The Great Marketing Reset: Part II
Cross-site tracking is essentially dead. Like the ePrivacy Directive and General Data Protection Regulation (GDPR), the impacts of regulations in Europe have given users the right to limit tracking activities of their behavior across the web. Preliminary data shows that only around 70 percent of users consent to the placement of cookies and processing their data for marketing/advertising. In the United States, the California Consumer Privacy Act (CCPA) generates similar effects, and nationwide privacy regulation is likely on the horizon. Per Merkle's 2021 Customer Engagement Report, 41 percent of marketers say digital media activation will be the area most impacted due to the rise of privacy-related data restrictions.
Meanwhile, Google has expressed its intention to phase out support for third-party cookies in Chrome browsers by 2022. Safari effectively stopped the support of third-party cookies with their introduction of Intelligent Tracking Prevention in 2019.
Whether talking about government regulations or technology changes, we are likely experiencing the most significant change in digital advertising and measurement since the first banner ad appeared on HotWired.com in 1994. How the digital advertising industry will look in the coming years is anyone's guess, and we can't predict the future—aside from the fact that it will likely be free of third-party cookies.
To be successful in this new advertising climate, organizations will need to rely increasingly on first-party data. Below, I'll explain how to prepare for these changes and provide concrete steps for building a first-party data strategy that will improve your ability to serve customers, future-proof your business, and help you secure a healthy ROI.
Essential Considerations for First-Party Data
First-party data includes any information collected directly from your target audience or customer base. This information provides deep customer insights that allow organizations to create personalized experiences, improve the retargeting strategy, and predict future trends. It can be a powerful tool, but unfortunately, many organizations focus on capturing first-party data without having a clear plan for capitalizing on it.
Whenever I visit an eCommerce site, I almost inevitably get a pop-up telling me that I can get 10 percent off my first purchase if I provide my email. Many companies think this is a great way to build a first-party strategy. In reality, it may be a decent strategy, but many companies aren't asking critical follow-up questions: Are they getting their money back? Do they have a plan for the information they capture? And is that data part of an integrated strategy?
In a recent Boston Consulting Group study, nine out of ten marketers said that first-party data is vital to their digital marketing programs. Still, very few are using that data to its full potential. While less than 33 percent reported having the ability to collect and integrate data across multiple online and offline channels, only 1 percent use data to deliver a fully cross-channel experience for their customers.
In the coming years, prospective first-party data will be necessary for businesses, but the focus should be on capitalizing on that data, not just capturing it. To that end, it's essential to consider how you're integrating first-party data, especially if you are an omnichannel retailer. Let's say that you have in-store data and online data about your customers, as well as a loyalty program. If the data is stored in three different CRM systems, your marketing is likely inefficient, which can limit your ability to maximize your ROI on first-party data. Moreover, you may also be opening yourself up to potential lawsuits as privacy regulations expand. Suppose a customer requests their information, and it's spread across three or four platforms. In that case, your organization will not only waste time collating that information but may also run the risk of providing incomplete information.
To protect your business and make the most of first-party data, you must approach this data with a clear strategy.
Steps for Building Durable Data Strategies
Before you take any action, assess how the market has responded to your desire for data collection. Is your current offer working on people? Are they giving you their information, or are they ignoring the offer? If you're able to capture their email address, are you capitalizing on it? Or, are you collecting emails by the hundreds without generating any concrete results?
- Create a Fair and Transparent Value Exchange
No one likes to be taken advantage of, so consumers need to see your offer as fair or advantageous to them. For our EU readers, your first challenge is convincing people to consent to track. The best way to do that is to be transparent and clear, focusing on the three following areas:
- First, be candid with the consumer about what you’re collecting from them.
- Second, be frank about the reasons you’re collecting this information.
- Third, explain what value they are going to get once they provide this information.
Many websites ask me to register for an account. It’s clear that they believe I will get some value from doing so, but that’s not what is being marketed to me, and I often resist signing up. Organizations must ask:
- If a consumer can still buy or return products without creating an account, what might motivate them to provide my information?
- Will there be a better customer experience?
- Exclusive benefits?
- How will signing up make their life easier or better?
In other words, companies need to think through the value exchange they're providing in return for the customer's information.
Provided the business is transparent and responsible with how it uses that data, this creates an ongoing value exchange between company and consumer. The consumer gets something of value. The company learns more about its audience—allowing them to deliver better experiences and more effective marketing through first-party data.
Get creative about the value exchange you're making when you ask people to register, log in, or identity themselves. For example, one car manufacturer has created an app that drivers can use to lock and unlock the doors, pre-heat the car in winter, and plan trips. In return for this extra functionality, the user allows the business to collect their data, which helps develop the customer experience and other cross-selling opportunities. The app has so many benefits that the consumer happily provides their data to obtain the added value.
Another example is a personal care brand that has produced content-specific websites to capture traffic from more than one billion hair care searches each month. Users can watch videos with styling tips specific to their hair type. Exclusive content provides value to their customers. Using this exclusive content approach helps the company gather first-party data such as site visit actions and email addresses to improve audience segmentation and create more relevant messages.
One mistake many companies make is treating registration like it's a static process. They often simplify the data they want to collect from their customers, asking for only an email address or a few other fundamental data points. Then, they act as if the collection process is complete. Instead, consider progressive profile creation as an opportunity to gather more information each time your customers engage. Each time they log on, ask a new question, possibly based on their previous behavior. That will allow you to gather new data points and constantly update the knowledge of your target audience.
As I explained earlier, it's critical to integrate your data. Get your CRMs under control and bring all your data together in one integrated platform.
Aligning your data strategy for building out your customer profiles also requires the technology and tools to put this data to use within your organization. Platforms like LiveRamp with IdentityLink can help augment your identity information. They take the information that you know about your customers and use it to identify them in the digital ecosystem. Historically this has been very difficult, but IdentityLink reduces the barrier to entry for both identity resolution and incorporating identity into any attribution and measurement solutions.
A few other companies that can help connect your first-party data into the digital ecosystem are LiveIntent, Conversant, and Oracle OnRamp. In some cases, the best path can be to go directly to the likes of Google and Facebook for engaging current customers or acquiring new customers. These methods still aren't ideal, but it's worth experimenting with and testing solutions that will prepare you for the transition away from third-party cookies and maximize your use of first-party data.
It's great to say that you have a new data strategy, but how do you know if your first-party data strategy is paying off? One of the easiest ways to tell whether you've offered a solid value exchange is to look at your customer satisfaction. If it does not go down after asking people to fill out a profile, they likely see clear benefits to providing their data.
The first-party data that you've gathered will also improve your targeting precision by allowing you to identify real people across devices and channels. By integrating and accessing first-party data from one customer identity asset, marketers can map the buyer journey, discover the different steps that consumers take on their path to conversion, and the order they take them. This data helps marketers deploy the right message at the right time and place, informing strategies to pull customers back on the road to conversion. First-party data helps marketers enhance accuracy and relevancy, reduce ad waste and, ultimately, drive ROI.
The ability to target also increases your relevance because you can use this information to make tailored content that generates higher levels of engagement. First-party data delivers the most accurate intelligence and inspires new ways to tailor messaging and shape the customer experience. Based on what a brand knows about its customers and their behaviors across touchpoints, marketers can design unique brand experiences customized to specific interests, preferences, location, purchase history, and more.
Your Best Tool
If you want to future-proof your business, your best answer is to develop a first-party data strategy. It will help you create more relevant, engaging content, improve your ability to send the correct type of communication through different channels to the right audience, and get a better response that boosts sales.
Nevertheless, a first-party data strategy isn't something that you set and forget. Your ability to build a first-party data set and improve its relevance is something you need to measure monthly or even weekly.
First-party data is one of the best tools at a marketer's disposal, and in a world without third-party cookies, first-party data will become even more vital to marketing success.
Michael has the rare skill of taking complex subjects (web analytics, digital marketing) and making them easy to understand for everyone. He understands how to engage an audience in helpful conversations and activities to really learn whatever subject he is addressing.”
Michael Loban is the Chief Growth Officer at InfoTrust, a global analytics consulting and data governance company. When he is not motivating organizations to undertake a digital transformation, Michael can be found passing on the power of digital analytics to the next generation of marketers and analysts through his roles as Term Adjunct Professor at the University of Cincinnati and Adjunct Faculty at Xavier University. He is also a presenter and author, with work published in Forbe s, AdWeek, and CIO Magazine