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How your brand can shift the power dynamics in 2023 

CPGs and retailers have always relied on one another. Stores provide crucial distribution channels that help brands reach their target customers, while CPGs offer exciting products that drive sales and in-store traffic for retailers. Historically, the relationship was always symbiotic, with both parties needing the other to thrive. But recently, this dynamic has changed.

Nowadays, major retailers dictate the terms and conditions of these partnerships, leaving CPGs with increasingly limited options for growth. This shift in power dynamics has resulted in a challenging landscape for CPGs, who are forced to find new ways to reach their customers and build their brands. With the scales tipped in the Tier 1 retailer's favor, here are three potential growth opportunities that CPGs can pursue right now: 

1. Expand Direct Relationships With Your Customers

The current power balance between Tier 1 retailers and brands has made direct-to-consumer strategies even more important for CPGs. Emphasizing DTC allows brands to be more flexible with pricing, create unique user-friendly digital experiences and personalized product offerings. It also helps solidify customer loyalty by facilitating direct, ongoing relationships with customers. 

And brands are taking notice, with the DTC online market predicted to reach $213 billion by the end of 2023. DTC is also a win from the customer's perspective, with 55% of consumers saying they prefer to buy directly from brands as opposed to multi-brand retailers. Given the current power imbalance with Tier 1s, CPGs can retain some of their effectiveness by solidifying DTC strategies. 

2. Leverage First-Party Data

CPGs have primarily focused budgets on third-party audiences in collaboration with vendors and strategic partners. As recently as 2021, expenditure on third-party data in the United States reached more than $22 billion. But as third-party data slowly reduces in value, brands are working hard to scale their first-party data strategies in order to stay competitive. This overarching push has created a false dichotomy between brands about what type of data is actually being collected. 

The truth is first-party data exists on a spectrum, and the idea that every major brand is getting a swath of first-party sales data is a myth. Obviously, sales data is the holy grail, but major retailers aren’t motivated to share it and are simply charging too much for access. The good news is that there are a variety of other types of first-party data that can provide lots of value. Data that provides information on things like preferences, behaviors, and demographics can all play an important part in outreach strategies. 

3. Tear Down Omnichannel Walls 

Plenty of brands talk a big game about being omnichannel, but in reality, their outreach remains siloed. Most retail media programs remain entirely web-based, which leads to shoppers missing out on promotions when they’re in the physical store. Similarly, many in-store programs fail to tie in digital components, losing access to online users. 

The failure to be truly omnichannel has dire consequences for CPGs. Marketers using three or more channels in any one campaign earn a 287% higher purchase rate than those with a single-channel campaign, and omnichannel shoppers have a 30% higher lifetime value than those who shop using only one channel. Omnichannel strategies are a crucial part of CPG's ability to provide a seamless and integrated customer experience. 

Fuel Your Growth With Adsta

As the number of retail media networks continues to rise, CPG's faith in them is waning. In a recent survey, more than a quarter of respondents named “data sharing and transparency” as a major challenge in working with RMNs. Additionally, 21% of respondents said that RMNs were a “simple money grab for the retailer,” and 32% understood RMNs to be effective, but no more so than other forms of digital media. In looking at the relationships between brands and retailers, it’s easy to see why this is the case. But CPGs don’t have to live this way. 

Adsta works to level the playing field by giving power back to CPGs.

By providing brands with the ability to reach their customers directly through an immersive omnichannel experience, Adsta puts the right messages in front of customers when it matters most. This means online, in-person, and everything in between. All while giving access to valuable analytics across the spectrum of first-party data, so brands can carve out their own space in a rapidly evolving market without relying on retailers.