Digital Changes Coming Ahead for Marketers and Consumers

The digital landscape in marketing and e-commerce is fluid and evolving continuously. In the meantime, the patterns and habits of consumer shopping behaviour also keep changing. Most notably in recent times, consumers were driven to modify their shopping behaviour due to restrictions imposed during the course of the coronavirus pandemic. However, consumers have had to adapt to broader developments in their environment (e.g., economic, political, technological) in just the past three years, during and following the pandemic. Technological-digital practices of companies on the one hand and consumer shopping customs on the other hand have been shifting and evolving concurrently — both were being directed by conditions set by the pandemic, but also the companies and consumers have been responding cyclically to the changes undertaken by the other party.

Business media and reports suggest that COVID-19 triggered the acceleration of digital transformation in many companies, pushing them to implement newer advanced technologies earlier by at least two to five years. Implications could be seen in different sub-fields, particularly noteworthy to mention here are applications of artificial intelligence (AI) and improvements in personalisation, where these two developments are interconnected (i.e., AI-enabled enhancements of analytics and forms of persoanlisation implemented).

On the consumer side, shoppers from different segments (demographic and psychographic) have moved during the pandemic to use online channels for purchasing (ordering) products more frequently and in a wider array of product categories, joined by ‘new entrants’ who have started to buy products online, which they had not considered doing before. Many consumers seemed to be happy to return to brick-and-mortar stores, restaurants and other retail venues once the businesses reopened their doors to customers. Yet, shopping will not return to be the same as pre-pandemic — rates of online purchases are receding from their peak during the pandemic but are likely to remain higher than earlier levels.

A distinct split could emerge between consumers who stick to shopping customs adopted during the pandemic (e.g., younger, more tech-savvy — greater willingness to make use of online ordering and deliveries, such as from restaurants and food stores), and consumers who prefer going out to visit stores, restaurants and other venues while restricting their online purchases to essentials (e.g., more accustomed to traditional shopping, less digital-oriented — using online channels when it is clearly more convenient or advantageous to obtain products this way). But for now, consumers may have simply not decided yet how to continue forward. Thus, US consumers mostly (75%) try to do both, combine (again) between online shopping and shopping in physical retail establishments — they seem to use digital channels more than before the pandemic, following up on habits they adopted during that period, yet increase once again their spending in brick-and-mortar stores they return to visit (McKinsey & Company, Consumer Pulse Survey: US Consumer Spending 2022, 4 May 2022).

Adobe and research firm Econsultancy classify companies into three groups: Leaders, Mainstream, and Laggards. Their classification is based on measures of five aspects: agility in responding to opportunities and disruptions; innovation; collaboration between marketing and IT; talent development & training; and ensuring diverse and inclusive teams (ratings self-stated by respondents in managerial roles). The study examined barriers experienced internally by organisations to their marketing or customer experience performance. The barrier that stifles the marketing organisation of both Mainstream and Laggards more considerably than among Leaders is poor integration between technology systems (Laggards 50%, Mainstream 42%, Leaders 24%). Laggards fall more strikingly behind Leader as well as Mainstream companies in lack of digital skills or capabilities (Laggards 50% vs. Mainstream 31% & Leaders 20%), and in lack of innovation (Laggards 47% vs. Mainstream 24% and Leaders 14%).

• Digital Trends Report 2022, Adobe & Econsultancy: The survey was conducted in late 2021 (Q4) among a sample of ~6,600 respondents drawn from lists of these two firms and ~2,900 third-party panelists for a total of nearly 9,500 respondents. The sample included ‘executives’ and ‘practitioners’ (all in managerial roles from most senior to intermediate levels), the majority being client-side marketers (65%), with the remaining respondents from agencies, consultancies and marketing technology vendors or service providers. The sample was global, comprising respondents from companies in North America (43%), Europe (39%), and Asia Pacific (15%).

Another factor of importance is deficiency in access to customer insights. While the differences between the organisation groups regarding the barrier of lack of customer insights are less salient (34% compared to 20%-24%), the authors emphasise yet the criticality of access to customer insights for performing many activities in responding promptly and effectively to preferences and expectations of customers. For example, Leader practitioners report having more significant insights into journeys of new customers and stronger access to insights across the marketing organsation than practitioners from Mainstream or Laggards (the differences on insights aspects are more substantial: Leaders ~50%, Mainstream ~20%, Laggards ~5%). The gap between organisations appears to be in scope and sophistication of analysing data obtained by the organsiations rather than collecting the data. Furthermore, there is a gap in leveraging AI for improved persoanlisation between Leaders (29% consider using AI), Mainstream companies (19%), and Laggards (13%).

Pesonalisation is based on the principle that consumers allow a company to collect and use certain types of information about them and their behaviours in return for receiving a more personally accommodating treatment, that is better fitting their interests and preferences (e.g., through message content, product offerings and recommendations). This kind of common understanding should be easier to maintain in a relationship between a company and its active or existing customers than with consumers who are potential or prospect customers from the wider public. As a means to support it, the practices of personalisation are governed or moderated by regulations (e.g., European GDPR) and agreements on privacy policy and terms of service presented by companies to users of their digital platforms.

Personalisation is dependent on the flow and accessibility of consumer data to companies. However, accessibility or the right of companies to use consumer data is gradually getting more restricted. This applies primarily to data on consumers who are not recognised as active or existing customers of a company. Limitations on use of data concern, for example, occasional, uncommitted visitors to websites of companies (i.e., they are unidentified or not known to be in any relationship with the company). Visitors to many business and commercial websites are likely to encounter on their entry an interactive ‘box’ in which visitors-users can state how they would like to treat the use of data-tracking ‘cookies’ whilst browsing the website: accept all, accept specific types of cookies, or reject all (beyond functional essential cookies that are said to be mandatory). (Note: Some websites require a full or partial affirmative response, others allow the visitor to decline or ignore its statements on cookies, but how companies interpret the latter reactions and what they actually do in these cases is unclear.)

Visitors may be more willing to allow performance cookies (who would not want the website to work properly and let one benefit from the most of its features and convenience?), or cookies aimed at statistics of traffic data and aggregate patterns of website usage; that is where the user can help out the company, which may use the information for designing future improvements. Functionality cookies already offer the convenience of more advanced features that apply personalisation techniques (e.g., organising content to better accommodate consumers’ browsing habits, as in an online store, for improved experience). The more contentious category of cookies is meant for marketing or targeting purposes. In that category, consumers-visitors might also treat differently cookies used strictly for marketing of the company owning the website and third-party cookies designated for advertisers or partners of the company. Consumers should not object, and could even enjoy, if promotional content more relevant to them appears more readily visible (e.g., higher on a page) and more interesting offerings are displayed. They may also be pleased to receive e-mail newsletters that are personalised to better fit their preferences and behaviour. However, accepting the benefits of any personalised activities is contingent on the level of relationship the consumer-visitor wishes to have with a company. Allowing third-party use of cookies is much more in question, considering for instance where the visitors would be willing to receive messaging from those third-party companies (e.g., by e-mail, on their social media account).

There can be material difference between a visitor logging-in to a customer account and any occasional visitor. Yet. even for a recognised customer, not every use of personal information may be permissible or legitimate. The customer should be able to discern the benefit gained, appreciate it, and consent to using his or her information for that purpose. This should moreover apply to mobile apps, where a certain level of formal relationship is set in place when the app is downloaded and installed on a smartphone or tablet. For example, Apple already limits the ability of apps to collect usage data on its devices which is not associated with the use of the app per se, and it gives iPhone and iPad users more control over the information an app can access on one’s device through its settings. In the domain of Internet browsers, Google declared it is going to disallow the use of third-party cookies on its Chrome browser from late 2023 (it has also set a new policy, “helpful content update”, for restricting manipulative use of SEO techniques on website content that attempt to trick its search engine).

Dramatically constraining, to the extent of fading out, the use of third-party marketing cookies, should be expected to considerably limit the customer acquisition practices of companies relying on those cookies; many companies do not seem to be prepared for these upcoming changes in rules of the game. It would bring issues of data collection back to the front. Firstly, according to Adobe and Econsultancy, it will require companies to rely more strongly on customer retention and enhance their retention methods thereby (Digital Trends 2022). Additionally, it may be anticipated that companies will have to improve their tactics for acquiring new customers on their own platforms, and also establish new forms of collaboration with operators of external platforms to reach new customers. These changes in approach could have significant implications for social media networks where practices involving third-party cookies and advertising remain vague and not transparent enough.

Trust between a company and its customers is a cornerstone for enabling successful personalisation activities. It is an asset that companies have to foster and handle most carefully. Adobe and Econsultancy present the role of trust lucidly as follows: “The fragile social contract between customers and businesses relies on more than just excellent data protections. Businesses must earn customer trust as a condition to sway them to exchange personal data in return for greater value brand relationships” (Digital Trends 2022, p. 13, boldface added). Businesses should prove in their conduct that they deserve the trust of their customers irrespective of and beyond any formalistic measures used to ensure fair conduct.

The digital landscape is in motion, introducing ever new challenges to businesses in a never abating competitive environment. Consumers neither stay still and modify their behaviour as they identify new opportunities for them. Businesses need to upgrade their capabilities, such as in delivering personlistion, to remain competitive, and be prepared to adjust to changes in rules of the game. Consumers should be prepared to spend the time and take advantage of the options given them for having better oversight of how their personal information is being utilised and what benefits they can expect to receive in return.