With third party cookies getting a stay of execution by Google until 2023, the advertising and media industry needs to get its head around the use of better first party data and the value exchange with consumers, writes Ed Ling.
The third-party cookie has been an integral feature of the digital advertising landscape since the early noughties, driving a boom in online ad spend, helping both brands and publishers to better understand online consumer behaviour, unlock growth opportunities and also follow customers around the internet imploring them to buy that thing they just bought.
Although Google recently announced a delay in phasing them out to 2023, we need to deal with the reality that third party cookies will at some point be consigned to history. This means that brands will need to get their first party data act sorted out. First party data will give brands a much clearer view of who their customers are. It creates efficiencies in up-selling or cross-selling and can be used to create much more bespoke customer experiences. According to a global survey by consulting firm BCG, companies who integrate first-party data sources into their digital marketing generate almost double the incremental revenue from a single ad placement or communication,
But with growing consumer concerns around privacy and misuse of data, brands need to get this right because it is the key to unlocking one to one relationships with consumers. Many brands have been collecting first party data for a long time, but a global report published last year concluded that only 24% of consumers see the value of personalization as the result of sharing data, and just 15% feel they are getting good value from granting access to their data.
So, if consumers are saying they want more personalisation then there is a disconnect between their expectations and the work that marketers are doing with the data they collect.
Many brands in retail, financial services, utilities and telco’s have first party data in spades. Largely because they offer direct value. It will be interesting to see how brands with lower perceived value (e.g packaged goods) act because they are going to have to think really hard about what they are offering in return for a customer’s data.
The issue is value, or rather the value exchange. The pandemic has led to significant changes in the customer journey. How consumers engage with brands and content and who they trust with their data has evolved. The traditional model of ‘if you want to read/see this then you have to look at this is declining in value. It is no surprise that more and more publishers are looking at subscription models. Personalisation is seen as a benefit to some but is arguably no longer enough and brands need to rethink reciprocity.
The law of reciprocity is ‘You do something nice for me and I’ll do something nice for you’. It could be emotional in terms of how you make someone feel or it could be material or financial. From a brand perspective this might mean a gift in return for an email address, or access to exclusive content. There are also a growing number of apps such as Digi.Me that help you collate your personal data and exchange that for money. So, in the future, brands may very well find that they need to pay for customer data more directly.
Getting the balance right between what you offer for a customer’s data and how you use it has never been more important. What brands offer in exchange for data may initially be out of balance, but in a good way. Because it motivates their customers to become evangelists for a brand, both on and offline and that one-off ‘gift’ may be the key to unlocking lifetime value. Something that all brands aspire too.
In a world in which consumers are almost never disconnected from the internet and referrals are arguably more effective than adverts, true reciprocity from brands to their customers is one of the most powerful tools at their disposal. So, building a sustainable approach to first party data is strategically imperative and something we all need to think about.
Ed Ling is the Chief Growth and Operations Officer at MediaCom Ireland.