and untargeted ad campaigns to try and reach consumers. However, all these brands in the last 25 years have relied on cookie-enabled online advertising to target and engage more effectively with consumers online,” Schmidt reflected.
This targeting has become vital to both to marketing efficacy and consumer experience. Indeed, Schmidt told FoodNavigator, without this targeting consumers could well come to feel frustrated by a bombardment of virtual spam. Cookies have allowed targeted communications to flourish.
“Consider sending a discount email offer on ribeye steaks to a devoted vegetarian or contacting someone with severe nut allergies with a sale on Snickers bars - it wouldn’t go down well. Many FMCG brands still rely on cookies to deliver a quality customer experience, so the end could spell disaster,” the loyalty expert explained.
If the data collected by Google cookies is removed, the ability of FMCG brands to continue to deliver a more personalised experience for their shoppers could become limited.
“Food and beverage brands risk becoming totally disconnected from their customers, and may be forced to fall back on traditional advertising methods to promote their brand. But these traditional methods simply will not cut it in our increasingly personalised online world. Consumers expect relevance.”
Finding ‘new ways to harness customer data’
Schmidt said that this threat is more significant if you are a ‘legacy’ brand because while established brands and house-hold names might benefit from high recognition levels, they could also find themselves ‘struggling’ to keep up with challenger brands, many of whom have established direct-to-consumer models.
“DTC challenger brands that are well set up to collect, store and use customer data from day one, to maximise customer engagement. It’s never been more important for legacy players in particular to find new ways to harness customer data,” we were told.
So what does Schmidt recommend F&B companies should do in response to Google’s third party cookie phase out?
Well, it sounds like challenger D2C brands could be on the right track. “In order to create a more direct and meaningful relationship with consumers, FMCG brands must look for ways to collect first-party data on their own,” Schmidt advised.
But shoppers will require incentives to give up their valuable personal data, he continued, suggesting ‘brands must offer something valuable in return’.
“Here, engagement programs may be the answer they’re looking for, providing a crucial bridge to get the data they need to offer a vastly better, personalised customer experience. At its core, data sharing is about a value exchange. Customers are largely happy to share some of their information in exchange for the chance to win or earn quality rewards. At the same time, this data sharing allows a brand to deliver each customer with the right offers at the right time.”
A shift towards first-party data also offers other benefits, such as the opportunity for increased transparency to build deeper relationships of trust. “Rather than third-party cookies tracking consumers across multiple sites without their knowledge, the knowing exchange of first-party data builds trust between brands and consumers and allows consumers to have a more valuable online experience.”
Schmidt sees the possibility of developing deeper and broader connections with consumers if first-party relationships can be nurtured to deliver an omnichannel presence, intertwining physical and digital experiences.
“Engagement programs also allow brands to create a holistic DTC view as the mechanics can work both offline, via code scanning, and online, thereby creating a full overview of the consumer’s transactional history. DTC strategies are fundamentally different from one off sales promotion activities as the goal is to gather all first party data of a particular consumer and not just on one particular purchase. In the coffee capsule industry for example, the individual consumer data insights gathered are often referred to as the 3Fs: Flavour, Format and Frequency,” he observed.
“With the direct and ongoing engagement provided by engagement programs, they can convert anonymous consumers into loyal brand advocates. Put simply, they provide a low-cost option to engage with consumers that will ultimately reduce brands’ reliance on expensive set piece advertising campaigns.”
Waiting to act ‘would be a mistake’
Schmidt said many marketers might be tempted to take a wait-and-see approach to data collection in the hope that Google will again delay the move. This, he told us, ‘would be a mistake’.
“Google’s phasing out of cookies has been delayed more than once so FMCG brands without an independent first-party data collection strategy might be tempted to sit back and bide their time, continuing to rely on the technology. This speaks to the significant influence that big tech has over many industries.
“This would be a mistake. Instead, FMCG brands should see the change as an important opportunity to take consumer data into their own hands. One straight-forward and low-cost way to do this is through engagement technology. The time to establish a direct line to consumers is now, before it’s too late.”