The digital advertising landscape is in the midst of a tectonic shift. In the prior installment of this series, AdTech Earthquake Part 1: Cracks in the Foundation, we covered how changes in big tech’s privacy policies would present significant challenges to every brand that depends on digital advertising as part of its marketing mix.
Since we’ve already spent a lot of time defining the problem, in this blog, we’ll dig in on the solutions. We’ll break the discussion down into near-term and long–term plans. But first, we’ll talk about the critical asset that serves as your foundation for succeeding in the new privacy-first economy.
First–Party Data is Key to Surviving the AdTech Earthquake
Conventional digital advertising strategies rely primarily on third–party data. As we’ve discussed extensively, the rug is getting pulled out from under third–party data strategies. With third–party data diminished, marketers must go in search of new ways to acquire prospective customers. The answer? First–party data—the customer information your business collects directly from consumers to provide a robust customer experience.
You’ve probably heard something—or a lot—about the notion of a first–party data strategy. And undoubtedly, your company has already made some investments in first–party data. But if you’re like many enterprises, your first–party data roadmap didn’t foresee the coming disruption that’s now putting first–party data on the front burner. According to Winterberry Group’s 2020 Identity Outlook, more than 60% of industry experts say one of their business goals is to increase spending and emphasis on the use of first–party data analytics in response to the deprecation of third-party cookies.
If you’re behind on where your strategy needs to be, it may take months or years to reach your desired state, and will require customer data you don’t have yet. What can you do in the near-term to compete while your organization works to catch up?
Near-Term Plan: Delivering CX When Customer Data is Lacking
In today’s marketing landscape, and lacking in-house data you’d need to execute on your own, two primary marketing tactics are available to you for digital customer acquisition:
1. Increase reliance on walled gardens
If you don’t own your customer data today, or most of it is anonymous, you are certainly already leveraging one or multiple walled gardens such as Google, Facebook, or Amazon. In a walled garden, the ad ecosystem (e.g. Facebook) owns the data. While you never get to access the data, you are permitted to pay (dearly) to target consumers in the ecosystem.
Walled gardens are direct beneficiaries from the deprecation of third–party cookies. In the short term, they’re a good place to double down with ad spend. However:
This strategy is costly, and you can’t control the costs—they’re dictated by the market
Walled gardens will be negatively impacted by Apple’s changes to IDFA, so be wary that the clock is ticking down on this tactic
2. Leverage contextual advertising
The diminishing of third–party data makes it difficult to use programmatic advertising for targeting anonymous consumers based on their past digital behavior. Contextual advertising, however, targets consumers based on the content they’re viewing in the moment. If you use Google Adwords, for instance, you are already engaging in contextual advertising. Interest in contextual advertising is increasing specifically because it does not depend on knowing the consumer’s identity.
Today, expanding your contextual ad programs beyond Adwords can be done more efficiently than in the past, thanks to advances in AI/ML—which, among other things, enables contextual advertising engines to evaluate page content and serve up relevant ads in real-time.
This approach does come with some drawbacks, however:
Contextual advertising is a blunt tool as compared with behavioral targeting—you’ll need to serve many more ads, deal with limited content inventory, and do much more test & learn work to reach your audiences. This is one reason why, according to McKinsey, “contextual advertising rarely meets campaigns’ viewership goals.”
It doesn’t offer a solution for remarketing, one of the most efficient, effective, and soon-to-be badly hobbled forms of behavior-based targeting.
In the absence of better alternatives, employing some of the strategies described in this section will help get you by in the face of the digital advertising earthquake. But to go from “survive” to “thrive,” you’ll need to simultaneously execute a more strategic long-term plan.
Foundations of the Long-Term Plan: Build Relationships, Collect Customer Data
As we mentioned earlier, the foundation of your long term-plan is based on prospect and customer data. Owning this data, utilizing it for customer retention, and making it accessible is the only way to drive personalized experiences for prospective and existing customers. In this section, we’ll cover four key elements to building up your customer data strategy.
1. Define and execute data collection strategies
There are many different types of data that make up your customer data strategy. We’ll be digging into each of these—and how to execute around them—in a future post. For now, here’s a brief intro into each type and how it’s acquired:
Zero–party data is a subtype of first–party data that’s getting a lot of buzz recently. Zero–party data is the caviar of data because it’s explicitly provided by the prospect or customer. There’s only one option for acquiring this data: build a relationship and build trust as part of every interaction with your brand.
First–party data is the data you directly collect about customers. It includes zero–party data plus all other analytics you gather via your brand’s touchpoints: browser clickstream, mobile app usage, call center interactions, point-of-sale, and much more.
Second–party data is the first–party data of another organization within your partner ecosystem. It’s used to enrich customer profiles, improve customer experiences and drive additional revenue through partner programs.
Third–party data is external data acquired through an intermediary who isn’t the direct collector of the data. This is the lowest quality form of prospect and customer data, and it’s becoming less and less accessible due to privacy and data governance concerns.
2. Look for consent
Consumers are increasingly concerned about the lack of transparency when it comes to consumer data governance. Governments and big tech firms are listening—and tightening the reins—rapidly moving us into a consent-first world. Third parties can’t do the heavy lifting for you anymore. For example, with consent added to Apple’s IDFA, predictions range anywhere from 30 to 90% user opt-out.
The solution? Brands must find ways to obtain consent on their own. To do so, you must clarify to the customer the value they’re going to receive in return for providing consent. Some of the strategies for obtaining consent are similar to those of early authentication—so read on!
3. Authenticate early
Early authentication is all about finding strategies to get consumers to identify themselves to your brand, even before becoming a customer. The key is to make it worth their while. Many brands do this today with the help of special offers and incentives, exclusive products and services, high–quality content, free trials, loyalty programs, subscription models, and more.
Following a progressive profiling marketing strategy, you can collect the minimum information required to authenticate the person early. This is commonly an email address, which is the identifier we expect to see most commonly frequently used to exchange and connect data between organizations. Mobile numbers are also becoming increasingly common as part of authentication.
One example of how early authentication can mend some of the hurt of the AdTech earthquake: if you have an email address or a mobile number, you can retarget on all the big platforms (i.e. Facebook) without relying on third-party pixels.
4. Build a partnership ecosystem
Partnerships can be valuable for every brand, and are critical for companies that currently have limited access to first–party consumer data. We classify partnerships into two types:
Data partnerships are commercial relationships where you directly license third–party data from a data vendor for use along the customer journey. These partnerships can help identify, segment, and enrich profiles for both known and anonymous identities. Typically, data partnerships are low-effort—vendors often clean and conform data to help minimize integration effort. A drawback of this type of data integration is that it can be difficult to identify and validate the quality of the original data source(s).
Brand partnerships are direct relationships you create with other brands that facilitate the exchange of data. CPG manufacturers, for instance, often engage in data partnerships with downstream retailer brands so they can better understand customer wants and needs. Building these partnerships can help you reach new and existing customers outside of your owned properties and traditional walled gardens.
If your customer data business strategy includes these four elements, you’ll be on your way to building a solid customer data foundation that will support your marketing efforts well into the future of the privacy-first economy.
I’m especially interested in the subject of partnerships. How is your brand thinking about partnerships? What strategies are you embarking on, and what’s your plan for the next few months? I’d love to hear where you’re headed and offer insights that my colleagues at ActionIQ and I can provide. Feel free to reach out to me directly: firstname.lastname@example.org.
Collecting Customer Data is Only the First Step
In this post, we covered near-term strategies for coping with the emerging privacy-first economy, as well as the foundations for a data collection business strategy that will serve you in the long-term. But simply collecting data isn’t enough. Brands must go through a series of steps to make that data useful, and activate it in the real world.
In our next installment, we will share strategies and techniques for generating maximum value from your customer data. Stay tuned. In the meantime, I’d like to invite you to check out some of my other blog posts covering a range of topics at the intersection of marketing and technology. Enjoy!
We also invite you to get your questions answered by our experts – contact us!