How inflation and the end of cookies will redefine marketing and advertising success in 2023

Marketers must be increasingly aware of real-world impacts on consumers as fears of inflation and the persistent COVID-19 pandemic persist.

Coupled with the end of cookies, the economic and health-related realities that face consumers will likely require marketers to recalibrate their approach. The confluence of technological and worldly changes should drive marketers to use data and new technologies to their advantage.

In the latest Performance Media Report, Merkle reports that 85% of advertisers surveyed expressed concern about the impact of inflation. Combined with other economic considerations, inflation is a major worry for performance for the final half of the year.

A similar number (86%) indicated that the way they interact with customers has permanently changed due to the pandemic.

Inflationary pressures drive changes in consumer habits

The U.S. Bureau of Labor Statistics reported that inflation rose 9.1 percent in June 2022, an even higher increase than most experts had predicted.

Most consumers are likely not surprised. They see the increases at the grocery store and the gas station. Businesses are facing increased prices for labor, supplies and transportation. Supply chain issues exacerbated by the pandemic have meant items are often out of stock and prices are exorbitant. Crises such as the ongoing shortage of baby formula have led to frustration, fear and anger.

Prices are similarly increasing for online shopping. The Merkle report indicates that paid search continues to grow in year-over-year spend, with as many as 57% of advertisers reporting increases.

However, the increases are not across the board. For example, only 48% of retail marketers reported a year-over-year increase. The dramatic increase in online shopping in 2020 and 2021, coupled with inflationary pressures, are cited as the main factors in softer retail paid search spend increases.

Enterprises, be wary. The level of worry is higher among larger companies, with 91% of companies with annual revenue in excess of $500 million concerned about inflation’s impact. By contrast, 80% of businesses with less than $500 million in annual revenue expressed concern over inflation’s effect on their business.

The end of third-party cookies is factoring into advertisers’ approach

Google Chrome, Mozilla Firefox and other top browsers are shifting away from third-party cookies. The so-called ‘cookiepocalpse’ is forcing advertisers to rethink how they collect data and use it.

However, many companies are still dragging their feet when it comes to rethinking their approach to data. That’s a risky proposition that could be costly for companies that are also seeing consumers have to make hard decisions due to inflation.

Even before the extraordinary inflationary pressures, advertisers and marketers have begun to change their approach. That starts with a new emphasis on first-party data (provided directly by consumers). However, marketers must also focus on building transparency with their customers and using new technologies to reach targeted audiences.

4 Recommended approaches for success

We recommend several approaches to use when addressing the dual forces of inflation and the change in cookies.

1. Refine audience segments

While segmentation is nothing new to marketers, the dual challenges require a more refined approach. Consider asking what audiences will be most immune to inflationary pressures and which are most sensitive.

From there, define value propositions that will make your product, service or information most compelling to each newly developed segment. Test those assumptions and refine the segments, strategy and messages accordingly.

2. Acknowledge reality

For nearly two and a half years, consumers have been grappling with unprecedented challenges.

Messaging should reflect the financial pressures consumers are facing and the difficult decisions they face with both essential and discretionary purchases.

Speaking to consumers directly about what they are facing creates resonance. It’s an approach that acknowledges the challenges they are facing and meets consumers where they are today. When combined with discounts, coupons, rebates, expanded payment options, subscriptions and other cost-cutting measures, the messaging can have a deep effect on campaign outcomes.

3. Adopt new technologies for personalization

Machine learning, artificial intelligence and automation can enhance the work marketers do and stretch ad dollars further. That’s because these technologies can use data collected and shared by consumers to create more personalized experiences.

Consumers today expect personalized engagements with brands. The brand should know their history, preferences, needs and questions. That’s where technology can best use data to create personalized recommendations, next steps, customer journeys and smooth online and in-store experiences.

4. Stress transparency

Marketers should tout their approaches to data collection, privacy and use whenever possible. By being transparent and responsive to consumer concerns about their data, marketers can gain credibility. Authenticity matters more than ever when it comes to consumer data.

From clear-to-follow policy statements to easy-to-find options for data, marketers need to rethink how they communicate their approach to data.

The impacts of privacy, COVID-19 and inflation are inextricably intertwined today. Consumers are thinking and acting based on the combined impact of all three and other external factors that marketers admittedly can’t control.

However, what they can control is the way they empathize with consumers. Recognizing where they are and identifying how their products and services can help will go a long way to establishing stronger brand reputations and trust.