How Retailers Can Invest in Data Now to Prepare for the Post-cookie World

How Retailers Can Invest in Data Now to Prepare for the Post-cookie World

There's no denying online retail's momentum. E-commerce sales accounted for nearly $1 out of every $5 spent on retail purchases at the end of 2020. While retailers are suddenly eager to invest more online and expand their eCommerce operations, they are speeding towards a wall. 

The technology and tactics deployed today to stand out in a crowded marketplace are not going to work the same way a year from now, due to continued changes in browser privacy policies. Chrome, the web browser with the largest market share, will stop supporting cookies, the mechanism through which retailers collect data and then target their ads, beginning at some point in 2022. Google compounded marketers' fears earlier this year when it stated that it would not support any identifiers that replace cookies for one-to-one targeting.

Retailers rely on retargeting to effectively reengage their current known prospects. Retargeting relies on cookies. Therefore, these changes mean that many of the data signals powering online retail's surge will dry up. Requiring new solutions to effectively reach a brand's best audiences. Retailers need to lay the groundwork now. They should test and learn which solutions to incorporate into their programs in 2021, to avoid stalling out in 2022.

Your real customer insights

While nearly every media expert can advise retailers to look at their first-party data, making that data actionable requires digging a little deeper.

Start by considering your image of the customer. It might be the single audience for which a product was specifically designed. It might be a few different segments that the brand sees as likely buyers. But often, this vision can differ from an e-commerce vendor's actual customers.

While big data can help test a hypothesis and prove it right or wrong, it's also great for uncovering surprises. One thing we constantly find in ad performance -- and the resulting sales conversions -- is that the audience that responds best is not always the image with which the brand started. This is a good thing because it opens new worlds of opportunity for brands.

The coming shifts in data collecting are unfortunately going to make this harder, so it's important that retailers learn as much about their entire audiences as they can right now. Dig into the insights and conversion data to find out who your actual customers are. Who are the high lifetime-value buyers and the repeat buyers? Do they match your perception? The information you gather now can help define your campaigns and creatives going into the future, so invest heavily in a deep understanding now. This will prove to be valuable when retargeting site visitors becomes increasingly harder. Even better, these insights don't have to be cookie or even ID-based right now.

Cookie-free performance data

Every online retailer is aware of the looming change to third-party cookies in Google's Chrome Browser. What many may not be aware of is that there is already a large swath of internet traffic that is happening outside of cookies. Browsers like Safari and Firefox have had cookies turned off by default for years, and the audiences using those aren't producing the same kind of behavioral insights. Right now, a little more than 40% of U.S. web ad inventory is not addressable. Once Chrome retires the third-party cookie, many in the industry expect that more than 70% -- and even up to 90% -- of inventory will lack a login or ID.

But that doesn't mean they're worthless. Safari is found on Apple products, which are often more expensive than competing products, and therefore likely owned by consumers with higher incomes. That's a valuable audience for retailers. To prepare for the post-cookie future, start running campaigns that don't rely on third-party cookies on these browsers today and gather all of the campaign data you can. Then, compare it to the cookies campaign data, and make adjustments as needed.

This cookie-free data is going to form the baseline for many of the campaigns you run in 2021, especially as retailers wait for wider adoption of identifier alternatives. So get familiar with cookie-free campaigns and establish a baseline you're comfortable with.

A post-pandemic forecast

Retailers are already trying to understand how pandemic-influenced buying decisions will impact their revenue in the long run. There are looming questions over whether customers who mostly purchased online over the past year will return to stores, or if they will remain avid e-commerce shoppers. Are surges in spending temporary, or here to last?

Retailers will respond to this question differently, too. Those with online storefronts and physical locations will hope to retain customers, no matter how they purchase. Those with online-only or delivery businesses need to predict upcoming churn and prepare media plans for both retaining customers and continuing to convert new ones.

Understanding these behaviors is even more critical in light of the changes to targeted advertising coming in 2022. Start getting a sense of the messaging mix now, so that you can deploy the right plan in 2022 when buying behaviors will likely be more predictable than they were in 2020.

Above all else, retailers shouldn't panic. The recent ad industry events aren't the end of effective online advertising - they are simply the end of the previous era. Retailers that take the rest of this year to pore over their data and better understand their customers, their campaign performance, and how to activate these learnings in the authenticated and unauthenticated digital ecosystem, should have no trouble transitioning to a new era.

Dstillery offers a solution for the post-cookie world called ID-free Custom AI. Please contact us if you want to learn more.