Three reasons why you need a holistic first-party data strategy and solution now

Julie Springer
December 8, 2022

As 2022 closes, we are inching closer and closer to a day without the ability to leverage third-party cookie data for personalization and targeting. Couple the deprecation of third-party cookies with more impending data privacy laws, and brands will have to rethink their customer acquisition and retention methods while publishers will need to hone in on their targeting strategies.

Underpinning the shift in the digital ecosystem is the current economic climate where every ad dollar spent will be scrutinized. With so much change and uncertainty, now more than ever brands, publishers and marketers need a strategy on how they plan to reach their customers without relying on third-party data, but with a better, more privacy-friendly approach.

Build trust with consumers

Morning Consult recently published a report on the Most Trusted Brands of 2022. The report highlighted that 39% of Gen Z and Millennial respondents tend to not trust companies that don’t take an active approach to earn their trust.  

Consumers want to turn to brands they can trust, and that trust begins with a transparent and privacy-friendly approach to acquiring user information.

Personally identifiable information, or PII, will make up only part of a first-party data strategy. Authenticated traffic only accounts for about 10-20% of all internet users. That leaves an extensive untapped audience of potential consumers.

PII also presents a certain amount of liability. Cyber attacks and leaks are steadily increasing annually leaving companies open to heavy regulatory fines and loss of customer trust and loyalty.

Main reasons for distrust

*Based on a 2021 study by McKinsey Research

For users that come to a web property and don’t consent to providing personal information, understanding who they are and how and why they transact, will allow brands to create more personalized experiences and target their customers way beyond their owned channels.

And while privacy may be at the core of consumer concern, consumers still expect a very personalized experience. How do brands still serve their audiences while protecting their personal data?

To begin, it’s important for brands to provide full transparency in why they are asking for personal information and how they plan to use that data. Brands also need to provide easily identifiable “opt-out” options so consumers don’t feel trapped by brand communications.

This is also the perfect opportunity for brands to polish their retention strategies and loyalty programs. Building better relationships with customers means creating a community they trust and enjoy engaging and transacting with.

Replace third-party data with first-party deep behavioral data for better targeting

As previously mentioned, relying solely on a user’s personal information is not a practical approach to maximizing targeting, retention or ad spend.

What’s needed is a more holistic approach using a scalable solution that relies on predictive analysis as a way to understand how users behave and a way to obtain important demographic and psychographic information, while still providing online anonymity.

“The industry faces a massive shift where privacy policies are evolving, user data access is being restricted, and third-party cookies are deprecating. These changes will inevitably impact all facets of the digital ecosystem,” says Anthony Caccioppoli, ad tech and data expert. “Third party data providers are at risk of collapsing if they do not pivot to a first-party data approach. Brands and publishers that do not ask their users for declarative data (such as demographics, gender, interests, etc.), nor have significant authenticated signals (such as email subscribers, registrations, etc.), are left with little to no valuable signals to enrich their user profiles. The industry will see a rise in probabilistic identity solutions to make sense of anonymous users across web and app environments and devices. Also expect to see a rise in privacy-first predictive technologies which do not rely on cookies to derive demographic, psychographic, and potentially other information that make data owners' user base more valuable to buyers.”

Aside from gleaning a deeper understanding of your customer, this privacy-by-design approach expedites trust between the consumer and the brand offering a deeper relationship for increased lifetime values. It also offers better personalization as you can leverage consumer intent and brand affinity.

An AI-powered solution that can take user interactions and segment demographic and psychographic information, provides a more robust approach to accurate targeting and real-time personalization.

Combat the current economic climate with better targeted ads

Since 2013, Safari and Firefox users, which account for 40% or more of US mobile web visitors, aren’t tracked by third-party cookies. With the impending Chrome third-party cookie deprecation, marketers and retailers will lose targeting capacity on more than 72% of desktop and 93% of mobile web users. Pair that with current economic instability where every advertising dollar counts, and the future of advertising seems unstable. *Information provided by Statista, US-only, 2021

According to an article published by IAB, State of Data 2022, The Measurement Dilemma, for publishers, $10 billion is at stake of sell-side annual revenue. As well, without access to third-party data, and no solution to supplement it, ad costs could skyrocket without the identification of targetable audiences. Estimates have been reported up to 200%.

One would think this meant doom for publishers, but this actually presents a great opportunity for better targeting. By leveraging scalable first-party data segments derived from deep behavioral data, publishers can have a competitive advantage to close more deals and increase revenue. This solution not only provides scalability across audiences, it generates more accurate data than simple behavioral or contextual solutions the industry has grown accustomed to. Better targeting means better eCPM and ROAS. And all while protecting the consumer’s privacy.

Leveraging deep behavioral data without the user having to supply personally identifiable information, is not only a win for the consumer in terms of privacy, but a win for brands, marketers and publishers on the targeting front.

Implementing a probabilistic prediction solution that provides predictive analysis that can be segmented by demographics, psychographics, intent and performance, creates the ability to better understand consumers, while maximizing ad spend.

The importance of implementing your first-party data strategy now

As they say, you don’t want to be the last one to the party. That said, determining your first-party data solution now will provide the time needed to bring this solution to life.

Transitioning to solely relying on first-party data requires everything in place downstream. Your entire strategy will need an infrastructure to support it. Integrations with marketing and other technology tools will need to be implemented, as will testing your solution. Educating internal teams, vendors and customers will also be required.

With a strong, first-party data solution rooted in privacy, consumers and brands will build better trust and enjoy highly engaging brand experiences. For publishers and advertisers, leveraging deep behavioral data means better targeting and increased ROAS. The future of first-party data reliance doesn’t have to be grim.