By Jim Misener, CEO, 50,000feet
Remember when Google announced it would retire third-party cookies on the Chrome browser by the end of 2020? Businesses gnashed their teeth. Without third-party data, how would they create personalized customer experiences and ads? How and when would Google deliver on its promise to provide an alternative to third-party cookie tracking?
In 2024, many are still asking those questions because Google has continued to delay the big cookie crumble. The latest update: Google is postponing (again) the deprecation of third-party cookies, possibly until early 2025. But Google’s procrastination shouldn’t dictate your strategy. In fact, some industry leaders have already seized the initiative and learned how to tap into their own first-party data. Their success should serve as a lesson to any brand to seize control of your own destiny.
Pull off an Epic Brand Pivot
In the same year Google declared war on third-party cookies, Airbnb faced a near-collapse. The COVID-19 pandemic drastically reduced travel and bookings by mid-March 2020. With $1.5 billion in bookings disappearing overnight, Airbnb’s future looked grim. The company, known for pioneering the sharing economy by connecting property owners with travelers, had disrupted the traditional lodging industry without owning a single hotel. However, like its traditional counterparts, Airbnb was dependent on people traveling and booking stays, which came to a halt as the pandemic took hold. In response, the company made significant cuts, laying off a quarter of the staff and slashing expenses, while seeking capital to sustain the business. Despite these efforts, Airbnb struggled as global travel stalled.
Yet, Airbnb’s adept use of first-party data became a beacon of hope. Data scientists at Airbnb observed a shift in traveler behavior: post-lockdown travelers preferred driving to nearby locations rather than flying to urban destinations. They also sought to rent entire homes to minimize COVID-19 exposure risks. Recognizing this trend, Airbnb quickly adapted by redesigning its website and app to highlight properties like cabins and homes in smaller, more remote locations within 200 miles of travelers’ homes. This pivot, driven by real-time insights gleaned from first-party data, enabled Airbnb to cater to the emerging preferences of its customers effectively. By July 2020, Airbnb’s booking rates rebounded to pre-pandemic levels, and by December, the company had successfully launched its IPO. This shift in strategy not only saved Airbnb but positioned it to thrive amidst new travel trends, emphasizing the importance of agility and data-driven decision-making in brand resilience and growth.
Be a Better Brand Steward
First-party data has empowered Netflix to strengthen its brand. The company collects extensive audience data to deliver highly personalized recommendations, inform original content creation decisions and optimize production efficiencies.
Netflix’s data-driven insights are enhancing the business in two crucial ways, boosting profitability and increasing cultural relevance. In 2022, the company launched a lower-priced, ad-supported tier, leveraging audience data to deliver tailored ads and surpassing competitors like Disney+.
By monitoring viewing trends closely, Netflix quickly develops merchandise for online and offline sales, borrowing from Disney’s successful model of merging entertainment and commerce.
For its part, Disney+ has rapidly garnered a massive audience with the help of first-party data. The platform shares data across its channels (including Hulu, ESPN+, ABC, and more), using its Disney Select platform to create 2,000+ audience segments for precise targeting. This sophisticated targeting, like with Netflix, fuels Disney+’s own ad-supported tier, allowing advertisers to pinpoint their ideal audience within its subscriber base.
Build a New Business
Amazon and Walmart have moved well beyond their retailing roots by harnessing first-party data to create powerful advertising businesses, Amazon Ads and Walmart Connect. These retailers are sitting on a rich trove of customer browsing and purchasing history. This allows them to offer hyper-targeted ad placements, driving increased visibility for brands and boosting sales.
For example, a shopper searching for hiking boots on Amazon might subsequently see ads for related gear like backpacks and water bottles on the product pages they visit. Similarly, Walmart uses its data from the Walmart website; if a customer regularly buys diapers, they might receive promotions for baby food or toys within the Walmart app. This level of personalized advertising results in higher engagement and better returns for advertisers.
Amazon pioneered this strategy, building one of the biggest online advertising operations in the industry. But Walmart is leaning into its own advantage: using shopper data to create advertising revenue streams on its website, app and in-store. Since Walmart has a network of thousands of stores, the company is well positioned to thrive.
Arguably, both Amazon and Walmart are not only building new business models but leading the rise of an entire industry of retail media networks. Businesses ranging from Target to Home Depot are following their lead by studying customer shopping data and offering personalized ad offerings to companies eager to get their products in front of their customers.
Outflank a Giant
By leaning into first-party data, Walmart, Disney+, and Amazon are thriving as new income streams emerge from retail media networks and connected TV. Walmart Connect’s recent collaboration with Disney+ demonstrates Walmart’s ability to use their own first-party data for better ad targeting. This matters because they’re all actually turning the tables on Google. Google, whose ad revenue has been based on paid search, is still trying to pivot to a world where retail media networks and connected TV are together the hottest sectors in online advertising. Ironically, while Google has slowly tried to kill third-party cookies, its competitors have outflanked the giant.
What’s Next?
The next frontier in using first-party data is embracing generative AI. Businesses are already using AI more generally. Generative AI plays a distinct role in leveraging first-party data compared to regular AI by not only analyzing and predicting based on data but also creating new, unique content and experiences tailored to individual users. For instance, generative AI can create personalized content such as product descriptions, marketing copy, and even personalized emails based on individual customer preferences and behaviors captured in first-party data. This goes beyond traditional AI, which typically focuses on recommending existing content rather than generating new, tailored material. In fact, businesses are just getting started, and they cannot afford to wait for someone else to call the shots.
