The retail evolution prompted by the pandemic has spurred an astronomical e-commerce acceleration, to the tune of 200-300 percent in growth over the past 20 months. But as the web continues to heat up, the new frontier for brands will be the battle over consumer privacy, which stands to upend marketing plans heading into the new year, according to the Interactive Advertising Bureau’s (IAB) 2022 Brand Disruption Report.
According to the group, which counts 650 media companies, brands, and marketing technology firms as members, 95 percent of brands have already begun changing their data strategies due to political pressures. States like California, Colorado and Virginia have passed comprehensive legislation limiting the ways in which companies can collect and use consumer data, and more are working to pass bills to a similar effect. Meanwhile, Google and Apple are increasingly giving users control over how their personal data is tracked, and by whom.
That’s an issue for brands and retailers, which have become increasingly reliant on these insights to target shoppers effectively on the web and through their mobile devices. According to IAB’s research, 73 percent of surveyed companies admitted to being somewhat-to-very concerned about the development of different state-level privacy laws, while 70 percent said they were equally anxious about the fact that Congress has not set comprehensive data privacy standards to use as benchmarks.
Sixty-five percent of respondents said they were worried about Apple requiring consumer permission for cross-app data tracking—a move that they believe could impact their ability to glean valuable insights from consumers’ mobile behaviors.
Their concerns are real—and the data tells the story, IAB wrote. Since being given the choice to opt into app tracking in April, just 15 percent U.S. Apple iOS users have done so. Meanwhile, as the online market becomes increasingly crowded, advertising costs are continuing to escalate. The group noted that lingerie direct-to-consumer Adore Me saw its CPM, or cost per impression, rise by more than 19 percent since the Apple iOS update.
Now, brand marketers are upping the ante when it comes to collecting first-party data, with 42 percent saying they plan to increase spending on collecting information directly from consumers via tools like email subscriptions, social engagement and tracking behavior on a company’s website or app.
“The media-retail cartel that limited the brands to which Americans were exposed and could acquire has been infiltrated and overturned by thousands of new brands, the limitless e-commerce shelf, millions of social media influencers, and a growing streaming-media persuasion machine that, contrary to conventional wisdom, favors advertising,” Randall Rothenberg, IAB executive chair and the report’s co-author, said.
Marketers’ advertising dollars will be increasingly allocated to media that offers a combination of social activity, entertainment and transaction facilitation. “That pressure is driving an advertising gold rush to streaming video,” analysts wrote, with 84 percent of ad buyers increasing spend on CTV, or online video advertising targeted to relevant content channels and audiences. Digital media like search, social, display, email and audio ads stand to drive 52 percent more ad revenue in 2021 than in 2019.
The fact that a majority of American shoppers are readily experimenting with new brands and embracing new modes of shopping bodes well for retail, but it also means competition is heating up. E-commerce is currently pulling in nearly $1 trillion in annual spending, IAB wrote, and online shopping stands to represent about one-quarter of all transactions in the next few years. And it’s not just standard click-to-buy driving web sales—the barrier between physical and digital shopping “is now completely eradicated,” the group said, with local delivery, click-and-collect, and BOPIS growing by 45 percent, 52 percent, and 125 percent, respectively.
Noting that the post-pandemic retail landscape is a “radically different world” for a multitude of reasons, the group’s senior director of research and analytics, Chris Bruderle, said that the “new reality is permanent.”
“There exists a ‘no-rest-for-the-weary’ competition for share among incumbents, disruptors and their marketing partners.”