Looking Forward: Digital Marketing in the Age of Privacy

Digital marketing strategies have been upended by recent data privacy changes, forcing an existential shift for fashion brands once reliant on customer targeting tools delivered at scale by Silicon Valley tech giants. . Early iterations of third-party ad targeting, social media growth hacking techniques, loyalty programs and personalization have contributed significantly to the rise of digital marketing and e-commerce brands.

But a new era is upon us, and brands must rethink how they reach new consumers and engage with existing consumers. Instead of pushing content to pre-selected groups, as has been so effective over the last decade, the key now is to engage customers with the fast-paced creative flow of his campaigns. When brands have access to valuable first-party data, they can prioritize channels that can deliver a strong return on investment, build deep and long-term relationships, and foster community among customers.

The disruption to digital marketing strategy is the culmination of years of regulatory and technological change aimed at online privacy and security risks. With the EU General Data Protection Regulation and California Consumer Privacy Act (groundbreaking laws introduced in his 2016 and his 2020 respectively), users get more agency over their data I was able to. Meanwhile, Apple’s iOS 14 software update for him in 2020 allowed users to opt out of tracking across apps and websites. Also, as part of its 2022 privacy initiative, Google plans to end third-party cookie tracking in Chrome, which accounts for 65% of his web browser market share globally. Many consumers refuse to be tracked when given the choice. A McKinsey survey found that 41% of his users opted out of his cookies.

Customer acquisition costs skyrocketed as a result of tracking limits, rising an average of 70% on TikTok and 39% on the Meta platform. In 2022, advertisers spent approximately $29 to acquire each customer. Compared to $9 in 2013, these changes represent a new reality. Gone are the days of third-party digital targeting. Brands should find different ways to differentiate their marketing strategies, expand the use of social platforms beyond advertising at the bottom of the funnel, and focus on creativity and quality of customer experience.

Reaching Your Customers: Content Is King

Next year’s winners will embrace creativity and experimentation to stand out in the plethora of online content. The updated approach reflects some of the strategies from the golden age of advertising that ran from the 1960s to his late 1980s, when campaigns competed for creativity and quality to win audiences. But the Internet needs both a faster pace and a wider range of media, especially video used in multiple ways. The lifecycle of a digital campaign can take a user two to three weeks before the impact wears off with repeated visits.

To meet the escalating demand for digital content, brands are looking outside their organizations for creative development and dissemination. As such, influencers are already key partners for many fashion advertisers, with brands leveraging their content creation skills to reach loyal audiences. There is a possibility. The influencer’s spending on marketing surged from $1.7 billion in 2016 to $13.8 billion in 2021. There are risks involved, especially if relationships sour, or if the influencer becomes embroiled in scandal or controversy. However, for many brands, the rewards outweigh the risks.

In some cases, fashion companies are elevating influencers to a brand-defining role once reserved for Hollywood stars and supermodels. For example, Hugo Boss has signed a multi-year deal with TikTok personality Kirby Lame to serve as spokesperson for the global brand in 2022.

Publications also have a new role to play in the content marketplace, going beyond traditional display and print or old-school advertising. A customized feature, video series, or affiliate marketing link can validate your brand and direct readers to your ecommerce site. Brands can also tap into the publisher’s creative team to create sponsored projects. For example, his Highsnobiety in his publication Digital Streetwear and Luxury, he has partnered with Gucci in connection with his collaboration with The North Face. Released in early 2022, the video for the project featured TikTok star Francis Bourgeois. Zalando said when he acquired a majority stake in his Highsnobiety in June 2022, the e-commerce retailer would act as a “strategic and creative consultant” to help publishers expand their storytelling capabilities. I was.

In recent years, many fashion companies have taken advantage of TV streaming by partnering with productions to increase exposure. For example, Gucci has provided access to its archives and allowed the film House of Gucci, directed by Ridley Scott and starring Lady Gaga and Adam Driver, to be filmed at its flagship store in Rome, with news coming in the coming months. and his 25,000 posts on social media. The movie will be released in 2021.

follow audience

Fashion brands need to scrutinize their marketing strategies at the channel level to offset the decline in revenue from paid social and search channels. The greatest return on investment will be in channels that reach in-market customers further down the marketing funnel and channels that offer brands the opportunity to build direct, first-party relationships with their customers. is.

Over the last few years, multi-brand retailers have increased advertising opportunities across websites, apps, email, social channels, in-store aisles and displays. Following Amazon’s advertising strategy, players such as Target and Ulta Beauty have rolled out “retail media networks” in the United States. RMN also allows brands to access retailer first-party data for closed-loop reporting. This allows brands to report on the effectiveness of their advertising throughout the customer’s journey, from viewing an ad to purchasing a product.

For many fashion companies, advertising by retailers is more efficient than other forms of performance marketing. Nearly 80% of apparel and footwear executives who responded to a recent survey reported that their advertising performed slightly better or significantly better on RMN than on other marketing channels . Spending on these networks, including Amazon, is expected to reach $100 billion by 2026.

Another rising marketing channel is the Metaverse virtual world, from games to immersive social environments. Although the space is less developed than RMN, the potential audience is growing and very enthusiastic. This allows brands to create a first-party relationship with their customers.As of August 2022, online gaming platform Roblox had nearly 60 million daily active users, up year-on-year. is up 24% in 2020, leading brands like Vans to launch virtual worlds on the platform. Any brand that chooses to pursue a project in this area must be disciplined to ensure that activation is not his one-off project.

On the other hand, blockchain-based web3 technologies such as non-fungible tokens can be deployed to build communities. Several brands have experimented with his NFT collection, including Adidas’ “Into the Metaverse” NFT and Prada’s “Timecapsule” NFT. Brands will find that the most effective web3 and metaverse projects provide value and usefulness to their users. Create stronger brand affinities, for example rewarding users with exclusive access to gated products and experiences.

Customer relationship and community innovation

Once a customer makes a purchase, brands should focus on building relationships, including considering how best to use customer data. A privacy-first world creates short-term challenges, but brands that build transparent and mutually beneficial relationships with their customers are well-positioned to realize significant long-term returns.

Not all customers are against allowing brands to access their personal information, even though the data-sharing environment is becoming more restrictive. According to a recent survey, more than 50% of his customers say they are more likely to share their data if they trade something, such as discounts, sizing advice, or personalized product recommendations.

Brands can incentivize customers with values ​​and services such as personalization while protecting customer privacy. For example, by using data to improve the customer experience, brands can combat rising online return rates by providing accurate sizing recommendations. This is especially important for the fashion industry at a time when 15% of returns for online purchases are due to “brackets” (the practice of consumers ordering the same item in multiple sizes and colors). Strengthening your loyalty program can also bring meaningful benefits. Nearly two-thirds of US consumers who are satisfied with loyalty programs say they are likely to make more frequent purchases.

Customer data also helps with product development. When a skincare brand partnered with retailer his RMN, through analysis of RMN’s data, he discovered that consumers were interested in Korean skincare routines, and developed a product line to attract that customer’s interest. launched.

The reward for brands that build trust-based, mutually beneficial relationships with their customers is a growing community around them. For example, loyal customers can influence others by creating user-generated content. This can be seen with Gymshark’s community of fitness enthusiasts posting tons of user-generated content on his social media showcasing the products of the British sports apparel brand. Gymshark nurtures this community with a dedicated ‘real life’ team who meets members at her offline events.

new way of working

Winning in the fast-paced, customer-centric world of marketing requires an agile way of working. By bringing together a cross-functional team of marketing, product, brand, sales, analytics and insights, brands can quickly iterate on effective creatives, channels and customer experiences.

Brands must invest in technology to ensure the success of this new approach. Investments include data such as customer relationship management software and digital asset management software that maximizes the value of existing content by enabling brands to edit existing material from their content library and re-edit it into new formats. system may be included. By investing in a centralized dashboard that monitors campaign impact, brands can make faster, more informed decisions to continuously improve the customer experience.

This article first appeared on State of Fashion 2023is an in-depth report on the global fashion industry, jointly published by BoF and McKinsey & Company.