The Death of Third-Party Data

Consumers expect more personalization, and personalized marketing has led the way in creating experiences that help brands differentiate themselves. It started out with platforms like Facebook, Amazon, Netflix, Google and Spotify – digital services that constantly personalize the stream of content, products and recommendations we interact with. Now, however, these experiences are so common that consumers have become wary of one issue and almost one issue alone: privacy, and that’s putting the third-party data used to personalized these experiences at risk. 

Those same digital platforms (particularly Google and Facebook) have long liberally permitted advertisers to use data to target consumers. They’ve collected it not just on their own properties, but throughout the web in order to get insight on what experiences consumers were really looking for. Now that consumers expect privacy and platform players like Apple and Google are committing to providing more of it, the “crackdown on cookies” that’s following is leaving many marketers scared for the future

In order to get ahead of this trend – “the death of third party data”, we’ll call it – brands need to consider three practices: reducing their reliance on third-party tracking, properly transitioning from the ad platforms they depend on today, and developing the kind first-party data that will allow them to provide the one-to-one experiences consumers love. All of this doesn’t have to cause fear, it can actually lead to a more effective marketing future than ever before. 

Most cookies are third-party and used for marketing. Curtailing these will fundamentally change the digital marketing landscape. Source: Cookielaw.org

Reducing Reliance on Third-Party Data and Tracking

Third-party tracking has been the basis of performance marketing for more than a decade. By being able to profile consumers as they travel across the web, Facebook and Google build unique pictures of what drives consumers and what content and advertising will interest them most. The types of cookies they use are also essential for tracking affiliate contributions to sales and campaigns that use methods like retargeting. 

Ironically, the real problem here didn’t come from advertising alone – it came from politics. The Cambridge Analytica scandal showed that far more data was available to brands, as well as political actors, than consumers felt comfortable with. As major tech platforms began to cut back what was available to data-driven marketers, consumer data has become a hot commodity – so hot that most brand marketers recognize the need to start generating their own first-party data as soon as possible.

In almost every case, brand marketers agree that targeted advertising is in crisis. First-party data is the only way to survive in a post-third-party-data world. Source: eMarketer

Significant changes in third-party data policies are a direct threat to major brands. Advertising is now majority-digital, which means that the same channels that are restricting data are the ones many brands rely on most. Most of the tools brands already use to target ads rely exclusively on either account and cookie-tracking, all to enable targeted campaigns that generate higher conversion. Without a full retinue of targeting capabilities available to them, brands will only see higher advertising costs and less return on each dollar. 

This threat is now kicking into high gear. Changes in the landscape, like Apple’s recently updated “Intelligent Tracking Prevention”, put more constraints on attributing purchases to site visits and ad buys. Google has added a similar feature to Chrome with optional third-party cookie blocking, which some say is a cynical move because users won’t have the option to block Google’s tracking of their internet behavior. As this trend continues, it’s not just important to find ways to be less reliant on third-party data, but to build first-party data of your own in earnest. 

Jumping Off Before You’re Cut Off

In the midst of an anti-tracking future, it’s important to set the table with your best bets. You’ll have to pick new technologies and try out new use cases to ensure that you can generate your own data and keep personalizing your relationships with consumers. While Google, Facebook, Amazon and Apple build “walled gardens” where each ecosystem offers its own unique targeting benefits, you need to in-house the data you generate through tools that plug into each of these channels. That way, while you rely on these platform players for distribution of your advertising, your knowledge of the consumer can still allow you to target and convert better than the rest.

Custom audiences – mostly defined through email – are just one example of how first-party data, when injected back into a given advertising channel, can help improve the relevance and effectiveness of ad targeting. Source: Neil Patel

Ultimately, people won’t ever only use Google’s services. The same is true of Facebook, Apple, Amazon and whatever other platform may prove relevant in the long term. The free and open flow of user data is what originally allowed these platforms to flourish and brands to profit from the data they made available,. Consumers also benefitted from richer and more engaging experiences. Since this flow of data is now being constrained, tech platforms may profit in the short term, but they’ll only become conduits for the brands who best manage their first-party data going forward. 

This data could come in various forms – emails collected, purchase history, customer origin, source, region or preferred channels of communication. More retailers are actively observing and requesting data from consumers in order to optimize their promotional strategies. However, transaction and biographical data isn’t enough – most consumers won’t really have a reliable history there. What you need is first-party data that tells you what they’re looking for and what matters to them, all before they buy. 

Taking First-Party Data to the Next Level

So, what kind of insights does this take? Well, when your consumers interact on your website, they might click through different topics or look at different products. Usually, you might use this for retargeting, but you may also be limited in your ability to retarget going forward as cookie expiration policies become more stringent.

If you do have a way to message consumers following their first interaction with your brand, you can deploy almost any form of marketing automation. The thing is, if you can’t reliably do that, you need to get lift in every aspect of engagement you generate, whether it culminates in an email capture or an ecommerce purchase.

To do that as effectively as possible, virtual product advisors are one solution that can create lift in the engagement, insight, sales and satisfaction you generate through ecommerce. The conversations you have consumers lead to specific disclosures: what problems are they having, what aspects of their life do they want to improve, what product categories are they interested in but unsure about. All of this form a rich “topsoil” for your first party data that you can use to increase first-time conversion and then build custom audiences or email retargeting campaigns after the fact, and even reengage returning visitors to your website (no need for a third-party cookie for that).

Virtual Product Advisors allow brands to take an active stake in the consumer decision journey, generating unique first-party data about needs, wants and concerns and increasing conversion.

It’s not just collecting data that’s important. The process you use to collect first-party data and the other benefits that process can involve are equally essential to handling the ongoing changes in third-party data. Brands often assume that solutions like AI assistants are best suited to support consumers, but every and any interactive solution you can deploy – especially if they’re conversational – gives you access to another level of marketing that you can leverage to get a competitive edge. 

Providing One-to-One Customer Experiences

This process can even be deployed through tools like conversational advertising, supercharging your engagement and data collection from the very top of the funnel – all while competitors just try to keep up with the latest changes in cookie policies. For brands, it’s important to understand that the end of third party data is only the end of a first version of digital marketing. There has been so much focus, historically, around tracking and attribution for individual transactions that it’s been impossible for many marketers to focus on the importance of reach and engagement in driving the conversion they want to see online.

That means that getting specific, actionable insights on your consumers is essential – not just for better ecommerce performance, but to building real customer relationships that drive more sales over time and more satisfaction with each interaction. Conversational AI can be deployed across every single customer touchpoint – from marketing to commerce to support – in ways that enable greater engagement, prevent competition and maximize the value of a given customer experience

Consumers still expect omnichannel experiences, even while third-party cookies are restricted. Your brand needs to use solutions that connect directly with consumers to continue to meet their needs. Source: UrbanFox

When deploying conversational AI, you have the opportunity to engage a customer in conversation across multiple channels and interactions. Even with limited third party tracking, conversational AI allows you to increase engagement, generate insights and convert more in every instance – whether it’s on social media, your website or other preferred channels. Brands can see more than 30% increases in average revenue per user with it – all without the headaches that come from trying to know if you’re properly managing data or violating consumer privacy.

Considering everything that brands devote to ecommerce sales, lead generation and customer acquisition in general, investing in a conversational approach is a long time coming – not just to improve your first-party data collection, but to put that data to use in a quick and friendly way that consumers actually love

Third-Party Data is Dead. Long Live Third-Party Data!

Brands will take data where they can get it. Third-party data will have a role to play in the future, but it’s not going to be the growth engine it once was. You can’t wait to make the jump – you need to think about first-party ways to generate data and improve insights before your most common third-party-dependent campaigns are hampered.

Tasks like personalized marketing can be challenges. With the data it generates, conversational AI lets you actually execute campaigns on a more personalized basis that accounts for people’s real concerns, rather than just their inferred interests. Third-party data has given brands plenty of great opportunities to market themselves, but face it: it’s time to move on to bigger and better things. 

Book a demo with Automat to learn more about how to overcome the death of third party data and use actionable insights to sell more

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