Bernie Yu, SVP Corporate Strategy, ADARA
Google announced that it would not support personal ad IDs as an alternative to third party cookies. In a move that slaps several large DSPs and data management companies in the face, Google is making it clear that on their properties, people can only be targeted in aggregate. In the future, brands targeting a Google FloC, which is like targeting a segment, may end up being satisfied with the performance, but it isn’t a solution for the entirety of online marketing.
The smoke is starting to clear on exactly how brands will reach audiences in the future. In the walled gardens like Google, Facebook and Amazon, brands will follow the rules laid out within each individual platform. Performance and scale will be great, but insights and cohesiveness will be lacking considering marketers can’t take learnings out of the walled gardens to combine with the rest of their media buys. Outside of the walled gardens, they’ll have to find a new way forward without cookies, or IDFA, for that matter.
Find a Lot of Good Data Partners, and Fast
Here is where data collaboration comes in. A recent Winterberry Group report indicates that 81% of US marketers already collaborate with some data partners, but what that looks like today is likely to change dramatically in the future. Only two-thirds of companies work with a first party data provider of any sort, and only one-third say they have a comprehensive data strategy. In a world without cookies, reaching an audience at scale will require the ability to work with a lot of first party data providers, not just one or two. Even the most comprehensive first party data strategy today will seem lacking in a year from now.
Already, we can see the effect that blocked IDs have on the target. Three-quarters of mobile cookies are rejected compared to 41% of desktop cookies, driving ad prices down on browsers like Safari. With ID solutions largely shunned on Google and IDFAs new rules blocking the majority of people reachable on mobile apps, that same effect will spread to virtually the entire digital media universe. Estimate what type of first party data partnership strategy is needed to make up for a 90% signal loss across web, mobile and app. That should put things in perspective.
For brands, data collaboration should become the mantra. There are many avenues forward when it comes to making first party data partnerships. There are complementary brands, such as grocery chains and CPGs, or airlines and hotels. There are publishers that require a login, or app developers that require opt-in. And there is the option to score online data using insights from offline data. But to test all of these options for quality, scale and of course, performance, requires brands to start partner conversations now.
Picking the right data collaboration partners:
- Ensure they collect data from their customers in a transparent manner
- Determine if they use to collect and use data with a privacy-first approach
- Review opt-out mechanisms for compliance and customer-friendliness
- Check the scale of the data to ensure it makes sense based on the company’s footprint
- See how frequently the data is updated
- See if inactive data is churned
If a partner checks out, then it’s time to structure an agreement that touches on all of these details. The agreement should discuss how the data is transferred and shared, what the acceptable use cases are for the data and how opt-in/opt-out will be managed. While complex, creating an agreement that considers every element of compliance and privacy up front will avoid issues later on. Part of the agreement is, of course, the value of the data itself. Determining a cost per use, value exchange or volume price based on different use cases can ensure that the agreement is worth the effort.
Clean Rooms and Collaboration Parameters
Making the move to collect, store and leverage first party data requires planning and infrastructure. Technology stacks that support third party data partners, (which rely on cookies that flow through a DMP or CDP) will need to be updated to first party data that is collected explicitly and used in a dramatically more secure environment. The privacy regulation that governs first party data is explicit.
Brands need automated data governance policies that ensure every single data point is accounted for at an enormous scale. Technology needs to be able to attach rules to each data point – what can come in, what can go out, and how it can be used. This is not only based on GDPR, CCPA and other privacy regulations, but also on business rules. For example, implementing a requirement that no data is shared with competitors. New technologies like data clean rooms can act as a safe, personalized data sandbox for a brand, allowing them to test data and analyze data without violating privacy regulations.
While shifting to a first party data collaboration strategy may feel complicated, the move is worth it, and not just for the preservation of what we had with third party cookies. In reality, third party cookies have been flawed from the beginning, creating an unstable view of the customer. First party data is a more safe, stable and more accurate way to assemble a unified customer view. With third party data, digital organizations were able to assume many things about people without actually asking them – and we all know what happens when we assume things. Now, even those assumptions we relied on from third party cookies are going away. First party data changes that for the better, moving from assumptions to real understanding.