This article was previously published in DestinationCRM and has been re-published here with permission.
This year’s Girl Scout cookie season may have successfully gone virtual, but in the tech world, the relevance of cookies has long expired. Google announced a few weeks ago that it was planning to phase out support for third-party tracking cookies in its popular Chrome browser within two years. (As of June 2021, Google has announced they will postpone removing third-party cookies until 2023) This move has been viewed by many as the final blow in the death of third-party cookies in marketing and the latest wave pushing us toward stronger privacy-focused open web standards.
The collapse of third-party cookies was expected as the debate around personal data and privacy ramps up with legislation like the California Consumer Privacy Act (CCPA) restricting third-party data use and making this data less accessible and reliable for marketers. So what does the death of the third-party cookie mean for marketers? That you must develop a powerful first-party data strategy to win the trust and loyalty of your customers.
Evolving from Customer Acquisition to Consent-Driven Personalization
Historically, digital advertisers and marketers used third-party data to compile massive amounts of information about new customers to inform their targeting and advertising. Brands would buy publicly available records from data vendors to sort potential buyers into different categories based on things like gender identification, phone numbers and transaction records. While third-party data was helpful for marketers to build up a large database of prospects to target quickly, this data couldn’t provide a full view of customer interactions over time. Third-party cookies don’t incorporate data from a number of other devices and channels where customers are engaging, like voice or mobile. The result is a frustratingly incomplete outline of customer traits without a single source of truth. The biggest flaw in relying on third-party data for marketing is that it’s purely acquisition-focused and done without any direct engagement with the customer themselves. If you’re trying to build lasting customer relationships, shouldn’t the actual customer be represented?
First-party data is data that your company owns and is collected directly from your customers as they interact across your website and various brand channels. This data relies on acquiring permission and consent from customers, such as when a customer fills out a form to download a whitepaper or agrees to have their browsing behavior tracked when visiting a website. Owned data can also include declared or zero-party data where customers willingly give brands more insight into their preferences and future needs in exchange for a better and more personalized experience. Brands can encourage customers to provide zero-party data through things like quizzes, interactive content or educational surveys and use this knowledge to improve what content they display to certain individuals. These consent-driven data exchanges are by far the most valuable and reliable data for brands to access because they show that a customer trusts you enough to share their personal information for the value your brand offers. Companies can earn this trust by taking control over how they collect and manage personal data by building a centralized and secure data infrastructure with a customer data platform (CDP).
The Rise of the CDP for Stronger Data Privacy
As consumers grow more tech savvy they also grow more wary of how companies and advertisers are using their data. Recent data breaches, cyberattacks and failures to comply with customer data requests have all led to a global push from consumers for stronger governance and control over their information. Yet, the increasingly digital landscape has also meant businesses are adding more tools to collect all of this data. Adding more systems introduces more risks and exacerbates the challenge for marketers to know exactly what data they have and how best to process, amend or communicate this data back to their customers.
This lack of transparency and trust between consumers and the brands using their data has accelerated the downfall of the third-party cookie. Third-party cookies used an anonymous data collection approach that offered customers little visibility into who had their data and how that data was being used. Now regulations like GDPR and CCPA have pulled back the curtain for good.
Marketers need a solution that unifies first-party customer data across every source and system where customers engage. A customer data platform (CDP) standardizes and enhances this data to give marketers a whole-person view of their customer to inform those desired personalized experiences. The power that a CDP offers (to learn and understand who your customers are and what they want in real time) also comes with expectations for brands to use that data responsibly and securely.
Investing in a first-party data strategy means establishing a partnership between both the CISO and the CMO to eliminate data silos so that everyone has visibility into all your brand’s data sources. Unlike DMPs, which only gather third-party data for advertisers, a true customer data platform offers a complete view of all the sources of data you have, so brands can better store, manage and activate this data, while remaining compliant with emerging regulations around data protection and privacy rights.
A First-Party Data Strategy Requires Unifying Data Across the Customer Lifecycle
Customers today don’t want to be tracked and targeted; they want brands to speak to them like real human beings and offer personalized and nuanced options as they move across different touchpoints and interfaces. Using third-party cookies, marketers only had an eclipsed and disconnected view of the customer journey. Third-party data could tell you if a customer viewed an item like a new blender on one site, so you could then cross-target them across various other websites and platforms with ads for other blenders as well. However, this single data source cannot account for all the other actions your customers may have taken on other channels. Instead, marketers need an open data framework where information can flow between different systems, channels and departments: from their website to their CRM system to customer support portals. Only once all of the customer data is collected, organized, unified and activated can brands build a resilience first-party data strategy. Using a CDP to create 360-degree customer profiles drawing from data from all systems and sources, marketers can understand how, where and when their customers prefer to interact.
The result of having all these different systems talk together and marketers can draw more accurate conclusions about customers’ preferences, segmentation and targeting efforts are improved and potential cross-selling or personalized offer opportunities are uncovered. This wouldn’t be possible if marketers focused on just a single touchpoint. For example, say a returning online-only shopper goes to buy an appliance on a brand’s website only to see that the model they wanted is out of stock in the online warehouse but still available in some physical stores. Rather than lose out on potential revenue, the company can leverage geolocation data within the CDP to help that customer find their closest store with their chosen item in stock. From there, they can use that customer’s existing data history to execute a personalized campaign to convert them to a regular in-store shopper. For example, the brand may later email information on upcoming regional events or text them exclusive in-person promotion offers.
Weaving together multiple first-party data points into a continuous data pipeline is the key for brands to create consistently relevant experiences and create lifetime value with their customers. No more wasting money on mistargeted advertising campaigns or static product recommendations that seem to stalk customers as they move from site to site. The new frontier of customer experience requires a unified content and data journey that directly connects data to personalized customer experience without a middle man. By investing in first-party data and a customer data platform, marketers can create transparent, meaningful conversations with customers that persist beyond a single transaction and result in significant lifetime value.