As kids, we loved to pretend, and no one made pretending more fun than Mr. Rogers. So, let’s pretend by imagining you own a clothing retail store.
A customer enters your store and, because of their past interactions with your brand, your employees greet them by name. Your employees are familiar with this customer’s wants, style, and impulse to purchase shoes.
It’s a win-win situation. Your customer gets what they want and your store has another sale. Your customer feels great, as do you, after the interaction… like meeting with an old friend.
You purchase billboard space on a very busy highway, plus you hire a human billboard to perform spinning tricks in front of your store, all in the hopes of attracting potential customers.
Prospects drawn to your store from the billboard are unknown to your employees. It takes time to figure out whether they’re just perusing or looking to buy. They’ve yet to trust your brand or build an emotional connection with your store.
Both of these scenarios are very simple examples of the difference between first-party data (scenario one) where – based on past interactions – you can easily connect with previous customers, and third-party data (scenario two) where you try and attract the attention of potential customers to enter your store in the hopes they’ll make a purchase.
Let’s dig in to why third-party data is being phased out of marketing and why first-party data is the future.
Major Changes Are Here
The world’s most valuable resource is no longer oil, but data.
Data privacy has been changing for some time now. With regulations like Singapore’s PDPA, Europe’s GDPR, and the USA’s CCPA, regulations have become stricter regarding what a company can and cannot do with customer data.
Last summer Google announced they’d phase out third-party cookies by 2022 (goodbye pixel tracking). Apple’s Safari and Mozilla’s Firefox currently block third-party cookies.
What does all this mean? It’s the warning shot over the bow for your brand to move from third-party data to first-party data.
Brands that embrace first-party data are able to deliver richer customer experiences, create personalized journeys, and gain a competitive advantage over competitors who have yet to leverage first-party data for marketing.
Apple and IDFA
One of the more controversial privacy announcements was Apple’s opt-out of IDFA (identifier for advertisers) for app users. This feature was announced in June last year and will be in Apple’s next beta version of iOS 14. (TechCrunch)
The way the IDFA opt-out works is when a user downloads and opens an app, they’ll be presented with a popup asking if they’d like to be tracked across other apps or websites the developer owns.
It’s not much different from the apps that already ask permission to use a device’s camera or microphone or location. This new setting allows one to limit the data shared but does NOT impact first-party data collected within the app itself.
Because of this change, Facebook could lose as much as “7% of total revenue in Q2” (around $5 billion). (AdExchanger)
“Apple’s iOS14 update means that things like pixel tracking — and Google have also announced the same changes — [means] having a pixel on your website for 13 different vendors to all get their signals back about what people are browsing, what people are purchasing, is no longer socially acceptable. It’s now something that consumers are aware of, consumers are freaked out by, and consumers are using dark mode, consumers are using ad blockers. Consumers are now saying: ‘I do not need to give you permission to use your website.’ There are huge, huge changes going.”
— Alex Timlin,
SVP Verticals, Emarsys
Google’s New Solution?
Since Google is removing third-party cookies in 2022, they’re creating new solutions for advertisers to continue showing ads, and one potential solution is the Federated Learning of Cohorts (FLoC).
FLoC groups people of similar interests together for advertisers to target. Each group is anonymized, and the information of each user is private. This could be a major change for Google, as third-party cookies have been the primary way online advertisers targeted users for years (decades). (Axios)
FLoC may not be the final solution. There may be additional options in the pipeline at Google, but FLoC will be rolled out for testing in Q2 of this year.
- Key Takeaway: Stay informed about the latest data privacy laws. Be sure your company has a plan that leverages first-party data to connect with customers instead of relying on web cookies and pixels, as they soon may be extinct.
Tech Stack Problems and Privacy Laws
Only 10% of US companies are actively working to comply with 50 or more privacy laws.
With all the data privacy laws, who in your company is responsible for keeping track of each and every legal change? Processing data correctly across multiple countries, and inside multiple systems, is difficult, even problematic when a brand has multiple siloed tech stacks.
Your data is valuable. It IS the future of how your company connects and interacts with customers.
Connecting all your data to one platform makes it much easier to create more personalized connections with your customers, and easier to manage and maintain your data with the current privacy laws in place.
“Right now I believe that marketers have a huge opportunity to get on the front foot with regard to customer data, how they gather and use it, and how they explain and demonstrate the value to customers for giving them the permission to use that for a period of time. And, you know, I think I’m seeing it, and I’m delighted that I’m seeing it, that marketers are absolutely thinking about their data strategy and how they’re going to move into that totally different mindset. It’s a totally different mindset to give me all of the data I can, just get it from anywhere, and, you know, I’ll see what I can do with it, into what do I need to add value to my customer? What is the value I’m going to give them back for it? And then how do I acquire directly in a relationship of trust? And to me, you know, this is kind of core to the new battleground for brands going forward, will be how will they do that.”
— David Eldridge,
Chairman & Co-Founder, 3radical
- Key takeaways: Make certain someone owns the legal side of your data. Make it easy to maintain the legal requirements necessary, and to empower your internal teams to use the data to easily connect with customers across multiple channels
H2: Final Thoughts
Your ability to obtain data and keep it lies mostly in the hands of customers. As e-commerce continues to climb in 2021, data privacy is a top focus for major tech brands like Apple and Google. Now is the time to make certain all your brand’s data is connected and stored in one centralized location, so your internal teams can use it in campaigns and while ensuring your business stays within the bounds of various privacy data laws.
Data privacy laws and regulations are just one of the priorities a brand should consider in 2021. There are actually eight priorities to consider so your brand can provide the experience your customer wants and drive positive business outcomes for your company this year.
Handpicked Related Content: