“We have a system that is out of alignment.” Troy Young, Hearst Magazines president and incoming Interactive Advertising Bureau (IAB) chairman
When we as an industry can no longer rely on third-party data collection, where do we turn?
One adtech executive was quoted at the recent IAB conference — a gathering of big names and leaders in advertising, publishing, and adtech — saying “The real work is these IDs are going to need to be based on first-party identities like email addresses or phone numbers.”
This might come as a shock to marketers after years of predictions and outright statements that email is dead. Could email really be what saves the industry? Indeed, for those brand marketers in charge of an email database, this is exciting news. They’ve been collecting first-party data like email addresses and likely plenty of other data points. They’ve just gone from someone who sends the emails to being at the center of how brands engage, track, and advertise to consumers.
For those brands that aren’t building out databases, but are merely gathering emails to send out updates — or worse, wholly dependent on third-party data — there’s a lot of work to be done.
Retaking control of data
In October of 2019, Mark Pritchard of Procter & Gamble upturned an era of massive ad spend. The brand, which has the second largest advertising budget in the world ($6.75 billion in 2019) frequently advertised on Facebook, Amazon, and Google, but wasn’t seeing the ROI it expected. These internet behemoths had a tight grip on their ads and the data and metrics that accompanied them. Pritchard suspected that these platforms weren’t being entirely transparent about their reporting of metrics and that the “walled gardens” were here to stay. So he decided that P&G would be taking things back into their control — starting with building their own database.
P&G now has 1.5 billion consumer IDs and counting. Each collected with clear permission from the consumer and now used for more specific targeting and less “annoying ad frequency.” This is first-party data P&G owns, controls, and has full ability to measure.
We’ve been saying this over, and over, and over again, within the next couple of years — before cookies melt away entirely — brands will need to embrace a data-gathering strategy that is based on first- and zero-party data. This collection is not something that goes on quietly in the background, it is direct, transparent, and consented to. It doesn’t involve collecting just for the sake of collecting, it encourages building a relationship with the consumer that gives them a trusted way to share their data with a brand in exchange for something of value.
Brands struggle to replicate the “walled garden”
The underlying theme in all of this is that no matter who is collecting data and targeting consumers with it, the true winners right now are those who have been collecting first-party data the entire time because they have logged-in users.
But brands, as they currently market, don’t really have this ability. And that’s what the Digiday article addresses — the open web, that is those without logged-in user platforms, such as small publishers and businesses — will be the losers in this new playing field. Brands and marketers know that it’s always been a challenge to get consumer information, especially when registration is required.
Forrester’s recent report The Capabilities Marketers Need to Build A Strategic Privacy Function, does a great job of laying out some strategies brands can use to get the information they need to personalize their marketing efforts while also respecting the privacy regulations and rules that have come about.
One of their suggested strategies is creating or making use of a zero-party/declared data platform. It’s how a brand marketer can gather data beyond just the identifiers of phone numbers and email addresses as suggested by the IAB. Brand marketers would still be gathering this first-party data, but the zero-party data strategy goes beyond that by allowing brands a chance to know the consumer through the psychographic data collected.
Another way to build out a database: loyalty
Loyalty programs have been around for decades, but they are so much more than their earn-and-burn, transactional reputations. A solid loyalty program, built on the foundation of first- and zero-party data and striving for emotional loyalty, can be the key to replicating the walled garden.
Think about it — 35% of U.S. consumers belong to 4-10 brand loyalty programs, with 50% belonging to 1-3. That’s half of America willingly exchanging their data to get the benefits of a loyalty program (whether that’s a birthday surprise, a sneak peak at sales, custom offers, or a wealth of other ideas). Their names, where and when they like to shop, their preferences, how and when they like to be contacted; that’s just some of the valuable psychographic data that consumers are willingly giving to the loyalty programs they belong to. If a smaller brand doesn’t have the manpower to build out a massive P&G-style database, a loyalty program can serve as that database.
There's no better time to start than right now
In this way, brands are no longer relying on walled gardens to report back sketchy, skewed, inaccurate data — they’ve built a database of their customers and their preference, all of which is based on accurate and self-reported zero- and first-party data.
The best part is that brands can use a platform like the Cheetah Digital Customer Engagement Suite, which combines a zero-party data, messaging, and loyalty platform — or just start asking consumers questions in whatever data collection tool you use. Either way, getting to know the consumer through first- and zero-party data is going to be the best way for brands to avoid the scramble to find better identifiers once cookies go away.
For those consumers, who’ve been tracked around the web for decades, this change means better privacy and protection. For brand marketers, it’s a challenge, but one they can start overcoming by gathering their own first- and zero-party data and building out their own database. Have questions? Get in touch.
We break down loyalty as a database growth strategy
in our latest episode of Thinking Caps.