How can Pepsi enhance first party data collection?

First, why should Pepsi or any other firm collect first party data? What is first party data?

All companies need to market their products to consumers like you and me. They have to do it wherever we are present — TV, road, radio, Instagram, Twitter, Tiktok, email, websites. While advertising on TV, road and radio creates awareness, advertising online helps brands reach relevant customers. To reach these relevant customers online, until a few years ago, companies of all sizes mostly relied on (drum roll, please) 3rd party cookies.

Wait… what are 3rd party cookies and what’s happening to?them??

Let’s say you visit a shoe website, look for a nice pair of shoes and then leave the website without completing the transaction. Wherever you go on the web, you keep seeing ads for those shoes. Annoying, isn’t it? This is accomplished by using 3rd party cookies which get stored in your browser. As you can imagine, this is not very privacy friendly and borders on spying. So, customers started using ad blockers and are increasingly concerned about privacy online, especially after 2016.?

Privacy? That’s Apple! The most valuable firm on Earth found an opportunity here and positioned itself as pro-privacy. Not only that, Apple started to tighten the noose around 3rd party cookies step by step from 2017 onward which culminated in blocking 3rd party cookies by default on its Safari browser in March 2020 (the beginning of cookie apocalypse or cookie death). Other less popular browsers such as Firefox and Microsoft Edge have also blocked 3rd party cookie tracking. If you are wondering, no — GDPR didn’t play any role in this saga.?

All companies collect data about your behavior on their website (and app) and this is called first party data

Safari browser controls close to 25% of mobile browser market in the world. This figure varies wildly from market to market and even from company to company. In the US, Safari is used by 55% of the population as of December 2021. To know what percentage of your company’s web traffic is coming from Safari, if you’re using Google Analytics, simply search for browser in the search bar and you’ll get the answer. Prepare for a rude shock!

What about Chrome? Also retiring support for 3rd party cookies in 2023?;-). Wonderful!

OK, so 3rd party cookies are dying. Then how can brands serve relevant ads to customers online? Just spray and?pray?

A few companies are well placed to mitigate the effect of the cookie death. Think e-comm, travel, food aggregators, fintech. You have to login to these websites / apps to complete the intended transaction. As a result, these sites collect data about your behavior on their website (app) and this is called first party data.?

Before we go further, let me make this clear. Having tons of 1st party data doesn’t guarantee protection against cookie death. Having 1st party data and having a 1st party data strategy are two different things and requires a lot of internal change (aka digital transformation). Companies that have a data strategy then use tools such as CDPs (Customer Data Platform) to target relevant audiences on different digital channels (search, display, social, etc) and do much more than that but that would require a separate write up!

Having 1st party data and having a 1st party data strategy are two different things

Sadly, several industries don’t (or can’t) collect customer data as a function of their business model. Think consumer electronics, FMCG (Fast Moving Consumer Goods) companies such as Unilever, P&G, Henkel, Coca cola, Nestle, etc. which have to cater to customers but have no way of knowing customer purchase behavior as they don’t directly sell to customers.

With 3rd party cookies dying, these companies have been following some interesting workaround solutions:

1. Partner with publishers – most news and content websites require you to login to their websites, right? They then collect your site behavior data and store in their systems. What FMCGs are trying to do is — they are partnering with the content publishers and using this 1st party data collected by the publishers. This is called as 2nd party data because they are using the 1st party data of somebody else. Some firms are even exploring a more advanced variation of this concept called “clean rooms” which you can read more about here.
2. Launch their own e-comm websites: FMCG companies are launching classic e-commerce websites. Some of them have highly engaging websites. Check M&M’s website and get a personalized M&M with your face (or any nice picture) printed on it (applicable if you’re in the US). While this is an interesting idea, the key question is — are customers willing to wait for 1 to 2 days to receive a shampoo or a can of Pepsi?
3. Conduct events: offline or online events where interested customers show up for dedicated fan events, giving these firms a treasure trove of highly engaged customers’ data.?

The downside? All are conventional methods and everybody is doing it (okay, except M&M’s — I loved it).?

Let’s answer the question which is the title of this article – how can PepsiCo enhance it’s first party data collection? What can they do differently? Let’s start with their website – what are they doing right now?

Enter Pepsi’s official website and you are greeted with one of the blandest pop-ups that ever existed on earth called “sign up to receive news and offers”. This message is even more cliched than “If I had a dollar” phrase. I signed up anyway and received an email which redirected me to the website. Duh!?

Apart from the obvious such as making this pop up more engaging, identifying more opportunities on their website to collect customer data and whatnot, the brand has to do something to make customers visit their site, as a first step. After all, what’s the point of writing a killer copy to make anyone submit their email address if nobody bothers to visit your site in first place?

Here are two never tried strategies that Pepsi can adopt in order to bring customers to its website:

Build Pepsi-verse: All of the PepsiCo’s products have barcodes (and can have QR codes). Most consumers have smartphones and an internet connection. So, how about explicitly asking customers to scan and register on the Pepsi website and participate in a weekly draw where the top consumers of its products get expensive gifts? Nothing motivates humans like the expectation of big rewards — same reason why lotteries have never failed to attract crowds. Then, gradually let these users post about their wins or plain consumption / recipes on different platforms, including the ‘Pepsi-verse’, which is just a fancy term for building a community of PepsiCo aficionados by using the power of connectivity. An Instagram like community built exclusively for the fans of PepsiCo. Think about the upsides — PepsiCo will know how often its customers consume its products and why, in real time. Of course, the Pepsi-verse community can have different levels to distinguish fans from the rest, treat the fans to special events — all of this to collect valuable first party data with consent, which is shared willingly by its customers.?

If this sounds outlandish, then let me tell you what Adidas did to collect 1st party data of its customers: Install and register on their app and get flat 20% discount on ALL items. This means if you made a purchase for USD 2000, you get a USD 400 discount. In other words, the firm would have paid USD 400 to acquire one customer’s email ID. Let that sink in! No, I don’t imply that Adidas is paying USD 400 for every email it has acquired. It’s an extreme case where the user spends USD 2000 in one go. But their average order value is USD 71, which means that the average cost of acquiring one email ID is only USD 14. Sweet deal!

Some of you are thinking, “But is it even scalable for Pepsi? It’s just one product!”. No. They have 22 brands listed on their official website?:-).

Build or partner with games: PepsiCo’s products are present in the day to day everywhere. So, why not integrate them into games as a product placement and let users choose or buy one of PepsiCo’s virtual drinks, chips or cereals in the game environment? If the firm can get its hands on these customers who are simply buying PepsiCo branded virtual stuff, this will help to tap into a customer segment which is still forming habits and preferences as 60% of gamers are under 34 with 20% under 18 ??.

Of course, nothing stops PepsiCo from building silly games on its verse or letting users redeem the rewards / points gained on the Pepsi-verse by using its products in other areas (use the points to unlock new avatars in games, or simply shop on different sites and redeem points).

Bonus - giveaway packs to customers in the supermarkets in exchange for their email ID ;-). Pepsi already does such promotions in stores from time to time by giving free food to interested customers and asking them to try it at home. Why not just add one more step to the process - by asking them to sign up in return for getting free food?

Wait… doesn’t all of this sound a little too desperate? can’t brands do without collecting first party?data??

Let’s imagine that a firm doesn’t bother to collect any first party data. What are the consequences??

By not collecting any first party data, the firm will be continuing to rely on 3rd party data to reach customers. Here is the thing I haven’t spoken about so far — 3rd party data is infamous for its dubious quality. I have personally analyzed and weeded out bad quality ad suppliers for my clients. In a recent blog post, Bob Hoffman stated that out of a dollar you spend on programmatic advertising (which is industry jargon for display ads and they rely 3rd party cookies), only 3 cents worth of ads are actually seen by people. I strongly recommend reading the article to get a better understanding (and don’t forget to subscribe to his weekly newsletter).

Apart from wasting a ton of money on dubious ad suppliers, the firm will also lose out by not knowing its customers. The purpose of a business is to serve customers. If you don’t know who your customers are, then how can you serve your customers well and grow your business?