Derek Slager is the co-founder and CTO of Amperity, the leading customer data platform (CDP) for enterprise consumer brands.
In early 2020, media and advertising were turned upside down by Google’s announcement that it would phase out third-party cookies by 2022. With Google’s recent announcement of a delayed timeline, we know now that advertisers have more time to prepare for the demise of the cookie. However, while this date has been pushed back, other third-party privacy walls have risen as a result of regulations like GDPR and CCPA, as well as Apple’s changes to policy around third-party cookies and similar tracking technologies. It’s clear enough that the trend toward greater privacy regulation is only going in one direction and that brands need to set themselves up to operate on a different model.
When the third-party cookie goes away, it won’t just affect key marketing functions like targeting, measurement and attribution; it will take away the entry ticket to participate in the broader digital ecosystem. At least this will be the case for companies that relied heavily on the cookie to tie their operations together. On the flip side, organizations that have invested in their first-party data assets will still have options.
In the not-too-distant future, consumer brands will have to collaborate with multiple other brands, finding new regulation-compliant ways to pool their data in order to recreate the network effect that the third-party cookie previously provided. Those that have built a solid, well-organized foundation for collaboration based on first-party data will find themselves in a much stronger position.
Haves And Have-Nots
This is a revelatory moment for customer-facing organizations. The loss of cookies will be a difficult challenge for many; third-party data has often provided crucial context that sharpened the effectiveness of first-party assets. However, the accuracy of third-party data has been decreasing, and companies that continue to lean on external resources without shoring up their internal data sources should face an even harder fall once cookies are phased out completely.
Many organizations that previously invested in robust first-party data to power customer experiences have realized that not only do they have a competitive advantage, but they also have a powerful bargaining tool as they work together with potential partners. A wealth of first-party data can allow organizations to bring more to the negotiating table, sharing data in order to increase their marketable audience while remaining in compliance with expanding regulations.
On the other hand, organizations without first-party data are facing decreasing insight and advertising reach through the increasing proliferation of walled gardens. The result is new pain in managing orchestration and frequency within these ecosystems, which were previously addressed by digital onboarding and data management platform solutions. With these solutions no longer viable, brands need internal first-party data sources and strong second-party partnerships in order to maintain long-standing advertising practices like look-alikes, suppression and retargeting—all within the increasingly fragmented ecosystem.
An Uneasy Truce
What would a healthy, productive data relationship look like between two organizations—particularly when one has more first-party data to offer than the other? The key is to find common ground between companies that previously have not been open to collaboration and that have overlapping customer bases but aren’t in direct competition with one another. Similarly, new partnerships could emerge between companies that maintain supply chain relationships and are looking to improve customer experiences across online advertising and retail purchases.
Successful data collaboration can allow the party in need to supplement its existing data for targeting, measurement and other analytical insights. Crucially, this exchange can’t compromise the customer relationship and data of the provider. The current solution to this problem is the “cleanroom,” a platform that makes it possible for one organization to share its customer data in an aggregated form without revealing or releasing the personally identifying information (PII) of its customers. Cleanrooms are already being embraced by some of the world’s largest brands as they look to modernize, diversify and draw closer to their advertising and supply chain partners.
Preparing For Success
As organizations enter into new data relationships, they will need to prepare for success. Just like in real relationships, an organization seeking second-party data needs to start by working on themselves before involving someone else. Brands have always had to use customer data to inform their internal functions. However, if that customer identity foundation is disjointed or poorly organized, it will make it more challenging to engage with potential partners. If an organization has five different versions of a customer for its internal functions, how does it know which one to use that will offer the most value when it collaborates with a data partner?
A robust, well-organized and agile customer profile should serve as the currency for any organization’s data collaboration efforts. Brands will need to find multiple partners for success, as a world of fragmentation and walled gardens replaces the easy exchanges of the third-party past. A brand’s first-party data and customer relationships will serve as its ante, the cover charge it pays to get into the new world of data collaboration. The more it has to offer at the outset, the more it’ll benefit from the exchange.
At the end of the day, brands must treat data collaboration partners as a channel rather than a platform. Although we might wish otherwise, there will be no single second-party or third-party relationship with all of the desired insights and customer relationships, and there will be no single interoperable solution for the related data collaboration. The only way an organization will be able to build new first-party relationships in a world without third-party cookies will be to prepare internally, develop agile relationships and master a unified view of its own customer in preparation for second-party exchanges between new trusted partners.
To effectively navigate this new world, advertising, marketing and IT functions must work together closely. By unifying their customer identities from first-party data and preparing for data collaboration with trusted partners, brands can set themselves up for success without cookies—both now and in the future.
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