The Data Divide of a First-Party Future

first party data

By Filippo Gramigna, CEO, Audiencerate

With cookies on their way out and the metaverse gathering momentum, the marketing industry has found itself in a deep state of change, with some confusion as to how to plan for the future.

With large walled gardens collecting first-party data at scale, making them “data-rich”, the deprecation of third-party cookies is likely to send more advertisers seeking market certainty flocking to partner with them, growing their advantage.

Meanwhile, smaller companies that are more likely to be considered “data-poor” will either be subject to the whims of these tech giants — as we have seen with  Google’s destabilising move away from third-party cookies — or risk being left looking for answers.

As 99% of businesses across Europe and the UK are classed as small and medium enterprises — over half of which reported reduced revenues since the onset of the pandemic — it seems digital assimilation, adapting to new technologies and developing additional solutions, is more than necessary for survival.

Stronger Together

Fortunately, there are a number of ways that smaller businesses can overcome the challenges of a fracturing data and privacy landscape.

This starts with a process of consolidation, streamlining and unifying systems and processes down the whole length of the supply chain, from effective internal collaboration between departments, to mutually beneficial partnerships with other companies.

But how does this practice of centralisation strengthen a company’s overall position within the marketplace?

Firstly, the best content and most impactful campaigns stem from a business of well-integrated datasets, incorporating information from each marketing, advertising, research and analysis team.

Research and analysis data informs marketing strategies and likewise, realtime campaign insights can influence advertising actions. In a similar vein, smaller companies working together can effectively pool resources, knowledge and extend reach, be it financially — for example, through a joint investment — or by developing solutions in an uncertain environment.

Keeping Up With Stiff Competition

Currently, Google’s solution to the post-cookie world, FloC, is a cohort-based data taxonomy that assembles user data into groups of similar activity. These privacy-first consumer profiles will provide brands with insights, however a decrease in tracking capacities and as such, impact measurement and optimisation, is to be expected.

Brands need to prepare themselves for the fact that this will not necessarily be enough to stand out, especially against first-party data heavyweights.

To achieve superior services and build a reputation, businesses of the future will have to master the act of spinning myriad plates, from tightening GDPR regulations and proliferating data touchpoints, to omnichannel campaign and marketing strategies and data dependence.

As the pandemic proved, digital transformation was vital to keep up with multiple vying demands as brands moved to ecommerce and tried to find new ways to connect to consumers and going forward, this will continue to be the case.

With the promise of a looming divide between data-rich and data-poor brands ahead where tech giants such as Google, Amazon, and Meta reign supreme across the digital world, it is unsurprising that other companies are trying to come up with alternative solutions, especially as FLoC has already come under fire for disadvantaging smaller companies with smaller data banks.

So far, the Trade Desk, ID5, Lotame, and LiveRamp have developed their own ID solutions, however it remains uncertain whether or not this will simply lead to an oversaturated ID environment with no clear best practice.

The Quest for Additional Solutions 

For those looking for alternative solutions, there is some light at the edge of the horizon: further technological developments, such as Customer Data Platforms (CDPs) and Data Clean Rooms and, promise hope for companies looking to maximise their insights, manage their data and preserve their customer’s anonymity.

CDPs and Data Clean Rooms can be complementary to each other, allowing first party data to be shared between players in the market; this is an evolution of getting data strategies to work efficiently to activate assets.

Walled gardens use media clean rooms to provide marketers — often those who have allocated a significant portion of their advertising budget on these platforms — with insight on reach, measurement and performance metrics. Data clean rooms are also a strong future contender for advertisers and publishers who wish to partner up and maintain control over how much data they share.

CDPs have emerged as a strong additional solution to Google’s FLoC, as well as other private identity solutions, because they combine data harmonisation with external campaign management tools.

Ethical and privacy-compliant systems build comprehensive user profiles that update in real-time, enabling key performance measurement metrics and ROAS. Furthermore, CDPs are inherently both independent and neutral in comparison to other potential candidates, which is a strong plus in a world where government bodies are imposing ever stricter GDPR regulations.

The digital future still leaves many questions unanswered, especially when it comes to issues concerning authentication, identity, and anonymity on the one hand and independent versus industry-wide solutions on the other.

What is clear is that brands need mechanisms that facilitate and streamline the complex combination of demands ahead — not only because they are legally required to do so, but because consumer trust relies on it.

Consumers need to have transparency on their data, so they can understand and agree to how it is being used and this includes an explanation of the straightforward value exchange of content, promotions or services in return for personal information. Only half of consumers (49%) have confidence in companies handling their data and just 25% believe that they even benefit from handing over any personal information.

With data as currency in the digital age, it will be up to brands to lead the way and prove to their audiences that they have earned their trust and loyalty.

Challenge and Innovation Will Pave the Way

The future promises challenges but at the same time, it promises innovation. Despite the delay of third-party cookie deprecation, it makes sense for companies to continue striving for solutions that reflect the reality of the marketing environment.

In other words, answers that are adapted to the large number of SMEs that provide a diverse depth of goods and services..

These solutions need to organically incorporate collaboration, data management, privacy compliance and integrated interoperability. Now is the time for businesses to go the extra mile to show consumers that they are invested in creating reciprocal value, something that not many audiences are convinced of.

Testing will inevitably involve some missteps, but these come with the benefit of being an integral part of the future solution.

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