What retailers need to know about the looming ‘cookiepocolypse’

As highlighted in recent PwC reports, key tools that retailers have used for a long time to engage in online marketing and advertising are going away soon. This includes Google’s decision to phase out third-party cookies and Apple’s recent announcement that it will require user consent for third-party tracking by apps on Apple devices.

These and other tech sector actions have collectively been described over the past year as the “cookiepocolypse.” We spoke with PwC partners Brett Croker and Toby Spry to learn more about what retailers need to know.

What are the critical things retailers need to understand about this shift?

There are three key things retailers need to understand with respect to the tectonic shift we’re seeing:

1. They will no longer be able to rely solely on third-party cookies and identifiers for advertisers to target and personalize advertisements.
2. The absence of universal tracking across multiple platforms and devices could lead to fragmented data and view of consumers.
3. Many retailers will need to evaluate impact and potentially rethink their privacy, data and marketing strategies right away to prepare for the near future and avoid falling behind their competitors.

How do retailers need to adjust how they use customer data? For retailers with loyal customer bases, is there an opportunity to turn this shift into a source of competitive advantage?

The pandemic already posed a significant challenge for retailers and forced many to enable new digital and mobile experiences and related marketing strategies to sustain business. In some cases, those who responded promptly emerged even stronger after homing in on and investing in these experiences which, in turn, led to greater consumer engagement and increased ecommerce sales. For example, some retailers’ digital sales growth surged higher than 100 percent during COVID-19 after doubling down and continuing to invest in digital.

We’re now seeing retailers simultaneously take on this next challenge — how to establish a resilient consumer data pipeline to continue fueling better consumer experiences and ultimately business revenue. It’s not a gradual shift, but in many cases a race to get ahead and turn this challenge into an opportunity to accelerate their business and data strategies, and differentiate themselves from their competitors.

Retailers must not only continue to focus on how they leverage and use consumer data to unlock more value from it and fuel better, more personalized marketing and shopping experiences for their consumers, but also how they can optimize collection of this data in the first place. There is not a one-size-fits all approach to this. Companies must consider the impact of this tectonic shift and determine how viable their current data strategy is.

In many cases, companies will need to strengthen their first-party data strategy, as well as explore other methods of data acquisition such as third-party data brokers and development of data consortiums via new business partnerships to supplement first-party data in a cookie-less world.

One common and understandable concern as companies begin to refine their strategy is the perception of a push / pull relationship between innovative consumer experiences and privacy concerns related to data collection and use.

There’s a mistaken sense that companies have to choose one or the other and potentially leave opportunities on the table or — worse yet — pursue data strategies that overlook the privacy concerns of their consumers. Companies that are able to bend these challenges into a competitive advantage will see past the false dichotomy of privacy versus innovation.

How should retailers organize themselves internally to address these questions?

In developing a viable go-forward data strategy, retailers will not only need to think about where and from whom they acquire data, but also investments in technologies (e.g., consumer identity and access management platforms, consumer data platforms, identity graph / identity stitching and other marketing technology), as well as other internal capabilities such as data governance and analytics, privacy and data protection, and consumer identity matching to enable it.

This becomes exponentially more important if you are a multi-branded company with a decentralized approach to data collection, management and use.

It will be critical that retailers assess and consider the resilience of their current data pipeline and make new investments where needed to implement their data strategy. As part of this, it will be important that retailers understand consumer personas and journeys to identify key points of interaction and data collection, as well as map out how data is used now, its source, how those sources of data may be disrupted and the value of that data. This will help inform and focus future efforts and investments.

As for who needs to be involved, it is very much a cross-functional effort. Consumer data touches many areas of any retailer and drives the overall business strategy, and so it’s important to bring together all the key leaders early on. This might include, for example, technology, marketing, privacy, information security, data analytics and data governance functions. No single function is at the helm in addressing this challenge — collaboration will be key.

While more companies move to appoint a chief data officer to help steer the ship — and some have even established a formal data office to help coordinate cross-functional teams and drive the strategy — there are alternative ways retailers can go about this if they’re not ready to appoint a CDO.

For example, some are establishing a cross-functional committee inclusive of other key executive leaders and decision-makers such as the chief marketing officer, chief analytics officer, chief technology officer, chief digital officer, chief privacy officer and/or chief information security officer to remain aligned on data strategy initiatives and important decisions and secure executive leadership buy-in on mission critical investments.

What steps should retailers take to ensure that any adjustments to their data and marketing strategies do not create new privacy risks or concerns with respect to customer trust?

While continued investment in consumer experience and more personalization is important, another key variable in the data strategy equation is trust. It’s one thing for a retailer to roll out a new mobile app, rewards program or digital shopping experience with a focus on enabling an easier and more seamless and rewarding shopping experience. However, privacy and transparency around consumer data use is equally as important to consider.

Privacy is key to building trust with consumers, and ultimately getting them to opt in to the collection and use of their data in the first place, and subsequently thereafter, so retailers can continue to leverage this data to unlock value and provide a superior consumer experience over time as the consumer progresses through different life stages.

Companies should look to optimize the privacy consumer experience across key points of interaction in the CX. This includes, for example, considering and addressing the user experience with respect to privacy notices, consent collection, privacy preference management and data subject rights , as part of overall CX design.

Retailers should look for and seize opportunities to make the value-exchange for data very clear to the consumer — in order to convert more opt-ins and enable the consumer to do so with more confidence knowing that their data will be handled appropriately and used to their benefit.

Many consumers are already skeptical about retailers’ use of their data (particularly with respect to digital marketing and targeted ads), and are only continuing to get smarter about their rights to privacy (as laws continue to pass globally and privacy becomes increasingly more consumer-facing).

As retailers move to develop and deploy more digital and mobile offerings to engage with consumers and keep up with their demands, they must make sure privacy is embedded in design from the start to maximize the return on this investment. When in doubt, remember to put the consumer first — understand the various personas you may interact with and put yourself in their shoes using empathy to drive design of a better PCX.

As this shift is happening, many types of consumer data are continuing to expand — including from mobile apps, from Internet of Things devices in homes and stores, and from social media applications. How can retailers think about leveraging these and other emerging data sources to improve their customer engagement?

Companies should look to (if they haven’t already) map out and understand the data they collect today, how it’s used now and where it’s sourced from. In doing this, not only will they have a more holistic view of their data environment and how it’s impacted by the tectonic shift we’re seeing, but they can better assess overall data quality and identify opportunities to leverage existing data sources in new or innovative ways to drive more value to the consumer and the business.

Not all data is created equal. It’s important that retailers understand where the various types of data they have fall on the data quality spectrum — and where needed, seek out new sources to obtain better data and ultimately better consumer insights to improve marketing and broader business strategies.