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A tectonic shift has begun—one that could open the door for companies to reinvent their marketing and data strategy, and potentially their whole approach to the consumer experience. To seize the new opportunities, companies will have to act swiftly.
For years, companies could rely on consistent access to consumer data gathered by third parties on the ad-supported Internet. Now, key tools for obtaining this data are about to go away. Among other shifts, Google is phasing out third-party cookies and Apple has altered the rules for its identifiers for advertisers (IDFAs).
Privacy regulations and regulatory enforcement are also tightening. With ever more companies gathering and using ever more data, the risk to brands from data breaches or other privacy violations is rising. New privacy regulations reinforce the new norm: consumers are either required to explicitly opt in to share their data, or they have ways to opt out of their data being sold and of receiving ads that target them. Consumers also have new expectations, not just for privacy and control, but for what value they may demand in exchange for their data.
Across the business world and digital marketing ecosystem, some companies are already reacting with aggressive new data strategies. Others report a lack of preparation. Cloud and other technology providers are offering new tools and partnership possibilities.This fast-changing scenario may appear daunting, but it shouldn’t. It means that new opportunities are arising.
All companies—whether brands or advertisers—have new ways to know, reach and please their customers, new tactics for offering value and creating trust (both B2B and B2C) and a new technology toolbox for understanding consumers without infringing on their privacy.
Yet there are two main ways you could miss these opportunities while potentially assuming new regulatory and business risks. The first danger is not acting right now: New solutions are advancing quickly. Even first movers are not yet too far ahead and have yet to fully assess both the marketing performance and the privacy implications of their plans.
The second danger is if different executives—such as the CMO, the chief privacy officer, the chief data officer, the CTO, the chief trust officer, and the ethics and compliance officer—act independently. If different functions or lines of business look to different solutions and work off different technology and operational strategies, they can fail to unify around consumers’ needs. (To illustrate how unwieldy an uncoordinated approach could become, consider that the marketing technology landscape alone has over 8,000 solutions).
To seize the new opportunities, companies will have to act swiftly. They can then craft a unified strategy that’s fit for a new, more privacy-conscious world.
Digital platforms are changing their data policies. Alphabet (the parent company of Google), as part of a declared effort to “fundamentally enhance privacy,” will phase out third-party cookies on its Chrome browser by early 2022. Third-party cookies, which track consumers from one website to another, have been a prime source of data for use in marketing, consumer experience initiatives and product innovation. Google will soon launch alternatives, but it will not offer or use identifiers that track individuals across the Internet. In line with Tim Cook’s affirmation that privacy and climate change are the top issues of the century, Apple has announced that its latest operating system requires apps to display a pop-up, through which consumers must choose to have their data tracked—including by Apple’s IDFA. Apple’s App Store also now requires that apps publish privacy “nutrition labels” with details about how the apps use consumer data. Without care, these labels could potentially put companies at risk of regulatory actions—including from the FTC—for deceptive and unfair trade practices.
Privacy regulations are growing in both number and strictness, with Europe’s GDPR and California’s CCPA and CPRA and Virginia’s new Consumer Data Protection Act merely the tip of the iceberg. By the end of 2021, 82% of the world’s population will have data protected by basic security requirements, according to PwC’s Risk Atlas database (which includes over 2,500 data privacy and security laws and regulations). ESG investor ratings are also attracting ever more attention, increasing the scrutiny of companies’ data security and privacy practices.
Consumers have long said that they want more privacy—even if they often haven’t found it yet. In a PwC survey, 76% called sharing personal information with companies a “necessary evil.” The COVID-19 crisis has also likely accelerated privacy awareness, since it has moved so much of life online. The result is that even as consumers demand ever more personalized digital experiences and products, they are also seeking better privacy options. Business customers too are increasingly wary about sharing data, upon which their own business may depend.
These changes may put many digital marketers in a bind, but they could also be the impetus for positive changes. Marketers are facing demands to be more customized and trackable so they can deliver demonstrably better ROI even as consumers are rapidly changing their purchasing paths. To meet these new demands, they’ll need identity and attribution models that can follow consumers in these new paths, paths that are often non-linear and fragmented: crossing multiple touchpoints, controlled by multiple companies, over multiple days and with repeating cycles.
It’s still possible for brands and digital marketers to acquire the necessary data while protecting privacy and enhancing consumer satisfaction. The path begins with seizing three opportunities.
The rules for accessing consumer data have changed due to major shifts in digital platform policies, in privacy regulations and enforcement, and in consumer expectations.
Success in this new world will have three ingredients: a new data strategy, a new approach to trust and value, and a newly innovative technology toolkit. The foundation for all three will be sizing and understanding the impact of the changes on your business. How much do your topline and bottomline depend on data whose flow and availability may be disrupted? Your marketing, consumer experience initiatives and product innovation may all require data whose access could be threatened. Once you’ve assessed your precise risks and needs, you can advance on the new opportunities.
Without third-party cookies, IDFAs and similar tools, many companies have to create a new data strategy. Yet even with cookies, most companies have been failing to fully access and monetize all the data that they could. To take just one example, many have not integrated all the information they already hold on their customers to create individual customer data profiles. The opportunity now is to create a new strategy that also creates new value—a resilient data pipeline, laser-focused on giving the business exactly what it needs.
Begin by mapping out what data you’re accessing now, where you’re sourcing it, how those sources of data may be disrupted, and what that data is worth. As you discover what different data sets are worth, you may choose to stop collecting some. For the data you do want, your map should reveal the exact contingencies—whether technological, regulatory, contractual or due to internal data silos—that you need to overcome to gather and use it.
You may find new ways of collecting data that are more complete and cost-effective than third-party cookies ever were. You should be able to develop a data strategy better suited to customer purchasing paths that no longer line up with linear advertising models.
You’ll benefit from this new strategy whether you primarily gather data directly or acquire it from third parties—and it should help you assess whether or not you should build or accelerate a first-party data strategy. Some companies with strong consumer relationships may even find a new opportunity to aggregate and sell their first-party data to new partners. But a first-party data strategy is not right for every company. For many, new partnerships will prove a better answer.
Your “single-pane” view of your data, whether first or third party, can help you continue to unlock its value as the privacy environment keeps evolving. It can help you develop a data trust strategy that not only helps you monetize data but also helps you minimize its risks.
The customer value exchange for digital marketing has changed, as a new report from the Interactive Advertising Bureau (IAB) makes clear. Consumers are no longer satisfied with the traditional exchange of free content in return for accepting ad delivery.
B2B companies face a related, perhaps even greater challenge. Business customers can be highly cautious about sharing data. Still, like individual consumers, they increasingly expect both effortless, seamless digital experiences and customized services and products—which you can provide if you have their data.
To raise the odds that both b2b and b2c customers will choose to share their data, consider a new kind of value exchange. You (or the third parties that gather data for you) will have to explicitly offer something of commensurate value in return. This value will usually not just be privacy itself, though it will probably include transparency and power. No one likes to be tricked into anything, including sharing their data. This value will more often be about ease and convenience, a superior digital experience, premium content, or free or discounted products and services.
Whatever your data sources, how you manage your customers’ digital identities can define your brand. You should therefore carefully consider your options. The correct privacy stance and privacy customer experience will not only give you access to the data you need. It will also strengthen customer loyalty and intimacy.
Highly sophisticated data valuation models are emerging. These models can help CFOs understand how much of their revenue depends on data sourced directly and through third parties. That will help determine the appropriate value for that data. These models can also help risk managers better understand, quantify and mitigate the related risks, which should also help guide how aggressively you pursue certain data sets.
As third-party cookies and IDFAs begin to fade, innovations are multiplying—many of which the cloud enables because, for cloud providers, the new opportunities are immense. Many are developing powerful tools and capabilities. Through a marketing cloud, your company may now be able to better measure attribution and performance for marketing across channels. It may be able to receive more focused and relevant data on every stage of a customer’s digital journey. A shift to the cloud can also accelerate innovation and growth throughout a company.
On and off the cloud, new partnerships are emerging. Many consumer packaged goods companies, for example, are partnering with retailers, who help track business outcomes for marketing. Several telecom companies, some with direct relationships with hundreds of millions of customers, are offering identity solutions.
Other partnerships are coming together within and across industries, so partners can build unified customer IDs from data aggregated from their various sources. Fast-growing digital platforms—whether for streaming content, video conferences, doctors’ appointments or online learning—are also offering options for understanding customers and marketing to them.
These partnerships are evolving new rules and standards for data. At present there is little alignment—even around defining such fundamental measures as age brackets for demographics across ad formats, geographic targeting and baseline attribution models. You might want to consider engagement to shape those and other standards to meet your needs. The IAB Tech Lab and the Partnership for Responsible Addressable Media (PRAM) are two alliances worth a look.
Whether on the cloud or off, with partners or on your own, tech innovations for identity and attribution are accelerating. Here are a few options to consider.
These options are just some of the many that are emerging. Digital media is still in a phase of experimentation and innovation. Yet even without dominant models, you can’t afford to wait. We believe all companies should begin evaluating existing and emerging tools—and do it in a unified fashion.
The challenge is too big for any one function or line of business to solve. It will also be wasteful if different lines of business reach agreements with different technology vendors or partners when a single customers’ or consumer’s data crosses many business lines.
Your path toward seizing the new opportunities begins with bringing together executives from marketing, sales, privacy, finance, IT and the business. This multi-stakeholder team should consider these questions to shape their agenda and create a unified response.