End of Third-Party Data (Cookie) For a More Private Web
A big change is coming to the digital marketing space. Third party cookies and device ID's that have been a big part of digital customer acquisition and personalization for the last 20 years are going away. Google previously announced that it is going to phase out third party cookies on Google Chrome in 2022. Apple also made a similar announcement with IOS 14.
All these changes are natural since technology changes more than anything in the world. Besides, digitalization of business services and products are still evolving since its birth, late 90s. We still don’t have enough talent and know-how to cover many roles for digital work all around the world. We are still learning and adjusting our strategies and find better ways to create and do business in digital world. In Late 90's everybody started to roll out basic websites for the first time ever. After first era where companies created basic products, second era started to optimize these products for a better customer experience. This is when A/B and Multivariate testing started. At the same time companies wanted to reach their audiences online more, so digital advertising started to take off. Both A/B testing and digital advertising required data and that’s how web analytics became another popular need. Google Analytics started at the end of 2005. While companies wanted to optimize their products which were mainly websites, Apple came with iPhone in 2007. This was when mobile started to infiltrate our lives. Smart devices flourished and we started to see mobile apps and mobile webs becoming an important part of digital traffic.
Mobile era probably is one of the biggest reasons why third-party data sharing started. Before there was only 1 website for our audience but now there was mobile site and then there was mobile apps. Multi device world was also accompanied by multi-channel world where brands now had more ways to acquire customers. Social media, retargeting networks and other source of traffic sources started to flourish.
I think most of the focus that was intended for product optimization switched to digital advertising, because digital advertising techniques can get you short term results. That’s when problems started for customers. First, customers were exposed to products and advertising that were not very user friendly. Secondly user data and privacy of people have been abused, because most of the third party data sharing is not based on user's consent. Many users don't know that brands they interact sell their data. We all know how Cambridge Analytica used Facebook data to manipulate US elections.
Many companies preferred spending their digital budgets on acquisition rather than product development. Product development return is long term, but digital advertising gives you short term results. If company culture is all about keeping their seats with no loyalty to product and customers with no long term vision, of course they would need short term gains through digital advertising. Have you ever seen Apple to push you some products through cheap banners? No, Apple spends their time and money on product development. Then when we see just the Apple logo, we know we can trust this product. Apple does advertising, but if you review it carefully, you will see that their advertising is not based on false premises, but it is based on features of their products. This is the best example of successful product marketing.
Now this era of pushing products to consumers through violating customer data is ending , because customers are fed up with bad customer experiences and data violations. Many people are awakened, and many started to use browsers that they can trust.
I have been working with data for a long time with many companies. Most companies really use data harmless ways, there is not much danger for the user. But of course, there are sneaky and shameless companies, who do not care any user data rights.
So here is the real issue: When I talk to people who don’t know how tech data sharing works, I already see that they lost their trust. Some of my friends told me that they think Instagram listens and records their voice on and off phone. This initiative actually helps marketers, because customers started to lose trust in digital. Trust issues will affect open and free web's future as governments start to bring more regulations.
As you know Europe has already implemented its data privacy regulation: GDPR
Users has to consent YES before a website can track you with cookies. Unfortunately this also affects first party data like Google Analytics data, if user says NO, companies can't collect web click data from customers. This is a serious issue because we don't want to lose first party data as it is crucial to provide the best customer experience.
Going forward we all have to care and respect customer's privacy, all our data strategies has to check user privacy box.
What is Third-Party Cookie and Data and What is Going Away?
When you visit a website, that website creates a cookie file in a text format and saves it on your browser. On mobile apps, this is done by Device ID. The main reason of cookie was actually to improve customer experience, it was a part of product development. It was never meant to create the mess we are in today. Cookies are harmless and beneficial for customer experience. When you go back to the site or to your app, app remembers your login, preferences and search history and that way if you are using a site a lot like Amazon, then you will have a better and faster experience here.
But some marketers figured out a way to make extra money out of it by selling data. First brands started with more innocent purpose. Usually the first reason to share this data was to catch customers who already visited your site on another network. If a customer added a product to their shopping cart and left the site without buying, brand wants to remind its customers about the products they left on the shopping cart. Then customer would go to a newspaper site or Facebook and there she would see a banner showing the product she did not buy. But then your Amazon browsing history would be part of other brand or network, without you realizing it.
This data sharing can only be done through third party cookies as cookies belong to a specific domain. The cookies on your computer can only be accessed by that domain , but third party cookies can be accessed by other companies as well, without many individuals understanding or consenting it.
So this is going away. There will be no more -at least- live data sharing through browsers or Device IDs.
Third party data disappearance will activate second party data and will make first party data more important. Marketers need to change their acquisition strategy based on the first party data.
What is first party data?
First party data is the data a company collected from its audience and customers directly. All your website, app site usage data, e-mail data, call center data, CRM data ,chat bot data, social media data, surveys, customer feedback etc.. are your first party data.
Everything we do creates data. If you are shopping on Amazon, all your clicks are data and all that data is recorded by Amazon. Most of the time this data is recorded for customer experience or customer service purposes. If you are doing business with bank, your deposit amount, financial history all has to be recorded so that bank can record your financial transactions.
Difference between Second-Party Data and Third-Party Data?
The reason we call third party data "third" is because there are 3 parties involved. 2 companies share data over 1 intermediary usually through ad networks or data companies. If there is no intermediary, data becomes second party data. Apple and Google are removing automatic third party data sharing, but they can't prevent companies sharing data between themselves. But secondary data is very tricky. Third party data sharing is easy because all you need to do share cookies or device ID live and online. Since third party cookies are phased out, sharing secondary party data would have to be offline and manual. It is tricky because you need to find a way to unite customer profiles. Secondary party data is usually possible between companies who have same customers, that way they can unite User IDs. The best example is an airline and its frequent flyer credit card bank, they can share data because they both use Frequent Flyer ID to define the customers. They can build a profile based on that ID.
Yes you can also use identifiers like e-mail and phone number to exchange data but this is again not very good option if we want to protect user privacy if customer did not consent data sharing. In the airline and bank example, customer is already doing business with both companies and is aware that her credit card purchase information is already red by airline to be able to add miles for those transactions.
But secondary party data is fuzzy and not always too useful for real time actions. It can be part of ad-hoc analysis to understand and create segments.
Refocusing Digital Marketing Efforts
Now it is time to reconsider all digital marketing framework. I believe this new era will create a better secure more private digital world.
1-Refocus on First Party Data
There are lots of opportunities to discover with first party data. I believe many companies are still not using first party data properly.
Start exploring your first party data.
Are you bringing all interactions on all touchpoints together ?
Have you built technology around those touchpoints to target and personalize your customers?
What first party data are you not using? For instance do you use chat bot and partner data?
Yes we can also use first party data to acquire new users. First party data gives us insights about how prospects become a customer. Instead of using third party data, you can use this insight to activate your advertising segments.
Since nobody will have access to third party data, old customer journeys that involved third party data will disappear anyway, so customer journeys will change. Because this change will reset customer journeys, there will be some time to learn and adjust to these new paths.
With this new path, data science and testing will be your best friends. Data science, machine learning and testing are needed more when we have less data about our problem.
3-Improve relationship with the customers and build trust
If you prove that you care about your customer's data privacy, they will share more data with you. More and more people closed their Facebook account and
2-Rethink E-mail Marketing
We used to use email lists to acquire new customers and target existing customers. Can we refocus here to do more innovative marketing?
3-Be Innovative and Think Outside Of the box
This is a great opportunity for those people who likes to challenge. Brainstorm with your team, agency and advertisers. You might come up with very interesting ideas to cover third party data loss.
4-More emphasis on product development and product marketing
For many companies digital marketing means digital advertising, and this is completely wrong. Advertising is part of marketing, it can't take over marketing strategy. Now we all have to get back to product development and invest more money to product development and product marketing. Usually, you are using third party cookies to find new audiences, with a better products, customers will come and find you. If you are successful at product marketing, you will need less advertising.
5-We don’t really need to identify consumers individually all the time to create personalized and targeted ads. Google is proposing other alternatives to track and target audiences. Google is working on Privacy Sandbox that will still use customer data but anonymously. Google also said that they will not join others in the tech industry who tries to replace third-party cookies with alternative user-level identifiers such as e-mail. Google is working on Privacy Sandbox and privacy-preserving APIs and suggesting that we don't really have to identify people individually. Digital marketing still can work through segments.
6-Follow The Industry
At the moment everything is fuzzy, nothing is certain yet. So we all have to stay up-to-date and see what will be happening. I am sure there will be some innovative companies and solutions will be born out of this .
cheers and happy private surfing