Why first-party data should replace third-party cookies

For marketers, there’s been a queasy equilibrium for at least a couple of years as regulators and major tech players like Mozilla and Apple began pushing away from third-party cookies as the mechanism behind online advertising. But with no real alternative in sight, marketers haven’t had to place their bets on the replacement technology… until now. 

Google’s March 3rd announcement, Charting a course towards a more privacy-first web, has certainly shaken the snowglobe, as it were, with the proclamation that they would not build or use alternative identifiers to track individuals across the web, instead “support[ing] first-party relationships on [Google] ad platforms.” For marketers uncertain about the future and looking at alternatives to cookies, Google’s stiff arm of competing technologies might look like bad news.

Good new for first-party data

But in our opinion, it’s actually good news. Good news for consumers, who won’t have to sacrifice privacy for convenience. Good news for marketers, who can get back to what marketing should be about–connecting people with the products and services they want. And good news for brands, who can build authentic relationships with customers directly rather than extending their reach through third-party data marketplaces. 

For a long time now (since our founding in 2012, in fact), we’ve been saying that there is a better way to market–a consent-driven, privacy-first approach to understanding customer needs and preferences. We conceived and built Lytics to gather information directly from customers, through all of a brand’s digital properties, to build useful marketing profiles and then derive insights from them using artificial intelligence and data science.

Steps marketers can take to prepare for 2022

The implications of this week’s announcement are wide ranging. Here’s what we expect to see and some recommendations for this transition period.

1. Expect ad costs per acquired user to go up. To keep overall costs inline, we would advise spending more on onsite-engagement tactics, like website personalization  and content recommendations to increase onsite conversions. Suppress weak audiences or customers who have already purchased to use budget efficiently. 
2. Invest less in third-party data and data enrichment services. They are economically less viable, since the window to use them is disappearing.
3. Build first-party seed audiences and first-party lookalike models in Lytics, such as “all users that bought” or “all users that liked this credit offer.” Onboard these seed audiences to Facebook, Google, and other ad networks, and then use their lookalike modeling capabilities to expand your reach. 
4. Focus on products and engagement strategies that build first-party relationships, which convert unknown users to known, i.e., registered, logged in, signed up for email newsletters, etc.

Avoid uncertainty with a first-party data strategy

Almost everyone has a grandparent who told them, “If you want to do something right, do it yourself.” And as far as the future of digital advertising is concerned, that’s pretty solid advice. Relying on third-party data sources is becoming increasingly untenable. Not only are there heightened liability risks from regulations like GDPR and CCPA, the window in which they will be usable is shrinking rapidly.

If you’re not considering a first-party data strategy right now, rest assured that your competitors are. Merkle’s 2021 Customer Engagement Report, which surveyed 800 marketing, analytics, and technology executives at major companies, identified developing first-party data strategies as a major trend. In fact, 88% of respondents identified the collection of first-party data as a high priority for the next six to twelve months. (Not surprisingly, the rise of privacy regulations and other data restrictions was a leading cause of these initiatives.)

The move to first-party data strategies makes sense; they have key benefits to marketers.

It’s consent-driven: Consumers use their purchases to reflect their values, and increasingly expect brands to demonstrate their alignment with these values. Consent-based marketing respects consumers, and they appreciate it.

It’s privacy-compliant: With laws like GDPR and CCPA giving regulators teeth to enforce consumer privacy protections, brands can reduce risk and exposure by minimizing or eliminating their reliance on third-party data.

It delivers exceptional consumer experiences: Brands recognize that holistic customer experience management is merging many of the functions of sales and marketing–and first-party data allows them to understand their customers better and give them what they want.

Implementing a first-party data strategy is marketers’ way to do it right, for themselves. If you’d like to learn more about how Lytics can help, request a demo today.