The Great Marketing Reset: Part I
Marketing is undergoing one of the most significant sea changes the industry has seen in decades, thanks to major shifts in the realm of data privacy. The first group of changes comes from consumers, who have expressed alarm around certain organizations' mistreatment of their data. After breaches of trust like the Cambridge Analytica Scandal, consumers are rightfully worried about their privacy.
These consumer concerns have occurred in parallel with the second set of changes: privacy-related legislation, like the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA). Many U.S. states are eyeing similar regulatory changes, as with Virginia's Consumer Data Protection Act. State regulation will likely lead to some national law since it's virtually impossible for businesses to comply with fifty different sets of regulations.
And that leads us to the third set of changes: those coming in the form of technical changes to protect consumer privacy. For example, Google recently announced an intention to phase out support for third-party cookies in their Chrome Browser in 2022. Apple has already introduced changes in their Safari browser, limiting the ability to track consumers across the web.
With all this change in the air, it's easy for marketers to feel alarmed, confused, or anxious. Still, it's essential not to be too hasty in your response. I suggest that organizations take a lesson from the 2020 World Economic Forum, whose theme was "the Great Reset." The focus was on taking a step back and resetting how governments, the corporate sector, and stakeholders should play together.
I believe it’s time for marketers to have a Great Reset of their own. Marketers, advertisers, and advertising platforms should take a step back and evaluate the proper strategic approach instead of just looking for a technical replacement to maintain the status quo. Below, I explain how organizations can use testing to create a measured, intentional response—a Great Reset—amidst the chaos of the changing marketing landscape.
Start with the Right Mindset
Many marketers and advertisers feel that these changes will make their jobs more difficult, which may be true. But if you want to meet these challenges head-on, it’s best to start with the right mindset. Moving forward, keep these four things in mind:
- These rules and changes are happening to everyone. You are competing against other marketers dealing with the same constraints. Because these changes apply to everyone, they provide an opportunity for those that rise to the challenge.
- Historical analysis won't help. The marketing approaches of the past aren't available, so there's no use crying over spilled milk. This is an excellent opportunity to move forward and try new methods.
- Be innovative. Robert Stephens, the founder of The Geek Squad, famously said, "Marketing is a tax you pay for being unremarkable." If it's going to be challenging to differentiate yourself without a highly personalized advertising campaign, there may be other opportunities to stand out apart from advertising. This is also a good time to ask how you can be more distinctive in the quality of your product, experience, sourcing, etc.
- Consumers are still buying. Yes, you may have specific limitations in reaching your audience, but even after the disruption of 2020, numbers show that your audience is still willing to spend money across the board.
Build the Right Team
Once you’ve got the right mindset, you can start the Great Reset and figure out what you should be doing to create successful privacy-centric marketing. The next step is building the right cross-functional team. First, consider who needs to be on it. Marketers, a data engineer, and someone from the compliance team are a must, but I’ve noticed that companies often forget to include members from legal and purchasing. If you’re a larger organization and need to experiment with new solutions and try new things as they become available, you cannot afford to run a nine-month RFP process and spend another year on deployment. So, it’s good to prepare your legal team for contract reviews. Likewise, having buy-in from the purchasing team is good to understand what they're purchasing and why based on the nuances of the situation.
I've often seen cross-functional teams where there's a clear push-pull dynamic between the legal team and the marketing team in the contractual context. The legal team wants to cut everything they see as a liability, while the marketing team feels they're being undercut and hemmed in. To prevent this dynamic, you have to build a team that brings people together and aligns their goals.
Design and Prioritize Tests
Once you’ve assembled the team, the next goal is to design and prioritize the tests. Consider new platforms, new ways of modeling, new processes, new campaign targeting tactics, and new marketing channels.
You won’t need to (or want to) try every available solution, marketing channel, etc., so your team will need to build a roadmap. For each identified opportunity or issue, the team should develop ideas about improving the experience and ways to test those ideas. Decide what you, as a business, want to accomplish, how the solutions should be tested, and in what sequence. Your timeline and prioritization will depend on your company's specific use cases, and it's crucial to have those priorities in mind before you move forward.
Test and Iterate Based on Results
Next, the team should run tests in one- to two-week “sprints” to validate whether the proposed approaches work. For example, which is more effective: precision advertising using third-party data or contextual advertising? One team at a European bank ran a series of systematic weekly media tests across all categories and reallocated spending based on the findings on an ongoing basis. This effort helped lead to more than a tenfold increase in conversion rates.
The team must have effective and flawless tracking mechanisms to report on the performance of each test quickly. At the end of each sprint, the war-room team should debrief to incorporate lessons learned and communicate results to key stakeholders. Your team can reset the priorities based on the results from the tests in the previous sprint and continue to work down the backlog of opportunities for the next sprint.
Experiment with New Solutions and Marketing Channels
With the privacy landscape shifting so quickly, new solutions are becoming available all the time. For example, Google Privacy Sandbox has introduced Federated Learning of Cohorts (FLoC) to enable targeting based upon users' browsing habits in the absence of third-party cookies.
There’s also already a subscription-based online search engine that caters to consumers who don't want to be tracked or served ads. The question that brands should be asking is if X percent of their budget previously went to Facebook, at what point should they be looking at other options and seeing if marketing is available there?
The new privacy landscape also gives marketers a chance to experiment with new marketing channels and prioritize marketing channels that might not have the same level of personalization they're used to. Historically, you might have wanted to use certain channels because you knew the high level of personalization and targeting that you could accomplish. Now, that type of personalization won't be as available. So, if, in the past, you spent $1 on programmatic display advertising to generate $1.20 in sales, the new changes might mean that you're paying $1.50 to generate $1.20. When those numbers become evident, you'll have to ask whether those tried-and-true channels are the best option.
It may be better to consider alternate advertising channels. For example, podcasts are popular right now. While they don't offer a high level of personalization, they might still provide companies the room to grow as the functionality of other solutions changes.
Treat Your Marketing Like Asset Allocation
Ray Dalio, who runs one of the most successful hedge funds, coined the concept of diversification as the “Holy Grail of Investing” in his book Principles. He sums up the idea this way: With 15 to 20 good, uncorrelated return streams, you can dramatically reduce your risks without reducing your expected returns. You can think the same way about your marketing: why put all your eggs in one basket?
Many organizations have doubled down on the popular digital channels that gave them the level of personalization and targeting they were accustomed to. Still, now that those channels are changing, it may be better to place your bets across different platforms. There's such a shift happening that you will still have other marketing channels that you can leverage no matter what happens in one given channel.
Focus on Modeling
Since the ability to collect data is getting more limited, organizations will need to better forecast, and model based on the information they already have or can collect. There's often been a common sentiment in boardrooms that if 100 percent of consumers' data hasn't been collected, the numbers aren't good enough. "We need more data to make an accurate decision" is a common refrain. Without the same capacity for personalization, organizations will need to get more comfortable with making riskier decisions, or at least uncertain ones, based on partial data.
Again, think of this as analogous to the stock market. If everyone knows a given stock will go up, they're not likely to make much money off it. You may never have a situation with 100 percent certainty again since users won't want to be tracked. It's best to learn how to make the most out of the data you have and allocate your advertising budget across different channels to diversify your risk.
Test Your Way to Success
As privacy-centric marketing becomes more and more necessary, organizations will need to adapt. They will need to take risks, stay agile, and commit to flexibility. In essence, they will need to embrace the idea of a Great Reset and develop a reliable way to test new solutions and channels.
This brave new world won't come without challenges. Still, adopt the right mindset, build the right team, prioritize, experiment and iterate, and allocate your marketing budget across different channels.
Test and lead your way to privacy-centric marketing success.
Be sure to check back in when Part II of this series goes live June 4th, right here on Marketing Magnified.