The deprecation of third-party cookies (3PCs) has been a steady but real looming threat to the status quo of how organizations do business and interact with customers.
Raymond Velez
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Over the last decade, the institution of more stringent privacy laws, like the General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA) (among others) has forced organizations to overhaul their data practice standards to accommodate the appropriate governance and compliance to meet the demands of these new regulations. In parallel, platform companies like Apple, Microsoft, Mozilla and Google have diminished or placed greater control over the use of third-party cookies on their search engines. Safari (Apple), Firefox (Mozilla) and Edge (Microsoft) already banned 3PCs and provide capabilities that periodically delete first-party cookies. Earlier this year, Apple and Google doubled down on efforts to limit how cookies are used. In April, Apple announced they would be limiting the use of its Identifier for Advertisers (IDFA) in their iOS systems, giving users the option to opt-in. This requires first going into settings after the IOS 14 update and asking users to opt-in to tracking. Google’s move to eliminate 3PCs from Chrome is another massive shift, effectively wiping the use of 3PCs from a browser that effectively owns 48 percent market share. The effects can be felt already. According to initial reports, upon launch, only 4 percent of U.S. consumers chose to allow apps to access their IDFA tags. Facebook, which relies on 3PCs to effectively advertise on their network, warned investors of potential revenue impact, and began testing new ways to acquire consent from their users in response. The lasting effects of these changes threaten more than just digital advertising. It snaps the thread of what enables organizations to achieve a true 360-view of the customer. If organizations do not put a plan in place that future-proofs their data infrastructure, authentication capabilities and data collection practices to consistently deliver strong business outcomes, they risk losing ground on progress they’ve already made improving targeting, personalization and experiential relationships with consumers. At Publicis Sapient, we have found that organizations that are not prepared for this shift risk losing up to 23 percent of their marketing attributable revenue over the next three years. In short, the pursuit of a deep understanding of the customer, and potential revenue opportunities, hang in the balance. And the clock is ticking.
At the center of this challenge is strength of an organization’s first-party data strategy. First-party data is collected from an organization’s owned channels, like a website, app, or in-store point-of-sale system and used to help track all the interactions a customer may have with a brand. A robust first-party data system decreases reliance on alternate data sources and increases the quality and accuracy of the information, since it was collected from a direct relationship an organization has with a consumer.
“Brands that are able to build out and better utilize their first party data assets are realizing there’s more potential than they understood,” Dana Moroze, SVP, Epsilon Platform Solutions, said.
Consumers interact with brands across many touchpoints, with different data collected across each part of the journey. In siloed organizations, this data is not always consolidated to give a true view of a consumer’s relationship with a brand. Siloed customer data may also be inconsistent, resulting in inaccuracies or redundancies that may lead to wasted spend. Further, organizations are often not able to collect all the contextual data they need to create a complete customer profile through owned channels alone. Typically, organizations leverage second-party data (data shared through trusted partnerships, like a retailer and supplier, for example) or third-party data to fill in those gaps. But with third-party data diminishing, organizations need to shift from device or cookie-based marketing to people-based marketing, with strategies that focus on diversifying first and second-party data to achieve an understanding of the customer that goes beyond solely cookie or device identifiers.
Second, organizations need to create an environment that allows data to be cleaned, analyzed, and shared in a way that ensures privacy regulations are validated. For example, say a consumer provides multiple email addresses when engaging with a company across different channels. While the email address belongs to the same customer, if this data exists across silos, it may lead to duplicate marketing efforts or inconsistent experiences. Further, some data privacy regulations mandate the “right to be forgotten,” where consumers can request for removal of personal data from a system. Organizations would have to ensure all data tying back to a customer is removed from all systems, which can be challenging if said customer data exists in multiple sources across the business. Achieving this requires organizations to rethink the way they interact with consumers, building direct relationships based on trust and value exchange that will ultimately strengthen the efficacy of first-party data. On the backend, organizations also must innovate how they work with data partners to strengthen the quality of data from alternate sources.
“Brands could ultimately emerge from this transition with a stronger view of their customers than they’ve ever had before,” Moroze said.
Evolving privacy regulations are intended to place the power of choice and visibility into how personal data is handled into the hands of the consumer. Opting out of data sharing, though, can often limit the quality of products or services that rely on personalization to drive better experiences. This creates a relationship of value between a brand and a consumer – a mutual understanding that opting in or sharing information will result in relevant, contextualized experiences the consumer is looking for. According to Publicis Sapient data, 61 percent of consumers do not know what companies do with their information, and 40 percent do not believe the data they share always equates to the value they receive in return. In response, organizations have an opportunity to create a more transparent relationship with consumers, educating them on privacy standards and how their data is used to provide services. Brands also have an opportunity to develop new products, services and campaigns that directly engage consumers on owned channels, creating a direct conversation between shopper and brand.
“Every campaign is an opportunity to gain first-party data,” Brianna Taylor, senior data analyst, Digitas, said. “There's a lot of brands where creating apps or log-in states don't make sense, so campaigns are going to play a bigger role in how we start and maintain conversations with consumers.”
Implementing a future-proof data system is not a one-size-fits-all journey. Organizations need to understand the current state of their infrastructure and what innovations are needed to create the best data environment.
The core capabilities of an enterprise-ready CDP:
Digital marketing, advertising, and how data is applied across organizations has been maturing over the last decade. A world without cookies is the next step, with plenty of silver linings. A focus on first-party relationships gives brands opportunity to really listen to their customers and build new experiences they truly benefit and value – benefitting both brands and consumers. Further data independence will also help organizations truly use their data to its greatest extent, leading to stronger partnerships, new revenue opportunities and better business outcomes.
Raymond Velez
Executive Vice President
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