The transition to an internet without cookies will be rocky, but it will ultimately benefit all parties — including, yes, even brands.
Executive Summary
For years brands have relied upon third-party data to drive their marketing, although first-party data provides deeper customer insights for personalizing ads and orchestrating next best product offers. Google’s decision to discontinue support for third-party cookies doesn’t create a problem for brand advertisers — it actually solves a problem by forcing brands to make investments in first-party data collection, augmentation, integration and application to their digital marketing.
The Disappearance of Third-Party Cookies
Brands are clamoring to adapt to a digital advertising industry that will soon restrict the use of cookies. The change is a massive upheaval for the industry, but it will ultimately benefit brands by forcing them to focus on the most valuable commodity in contemporary advertising: first-party data.
The hysteria started last year, when Google announced it would phase out the use of third-party tracking cookies on its Chrome web browser. That announcement was enough to send advertisers reeling — Chrome is the most popular browser on the web, and for the past decade cookies have been the industry’s primary method of targeting and measuring ad campaigns. Google banning their use effectively renders third-party cookies obsolete and forces brands and agencies to completely rethink how they build and target audiences.
Then, in March of 2021, Google announced that it would also restrict the use of non-cookie identifiers on Chrome (this deprecation of cookies was initially to happen sometime in 2022 and has recently been delayed to 2023). As a result, all the work brands, agencies and ad tech providers had put in over the past year developing cookie alternatives will be made … useless. Google’s cookie-restricting efforts combined with Apple’s ongoing crusade to provide more privacy on its devices and thus limit advertisers’ ability to track and target consumers have yielded the most significant change in the recent history of advertising.
Apple’s and Google’s data restrictions are ultimately driven by consumers. Consumers are tired of brands tracking them across the web and collecting their data without their knowledge or consent. Soon, brands will no longer have that option, which will be great for consumers. But this shift also presents a huge opportunity for brands.
Why First-party Data is Important
It’s understandable that brands would be a little wary of a cookieless future, given the magnitude of the shift. But after the initial shockwave wears off, brands will discover that this change could be the best thing that ever happened to them.
For years, brands have been too dependent on third-party cookies. It’s hard to blame them. Third-party cookies are ideal for reach campaigns — they provide a quick, easy way for brands to build audiences, execute campaigns across a variety of publishers, and reach consumers at scale.
The problem is that this obsession with reach, and buying impressions quickly and cheaply, has made brands overly-reliant on cookies. (Not to mention: it’s also resulted in a lot of spammy, low-quality advertising.)
Currently, advertisers are building audience technologies that will work within Google’s new data collection guidelines and hopefully provide a viable alternative to third-party cookies — such as TURTLEDOVE, an interest-based targeting technology provided by Google; SPARROW, a solution developed by ad tech company Criteo, which proposes keeping sensitive audience data in a siloed “gatekeeper;” and Unified ID 2.0, an industry-wide effort, spearheaded by ad tech firm TheTradeDesk, to develop a whitelist audience-targeting database available to all parties that wish to participate. These solutions are all fine and good, but they’re still third-party solutions and thus inherently less valuable than first-party data.
First-party Data Collection
The most advanced, forward-looking brands have spent the past several years building out owned and operated data operations. Why? Because first-party data provides a source of competitive advantage as it enables brands to improve personalization of offers and customer experiences for conversion, orchestrate next best offers to grow customer LTV, refine loyalty programs to deepen customer relationships, and extract unique data insights that competitors cannot easily copy. In short, they deliver superior customer experiences — and that translates to revenue.
Now that cookies are crumbling, these brands are well-positioned for the transition. They’ve amassed troves of first-party data — the most valuable asset in a cookie-less world — and, perhaps more importantly, they’ve developed the skills and workflows needed to deploy that data quickly and effectively.
Collecting first-party data is only half the battle, though. Once brands build out their first-party data-collection capabilities, they need a data lake, or a central repository for all their data. A well-run first-party data operation involves collecting data from a variety of channels, including email, social, and ecommerce. A data lake brings these myriad data together, allowing brands to combine otherwise disparate datasets and execute more sophisticated ad campaigns.
Many brands haven’t invested the time, effort and manpower into building out their first-party data operations, though. Fortunately, AdTech has advanced to the point that it doesn’t take brands too long to implement a data solution and catch up to the competition.
By simply contracting the right tech partners, a brand can begin building out its data lake and, in doing so, obtain a 360-degree view of its customers. Brands can commission a customer data platform and unify disparate pieces of customer data — their email addresses, their social media accounts, their past purchases — into a single database. They can store the data in-house and deploy it at a moment’s notice. And this comprehensive database can inform more than just the company’s advertising — it can improve operations across a litany of departments.
First-party Data Targeting
In a cookieless world, marketers will first need to define their campaign goals: customer acquisition, or customer retention and LTV growth.
For brands that prioritize customer acquisition, it will be important to realize that data will come from two sources: walled gardens and the open web. Intent data from walled garden sources can be viewed by its role in the buyer journey: awareness/interest (Facebook), consideration (Google), and purchase (Google, Amazon). Data from the open web will be owned by the identity consortiums. For brands pursuing customer retention, first-party data is essential to deliver personalized experiences that lead to growth of customer loyalty and lifetime value.
The beauty of investing in building first-party data collection and integration infrastructure is that it allows you to personalize ads and communications with customers based on their data — not someone else’s. This gives brands the opportunity to craft a more positive, bespoke experience for their customers.
First-party Data for Programmatic Advertising
Building an owned and operated data practice can seem daunting, but the benefits are real. For one, first-party data is unmatched when it comes to sophisticated campaign tactics such as segmentation, building lookalike audiences, and identifying the next best action in retargeting.
When brands rely upon third-party data, they’re tapping into the same data resources as all of the other brands in the universe, including their direct competition. First-party data offers an unparalleled competitive advantage for programmatic advertising and other marketing campaigns. Why? Because the first party data each brand collects (and subsequently augments with second-party data) is unique to them. The better the data collection/integration, the more targeted and personalized their marketing campaigns — thus, improved ROI and ROAS.
In that vein, building out a first-party database will make brands less subservient to tech’s Big Three: Apple, Facebook and Google. As the recent cookie frenzy shows, the large tech platforms have an outsized effect on how brands conduct advertising is conducted. A single policy change can reverberate throughout the entire industry, sending brands scrambling to reinvent their strategies and build new tech. First-party data protects brands against the whims of the Big Three and provides a more sustainable, reliable approach to advertising.
First-party Data vs. Second-party Data
Once a brand establishes its first-party data lake, itcan enrich that data even further by combining it with other, more traditional data sources, such as Experian or TransUnion (second-party data). The beauty of first-party data is that it’s pliable. First-party data provides a foundation brands can build upon by mixing it with other data sources and developing even deeper insights into their current and future customers. Supplementing first-party data with third-party resources improves a brand’s ability to chart the consumer journey, segment audiences, deliver personalized ads, and track the performance of different parts of their programmatic ad campaigns.
Now is the Time to Act
To help brands build out their data practices, DELVE has created a three-step system for evaluating a brand’s data, analytics and media competencies, and setting them on the path to building a world-class, in-house data operation.
Of course, a brand can’t deploy first-party data unless the brand collects the data first, and herein lies perhaps the greatest opportunity for brands. With cookies crumbling, brands have the chance to establish closer relationships with their users and customers. Brands can communicate how sharing first-party data will help the brand deliver a more personalized, frictionless experience. The value exchange can be clear and transparent, and it will help brands forge deeper relationships with consumers.
Ready to get started? Talk to an expert at begin@delvedeeper.com.
