Vericast

Advertisers today are faced with a paradox around consumer privacy. In order to deliver relevant and effective messaging, a certain amount of customer data needs to be leveraged. However, more and more, customers are leery about how their data is used.

Industry headlines bombard us with topics such as the death of third-party cookies, IP masking, COVID, and other economic events and consumer privacy restrictions. In response, the industry is doing rapid and frequent contortions to try and solve these challenges. But, for some, the answer to these challenges may be closer than they think. Their zero-party and first-party data sources, often used for one-to-one communications at the bottom of the engagement funnel, may also be a key to unlocking newer challenges with targeting wider audiences at the top of the funnel. To understand this, let’s look at how we got here.

About fifteen years ago, there was shift in digital advertising as brands mostly moved away from slow and cumbersome direct-to-publisher inventory buying tactics to a new programmatic solution. And as programmatic advertising grew and reached scale, advertisers jumped at the opportunity. Largely leveraging third-party consumer data sources, this gave the industry the precise targeting, relevancy and speed to market that it needed at the time. What used to take days, now took minutes. And cookies and pixels allowed for the tracking of consumers as they navigated the Internet. With a wide spectrum of competitors in the space, marketers could shift their dollars to what worked best, making performance the clear key performance indicator. The providers that had the best data for targeting would win.

Targeted advertising almost immediately created unease for consumers once they realized they were being tracked and profiled. That unease rolled into a period of acceptance where targeted advertising was accepted as a benefit for consumers – as long as it didn’t go too far. But this shifted again in the latter part of the second decade of the new millennium when regional laws started to surface that would limit the use of private consumer data for advertising. Technology providers would soon follow with changes to operating systems and browsers to protect the rights of the individual. As a result, the digital marketing industry clearly faces some headwinds. Soon it will be a real challenge for third-party content publishers (such as ad networks and exchanges) to resolve an individual’s location, identity, or interests unless they change tactics.

To be clear, restrictions on the use of consumer data will not be the end of smart advertising. Instead, advertisers and their solution providers will change to be more deliberate in how they source data for the purpose of advertising targeting. There will be a balance between efficacy and privacy, and the smart people in the industry will figure out exactly how to strike it.

Some of the solutions that will surface will look to the past. Contextual targeting and the use of direct-to-publisher inventory present potential solutions. Many in the industry are running to re-invent these older tactics for the future of advertising.

“About fifteen years ago, there was shift in digital advertising as brands mostly moved away from slow and cumbersome direct-to-publisher inventory buying tactics to a new programmatic solution.”

But one solution may come from the brands relationship with their own customers. For years brands have been establishing loyalty and opt-in list for the purpose of retention and one-to-one marketing.

An acceleration of the focus on direct-to-consumer marketing came in 2020 when the world faced a global pandemic and ensuing economic fallout:

• Brand trust became very important to consumers when health and safety came to the forefront. Establishing direct authentic relationships became immediately valuable. Brands that did not already have established loyalty audiences began to build them. Brands that had them worked to grow them.

• E-commerce became a necessity and some brands had to clammer to build direct-to-consumer marketing efforts to drive this conversation.

• The pandemic taught us that knowing your customer is no longer good enough. Now you need to understand their circumstances at the moment and specific to a geography.

• Leveraging the power of existing customer relationships became necessary when brands needed to incentivize them to return to a brick-and-mortar store after lockdown.

• Programmatic digital advertising was no longer enough as people were not on the move… non-digital channels such as Direct Mail and Email became very critical in marketing to consumers while at home during lock down.

With the effects of 2020 as a catalyst, brands grew their zero-party and first-party data sources dramatically. And with this abundance of new data, brands could speak more directly to their customers. But it also came with a heavy price. Managing a lot of customer data is not light lifting. Having all this data created a new “big data” challenge:how to make data actionable for smart marketing decisions.

Well-resourced big brands turned to Customer Data Platform (CDP) solutions, hired agencies or filled rooms with analysts to solve the problem while smaller organizations struggled to find the funding necessary to mine their big data. So, it’s up to each brand to determine if the effort and cost to make customer data actionable is worth it.

Certainly, there’s a tremendous value for brands to speak to their own customers. Highly targeted one-to-one messaging allows for effective engagement and can drive measurable results. But perhaps the differentiating value comes in when the data can be used to drive higher-funnel activity for marketing acquisition.

Zero-party and first-party data that is gathered through the direct relationship between a brand and a customer has the uniquely relevant benefit of not being constrained by the privacy pressures that are largely focused on third-party data. Therefore, figuring out how to use it for at-scale targeting could be the right solution at the right time for advertisers.

Brands that have established a deep well of zero-party and first-party data on their customers have a unique opportunity. Leveraging this data for the purpose of modeling predictable outcomes and identifying look-a-like consumer audiences could be very effective solution to the pressures they are facing in the industry. This would allow brands to use their own relationships, augment it with circumstantial and geographical information to force highly-predictable marketing outcomes. This works because it starts with the actual data that the brand has about their customers that was given to the brand freely and transparently.

Obviously, this isn’t light lifting. Modeling customer data is an advanced data science exercise that is well beyond the skillset of the average marketing strategist. But there’s a real opportunity here to lessen the reliance on third-party data for acquisition marketing by looking no further than the brand’s own customer data. Marketing technologies and solutions that can help to solve for this new challenge will be able to help brands future-proof their marketing efforts.