To keep their customers, traditional brands must emulate DTC players

Over a few months, consumers skipped years ahead in the trend toward shopping online. For example, online grocery shopping has grown 54.0% in the U.S. since the start of the COVID-19 crisis, according to Nielsen.

Many of those people shopping from home are sticking with brands they know, but well more than half said they’d tried new ones, finds a study cited in MIT Sloan Management Review. And brands are responding fast, increasing spend with online retailers to display their products and services in relevant ad units.

Brands also now have an excellent opportunity to solve an even more significant long-term challenge: the demise of the third-party cookie in less than 18 months. To prepare for the absence of those signals passed by browsers, and further hindered by new privacy regulations, brands now need to gather and use first-party data to build direct relationships with their customers.

Every brand, from pet care to cleaning products, fast fashion, and food, knows at least something about its consumers’ behaviors and can offer enticements and information that helps people navigate their lives. They can strengthen the emotional connections people feel for the brands they know and often love.

For years, direct-to-consumer (DTC) brands have done just that, tapping the power of digital technologies to introduce themselves, find customers, engage them, understand their wants and desires, optimize messaging, improve products, and hone customer service. And while traditional brands are increasingly moving into online commerce, to maintain their retail dominance, they need to go further mimicking the best practices of the newer, digital-first upstarts.

CPG brands hold market sway, but rely on retailers

Traditional brands still have substantial competitive advantages such as brand recognition, ubiquitous availability, and consumer trust. As strong as top DTC brands may be, most have but a fraction of the market sway of major consumer products sold through retailers. That’s one reason successful DTC companies like Native, a personal hygiene products company, have been acquired by larger competitors and partners.

Unlike DTC brands, however, many traditional brands are deeply integrated with multiple retailers who account for the bulk of their sales and own deep relationships with customers. Traditional brands need to develop new touchpoints, use them to enrich their first-party data, then weave those strands into a richer relationship fabric by honing touchpoints to make them more effective over time.

Many are on the way. The Procter & Gamble Co. in May launched a cause-marketing program called Good Everyday that gives consumers reasons to register and integrate their online identities with purchases of products they buy in return for rewards points, education, and games. Consumers earn the chance to win prizes for themselves while applying their points to worthy causes they designate, such as meals for the needy and aid for endangered animals.

Other brands are using Instagram and other social media to encourage consumers to offer their contact info. Some use interactive creative elements they place through programmatic channels that let consumers enter contact info or social media handles.

Because of their size, sales volume, and marketing spend, most traditional brands already have substantial data sets, often around audience segments built from third-party cookie data. By now building out their first-party data on consumers and employing artificial intelligence and machine learning to match and optimize it all, they can gain a further leg up. Sophisticated CRM systems will help them understand how consumers navigate websites and apps, what inquiries they are making, and what actions they take online and in the real world.

The moment accelerates the need for engagement

A cookieless world doesn’t mean the end of targeting. It just means that brands and the partners working with them can’t target people based on third-party data garnered from browser sessions. We can still reach out based on email addresses, phone numbers, via logged-in platforms such as Facebook and YouTube, through messaging platforms and SMS texts, and via other channels. With that kind of deterministic data, brands can then glean strong and valuable signals about consumers to build and deepen loyalty. The brands that don’t could soon find their customers wooed away.

This intense and challenging moment has accelerated the impetus for traditional brands to prepare for the cookieless future. They need to crack the code of how to gain direct access to consumers. Then they can match their first-party data with their unparalleled scale to more efficiently find and engage customers, and solidify their strength far into the cookieless future.

Originally published on Digital Commerce 360