CPG brands have always struggled to understand exactly who is buying their product because they don’t actually have purchase data—they have traditionally relied on third-party data sources and partners for that information.
CPG marketers have been all too familiar (and likely frustrated) with this for years, and the recent trend of third-party cookie deprecation makes things all the more challenging. Our recent research shows that 67% of CPG marketers say their no. 1 concern regarding third-party identifier deprecation is performance efficiency/ROI.
Whether they use syndicated purchase data, aggregated loyalty card data or opt-in panel data, each data source will have visibility into one dimension of an individual—their shopping at one or a handful or retailers. But activating that data efficiently and effectively across marketing channels requires excelling in a technology many brands are only just beginning to adopt: identity-based marketing.
Identity-based marketing is the ability to accurately and anonymously connect all data points around individual consumers, activate it for campaigns and measure campaign success on the individual level.
When identity-based marketing is done right, CPG marketers can efficiently reach their most qualified audiences, serve them the right message at the right time and measure it all to see what really worked. But it all hinges on getting identity right at the beginning; if quality identity solutions aren’t at the foundation of your CPG campaign, every step of the campaign will falter moving forward.
So let’s cover a few things here:
- Why it’s crucial to get identity right and what actually goes into good identity-based marketing.
- How good identity-based marketing will help your CPG brand reach more of the top audiences in your third-party data set.
It all starts with identity
Let’s tackle the first point by starting with how most CPG campaigns have traditionally started:
- A brand develops their creative idea with a target audience in mind, building an ad or a few ads that they want that audience to see—e.g. buyers of frozen snacks.
- They purchase that audience from a third-party dataset like NCS or IRI.
- They match that anonymous list of frozen snack buyers to profiles with a DMP or onboarder, layering on other attributes like age, gender or location.
- The brand brings those profiles to a DSP to activate the file, where they to try to find the individuals online across devices and reach them with ads.
- After the campaign has run, they’ll use the same third-party dataset they started with to work out who actually purchased.
The real issues start at step three, where they try to match the third-party list with actual people. The challenge here is that most vendors in the space are not identity-based (even if they say they are)—they’re actually cookie- or device-based. And, again, third-party cookies are on their way out.
What they have considered traditionally as a “person” is often a cookie or a device, which generates a ton of waste when the DSP serves eight ads each to 18 “people,” who are really just one person on three devices with six cookies per device.
In reality, that’s one person who saw the same frozen snack brand’s ad 144 times. And good luck trying to work out how many of those 18 cookies bought your product.
This is just one example of bad identity-based marketing, and it’s been, unfortunately, rampant in digital marketing.
Good identity needs to start and end with five core components: recognition, reach, accuracy, persistence and privacy. It’s a lot to dive into in a single blog post, but we put together a guide on identity-based marketing that details the importance of each piece, what to look for when selecting identity partners for your digital media and key questions to ask. I strongly recommend reading through it, as well as other identity resources on our site for more information on what best-in-class identity-based marketing looks like.
Interested in learning more? Download our e-book: 5 building blocks of identity management
How good identity helps you get more out of your third-party data
As established earlier, CPG brands have traditionally almost always activated a purchase-based audience from a third-party provider like NCS or IRI. You’re probably familiar with the fact that these lists are sorted by propensity to fit the audience, also known as a confidence score.
If we look at the process outlined at the beginning of the last section, step three is again where this can become an issue for CPG brands.
As a marketer, you would want to reach all the people at the top of that list, or those that are highly likely to have purchased a CPG product in a similar category to what you’re trying to sell them.
In a typical campaign activation process, that list of qualified prospects moves through a lot of hands:
- First, you see how many people your DMP can match from that list. For purposes of this example, let’s say there are 210 million individuals in a given data set, and your DMP can match 60% of them, or 126 million people in that list.
- Then you bring that list of 126 million people to the DSP, and they can match 40% of that list, which brings your number to 50.4 million people.
- In total, you can now only reach 50.4 million people from your original list of 210 million, or only 24% of that total group from NCS or IRI.
This forces brands to include more of the medium to low prospects in their campaign because of identity resolution issues.
But, if you have strong, people-based identity, you can stick to your top prospects, as in the "quality identity resolution" graphic above.
This approach allows you to reach more of those high-confidence audience members as opposed to needing to expand the pool to people with lower confidence scores. These people are more likely to want or try your product, which will make your campaign that much more effective overall.
If you want to get identity right as a CPG marketer, you also need to make sure that your partners meet measurement feasibility requirements. You should know what percentage of your audience segments your partner can match and reach in the digital world—and what percentage of them can be matched back to retail transactions for test and control measurement. The larger the measurement sample, the higher the confidence in reported campaign results.
As a marketer, you need to be informed on what good identity-based marketing looks like—you can’t just take your partner or vendor’s word on these things. Do your own research and ask probing questions of all your partners. In the end, your brand can’t afford to be wasting budget on campaigns with fixable problems.
Everything comes back to better identity. The more accurate your identity-based marketing is, the more you’ll get from your third-party audience buys.
Want to learn more about how you can improve your identity-based marketing strategy? Download our latest guide, 5 building blocks of identity management.