Advertisers’ Best Defense Against Changes in the Data Privacy Ecosystem? Design Your Offense with an Effective Data Strategy

January 6, 2021

Before letting the panic of upcoming privacy changes overtake you, or turning to costly CDP solutions before your business is ready, it’s time to evaluate the effectiveness of your brand’s data strategy.

Over the past year, consumers have spent more of their lives within the digital ecosystem than perhaps ever before. Interacting, sharing, watching, learning, shopping, even exercising across their online communities, where the experiences have grown more personal and more reflective of their own lives.

Yet, in an advanced society that is as well-versed in the internet as we are, it’s become clear that consumers are not always quite so aware of just how these more personal online experiences come to be. And the advertising world has long leveraged this gap in understanding to its advantage.

Now, this is not to say that the collection of consumer data hasn’t been of benefit to consumers. After all, advertisers have used this information to improve communications with people, using technology to access all the different signals to deliver personalized ads, while working towards the “holy grail” of reaching the right person with the right message at the exact right moment.

But somewhere along the way, the industry stopped thinking about permission. At best, we grew sloppy in the way we managed data and overly reliant on third party data sources. At worst, we stopped caring at all about whether explicit consent was given by consumers to allow the use of their data.

If that statement makes your feel uncomfortable – good. You are thinking in the right direction.  

And we all know what came next: the slew of consequences that we as an industry now find ourselves facing, including:

  • The pressure of GDPR, CCPA and other privacy regulations that are set to become the standard around most of the world over time
  • The strength of the walled gardens, who continue to offset the playing field in the ecosystem by limiting the flow of consumer data
  • The various rollouts of Safari’s ITP (Intelligent Tracking Prevention) and similar tracking prevention mechanisms
  • The fast-approaching change to Apple’s IDFA (Identifier for Advertisers) which puts consent front and center, and places the power back in consumers’ hands to agree to what data is tracked within mobile app environments
  • And, Google’s infamous crumbling of the cookie

Countless headlines have sung the woes of various industry players – how some will win in this new privacy-oriented environment, while others will suffer dramatic losses. They discuss how the end of advertising as we know it is upon us.

And they aren’t wrong. 

A good and necessary challenge

We certainly aren’t the first to say it, but all of what’s happening is a good thing – or, as we put it in our panel event, it’s not the doomsday some have made it out to be.

The reality is that the consequences and challenges we’re currently facing are ushering in a new and better era of advertising. Why? The exchange of first-party consumer data for enhanced, more personalized experiences will become a truer, more transparent exchange of value than ever before, because consumers will not only agree to it when they choose to, but they will also see its clear benefit.

The brand dialogue must evolve

But in order to get there, advertisers need to put in the work. First, what is the actual value exchange that is occurring? Sometimes, it’s purely transactional in nature, and in others, it might be access to discounts or other exclusive, personalized offers. In some cases, the value isn’t clear at all – and this is the real problem.

While we as advertisers understand that tracking and measuring consumer data is the way we can personalize and enhance the relationship with the customer – and of course, improve our advertising and ultimately grow our businesses as a result – this is not always communicated in a transparent and understandable way.

Harris Poll’s 2019 survey for Redpoint Global noted that 65% of consumers, “expect personalization as a standard of service,” which clarifies that the issue isn’t necessarily personalization, it’s transparency. Sure, if you’re a well-known brand that has the benefit of the “trustworthy stamp of approval”, this might not matter as much. But not every brand has this, and therefore, gaining consent and making the value that the consumer will ultimately receive as clear and explicit as possible is crucial.

The way forward is a customer-centric approach, powered by first-party data, enabled by data strategy

While many like ourselves agree that facing these challenges head on will be better for the entire ecosystem, there are still questions about how to prepare for and thrive in this new world driven by first-party data.

Brands know that the first-party customer data they collect and own will be the most important vehicle for future personalization, measurement, optimization, and later, automation and innovation, of their advertising efforts. But beyond this recognition, many marketers are either finding themselves in a state of paralysis, not knowing what the next step is, or turning to costly Customer Data Platform (CDP) solutions with the hopes that they’ll become the magic answer to gaining the single customer view.

What most don’t realize (or perhaps realize too late in some cases) is that their organizations have far more preparation to do and more discipline to build internally before taking advantage of the benefits a tool like a CDP offers.

More importantly, there is not one single answer for all brands, particularly as businesses are in varying stages of their digital transformation journey.

We believe the first necessary step is for brands to have an established Data Strategy that is fit for their business. At a high level, building up a brand’s Data Strategy should include these crucial components:

Consent Framework: a clear and transparent communication of value used to gain consent for the collection and use of customer data

Established Universal Identifier: how to identify the individual user within the digital environment, like an audience ID or customer segment. Depending on the brand, it might be to the individual customer or in aggregated form

Integrations: first, integrating a brand’s own internal systems and processes, like connecting Analytics, CRM and Media teams, or online and offline transactions, for example. Later, this can entail platform integrations

Governance: comprehensive management of all possible data collection points (site/app, media delivery, CRM, offline, surveys, etc.) This should not only define the correct way to collect customer data, but also set the standard for usage and output

Analysis & Enrichment: the data generated should be analyzed and segmented, using historical interactions with the brand, purchases and LTV, as well as media activation data via clean rooms (i.e. Google Ads Data Hub). These core datasets are used to activate and measure media investment. Beyond core audience segments, sub-segmentation can be enriched by datasets like media performance data, first party survey data and market research or second party data, like through retail partners or walled gardens.

Automation: when the entire process of data collection, analysis and segmentation follows strictly defined governance rules, the next step of automation becomes possible – where not only media investment but also in-the-moment customer experiences can be improved by real-time behavioral data.

Understanding that the future of successful advertising and customer experience relies on first party data and cross-channel measurement is a necessary change in mindset, and many have gotten there.

But we are an industry in constant transformation, and in order to transform meaningfully, brands need to embrace their role as responsible owners of their customers’ first party data. This means having a transparent approach to consent and a willingness to continue focusing on a better, clearer value for the consumer.

And it means developing a disciplined Data Strategy that truly maximizes the value of first party data within a brand’s marketing ecosystem. This is key for future improvements and innovations.

 

For more information, view the replay of our webinar event: Managing Complex Change: Adapting Your Marketing Strategy for the Future Data Ecosystem.

We also love this BCG resource on Responsible Marketing with First-Party Data. 

 

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