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The cookie apocalypse is here, and it’s going to change advertising as we know it. 

But with change comes opportunity. The loss of one channel as you’ve come to rely on it is a chance to build a new pipeline. 

Depending on your product and category, community building—or, in some cases, community listening—may be the long-term play that can make up for some of the short-term revenue loss caused by the shift in digital ad delivery. 

Google and Apple announcements that affect digital ad delivery  

First, a quick rundown on what’s happening: Apple and Google have announced changes that will affect personalized targeting: the backbone of digital ads on Facebook, Instagram, and, well, the internet. 

Apple’s latest release (iOS 14.0+ and macOS 11.0+) requires something called “App Tracking Transparency”, which means that every app will need to request tracking permission. That means users will need to opt in to the app’s use of their data for tracking purposes, which is a massive change from the traditional opt out model. 

Google, on the other hand, is removing support for third-party cookie tracking on its Chrome web browser. Instead they’ll be implementing a replacement mechanism called Federated Learning of Cohorts (FLoC) by “by clustering large groups of people with similar interests. This approach effectively hides individuals ‘in the crowd’ and uses on-device processing to keep a person’s web history private on the browser.”

The next year is going to reveal a lot about what these changes mean for advertisers. In the meantime, marketers will want to learn from brands that haven’t relied too heavily on digital ad targeting to bring in revenue. One of those brands is Peloton.

Photo credit: Forbes

It’s not that Peloton doesn’t advertise… 

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Peloton isn’t exactly known for great choices when it comes to advertising. 

In December 2019, Peloton was roasted for its holiday campaign that depicted a woman receiving a Peloton bike as a Christmas gift. The ad was described as sexist and dystopian as people expressed outrage over the implications of a husband gifting an exercise bike to his slim wife. 

Peloton lost $1.5 billion off its market cap immediately following the ad, but revenue didn’t suffer much, as reported by their second fiscal quarter earnings. While there are a lot of factors that helped mitigate the damage done by the ad, there’s no doubt that Peloton’s strong community was one of them. 

Community is such an important ingredient to Peloton’s success that it formed the basis of the company’s next advertising attempt. The "We All Have Our Reasons" campaign features actual Peloton users who gather under “one community” to “show up for one another” with Peloton. 

Still from Peloton’s October 2020 ad campaign. Photo credit: Insider

Peloton’s growth trajectory: An overview

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In 2020, a sense of community was hard to come by. It was also one of the things we craved the most as the pandemic threatened our physical and mental well being. 

After more than a year of too many Zoom calls, we know that virtual communities are no replacement for in-person interaction. But we also know it’s better than no community at all. In June 2020, at the end of its fiscal year, Peloton’s earnings reflected our collective yearning for human connection. The company generated total revenues of $524.6 million in Q3, a 66% year-over-year growth. They exceeded expectations across all geographies.

Peloton also boasts a 95% retention rate, with subscribers doing an average of 17.7 workouts per month compared to 13.9 workouts in the same period last year. These numbers are high when you compare them to gym retention rates, which can be as low as 35% over a 16 month period.

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While Peloton’s growth may seem like yet another pandemic trend that will fade into the abyss as soon as we’re able to go back to the gym, it’s worth noting that so much of what makes Peloton’s community special existed before the pandemic began. 

Peloton was poised to become the pandemic fitness brand of choice because of its investment in community.   ‍

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‍Does it make sense for all brands to build a community?

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As a brand, it’s hard to create community. Depending on your product category, community building may not be a viable tactic.  

That’s because communities are living entities that emerge from meaningful shared experiences. When brands attempt to replicate the organic process of community creation, they’re starting at a disadvantage—because they’re trying to manufacture something that normally happens without intervention. 

Peloton, however, started with a well-established model: group fitness classes. As the SoulCycle and Orangetheory crazes have shown us, some people are a lot more motivated to work out if they’re around other people. 

A solid workout is hard to accomplish because it requires overcoming physical obstacles. When you overcome an obstacle with other people, you create a shared bond—no one else understands what you’ve experienced better than other people who have also experienced it. 

Community is based on meaningful interactions between people with shared goals. Before you consider starting a community for your brand, be honest with yourself: Does your product create a meaningful, sustained experience between enough people with an important existential goal? 

If your customer research supports a “yes” to this question, keep reading to find out how Peloton stimulates the community building process.  

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So what does “community” look like for Peloton?

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Peloton doesn’t so much “create community” as it does create the underlying infrastructure that eggs it on. At Peloton, the abstract concept of “community” can actually be broken down into three concrete parts:

1. Ritual
2. Gamification
3. Personalities
   

Here’s how Peloton uses these levers to stimulate and maintain community. 

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Rituals create consistency within community

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Our brains love a good ritual. According to a 2017 study, rituals buffer against uncertainty and anxiety by helping us regulate our response to personal failure. In a nutshell, rituals are a way to self-soothe.  

A Peloton class may be as low stakes as physical activity can get, but it can still cause performance anxiety. Fitness class rituals can comfort someone just enough to encourage them to keep going when they feel insecure about their fitness level.  

Group rituals are especially useful in forming communities because they signal consistency and reliability. People like knowing what they can expect when they interact with members of any given community.

At Peloton, live class rituals keep people coming back because they give members something consistent to look forward to. Positive reinforcement triggers like virtual high fives and video chatting create rituals at every live class. Instructors are also encouraged to log on and give members high fives, even when they’re taking an on-demand (asynchronous) class.

Ritualized boosts like these are small nudges that not only encourage people to take that next class, but also create a self-sustaining community. Peloton may provide the tools, but its members are the ones taking action to encourage each other.    

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Gamification breeds friendly competition in a simulated environment

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Similar to Orangetheory’s leaderboard that tracks performance with wearables, Peloton’s leaderboard is a staple component of all its classes. 

For any live fitness platform, leaderboards are a no-brainer—but their power to stimulate community through competition shouldn’t be underestimated. When you can see who you’re competing with during a class, you’re forced to compare your performance to real people. 

You may even ritualize the act of checking in on the leaderboard, whether you’re searching for new competition or spying on your friends’ standing. Maybe after attending a few classes, you notice a few familiar names and make it your mission to surpass their performance. 

Peloton’s leaderboard and social network also encourage you to band together with a few friends to compete with what can become a shared enemy. This is how in-groups and out-groups are formed, which are mini-communities within larger ones. When human rights are involved, in-group/out-group dynamics can be devastating—but when they form within a simulation environment like Peloton, the result is (mostly) just good fun.    

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Personalities are community anchors

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Every community needs its leaders. Peloton’s most aggressive intervention to stimulate community is probably its investment in developing its instructors as online creators.

Robin Arzon, Peloton’s head instructor, currently has 748k followers on Instagram and has begun to grow her YouTube following. As an ex-lawyer who quit her corporate job to follow her fitness career dreams, her story reflects so much of what corporate America wishes they could do for themselves. Arzon also has type 1 diabetes and has been a vocal advocate for everyone who struggles to stay active with the condition.   

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Peloton’s most popular instructor as of late, however, is Jess Sims. An ex-kindergarten teacher, Sims is famous for her “glazed-donut look” catchphrase (the glaze is the sweat) and upbeat personality. Everyone wants to know what she eats. She’s hard not to like. 

No movement is complete without personalities to lead them. If Peloton were to come at its community as a corporate unit, its members wouldn’t be given much to respond to. Real human beings with flawed but likeable personalities are a crucial anchor point for communities to form around. 

Another important takeaway is choice and variety, which act as insurance just as much as they fuel community. If any one of Peloton’s 37 instructors miss the mark with something they say or do, the community doesn’t topple because other leaders are there to uphold the brand. At the same time, every Peloton member can choose their favorite personality to identify with, and find other members who have made the same choice.  

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Final takeaway: Sometimes it’s better to listen

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Community building won’t work for every brand. And when brands try to force community building with interventions that don’t make sense for how their audiences already behave, the result is nothing short of cringe. 

Before you consider investing in community building, spend some time listening instead. The best communities are built organically, without corporate intervention. If you’re offering a product that people can rally around, check for signals that your customers are already building a community without you. If they are, deconstruct how that community is developing and lean into existing mechanisms. 

If you thought you could develop a massive following on Twitter but you notice most of your customers talk about you on Reddit, follow their lead and find out how to support the conversation on a channel you may never have considered. If your customers have developed lore around your product in a way you didn’t think possible, find out how to make them an offer that reinforces their discovery. 

When you release a product into the world, it takes on a life of its own. Sometimes, for community to thrive, you need to forfeit control and embrace the way your customers have received your offering. 

The cookie apocalypse is here, and it’s going to change advertising as we know it.