"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Nancy Marzouk, founder and CEO at MediaWallah.
As the end of the third-party cookie era looms, marketers eye first-party data as the future of targeting. How far along are they in their journey to becoming first-party operations?
As of today, not very – and marketers seem to know it. For instance, a recent MightyHive/Advertiser Perceptions survey found that “fewer than one in 20 marketers believe they’ve tapped more than 80% of first-party data’s potential.”
Given today’s still-thriving third-party cookie ecosystem, being behind the curve on first-party data doesn’t need to be a cause for alarm – yet. The real question is if marketers will be ready over the next 18-24 months, when privacy regulations continue to take hold and walled gardens become increasingly restrictive.
On that two-year horizon, marketers tend to think they’re right on course. According to the same survey, two-thirds of marketers expect to meet their first-party data goals in 18 months or less. From my own conversations with marketers, they indeed seem to think they’re on track.
But are marketers underestimating just how much work lies ahead?
Going first-party will require a radical shift across three core areas of marketers’ operations:
• Data collection as user experience: In today’s world of third-party cookies, data collection is essentially invisible. Users go about their business, while cookies track their activity behind the scenes.
By contrast, first-party approaches rely on prospects’ volunteering personal information, particularly email addresses, well before they ever become customers. Marketers should consider how many cookies they’re firing across the web to execute targeted media today – that’s how many email addresses they’ll need to gather tomorrow.
How much customer data a marketer collects will become a function of how effectively they entice users to share their data. Data collection moves from a back-end task to an entirely new site conversion marketers must drive.
• More complex data infrastructure: In a world of third-party cookies, marketers and their programmatic partners can have a clear division of labor. Marketers keep track of existing customers via CRM. Programmatic partners, meanwhile, manage prospecting. Everyone has a separate role to play.
But if third-party management is taken out of the picture, marketers will need to store and manage data around customers and prospects alike. This includes keeping tabs on every visitor who’s come to their site, and differentiating customers from prospects at various stages of the buy funnel. The already-complex task of handling customer data becomes astronomically more intricate – and must operate at a vastly bigger scale.
• The new marketer data stack: A first-party data operation requires its own kinds of technologies, including site optimization tools and first-party ad servers. It also requires marketers to look at the workforce side of their data with a fresh set of eyes. For instance, only about 20-30% of marketers have full access to their company’s first-party data platforms, varying by platform type, according to MightyHive. Are those the right percentages for a world dominated by first-party insight? Perhaps, and perhaps not. Either way, marketers will need to fully reexamine – and often dramatically change – their first-party data technologies and how they work with them.
All in all, a first-party data era would require massive adjustment on the part of brands. How far have brands come toward making the necessary changes? When it comes to data infrastructure and technology stacks, it’s obviously hard for an outsider to know. But what is clear is that many brands are behind the curve on collecting first-party data outside of CRM. For instance, a recent HubSpot survey found that half of marketers don’t use lead magnets – content or offers used in exchange for email addresses – which are among the most impactful email gathering tactics. Meanwhile many sites, including major brand sites, hardly bother to solicit emails from visitors at all.
Capturing emails at scale is “step one” for a successful first-party data program. If brands are overlooking step one, how many are succeeding on steps two, three and beyond?
I’d guess not many. Some may be convinced they’re heading down the right path on a first-party future, but many are poised to get caught unprepared. When it comes to the real work of building a first-party data operation, many brands seem like they’re behind on emails – and may have received the first-party memo too late.