Cloud Services

HOW BRANDS CAN SURVIVE THE DEATH OF THIRD PARTY DATA

Cogent Infotech
Blog
Location icon
Pittsburgh

This conversation was started in January 2021 when speculations arose that Google and Apple may soon kill third-party data collection from their services. This abrupt shift in internet users will be effective from 2022, especially in browsers like Chrome and Safari. But hold on! While Apple has been the leading luminary in third-party data privacy, what happened to Google? Doesn't their revenue rely significantly on advertising? Read on to understand what this means for brands. 

What Does Third-Party Data Mean for Brands and Advertisers?

By the California Consumer Privacy Act (CCPA) of 2018, consumers get more control over what part of their data is shared with digital advertisers. They have the right to opt out of data collection. That's just the tip of the iceberg! Because internet users, even highly tech-savvy ones, are generally unaware or have somewhat vague ideas of how their data flows from companies to advertisers, they may not consent to share their data. Adding more variables to the equation, Apple just rolled out an iOS 14 update where users can opt out.

This translates to a massive pitfall for advertisers, notably the $152 billion US advertising industry, that would instantly lose access to third-party user data. In worst-case scenarios, advertisers may even be restricted from reusing the data they had already collected over the past decade, which has been powering programmatic advertising for companies. However, as bold as the headline suggests, Google isn't doing away with all users' data. First-party data and other information that users consciously provide will remain the same; only third-party user data will not be accessible.

The Fundamentals of First-Party Data and Third-Party Data

Before we conclude by saying that restrictions on third-party data are dooming for brands, we need to know where the silver line lies between first-party and third-party data and how advertisers still have substantial grounds to play on.

First-Party Data:

The user data your business collects through websites and marketing channels, which of course, are willingly provided by your customers, are called first-party data. The following demographic makes this clearer:

Source: https://marketop.io/first-and-third-party-data/

Third-Party Data:

From the same demographic, you can understand what third-party data is; data collected by services, notably social platforms such as Facebook and Instagram, and shared with advertisers and companies.

Advertiser Will Need To Adopt an Industry-Wide Experiment

After an entire decade of advertising operation without any formality or protection over customer data, advertisers and marketers need to strategize and implement an ambiguous solution. As shown in the following demographic, the rise of programmatic advertising in the United States accounts for 78.4% of expenses on video advertising in 2020. However, the impact of turning third-party data completely off is still unclear but will undoubtedly be different for companies that use it, more or less. Here's how advertisers are planning to tackle this industry-wide issue:


Source: https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-demise-of-third-party-cookies-and-identifiers

Revamp The Model of Earning and Managing Consumer Data: Third-party data might be gone, but first-party data is still here to leverage customer experiences. First-party information is still more accurate and thus will gain more traction shortly. The challenge for advertisers and businesses is to figure an effective model to manage this data and get it running through their operations. Managing and partnering with shared data will become more critical.

Share Data in Partnerships: Speaking of partnerships, marketers would need to allocate more ad expense on walled gardens to acquire a large consumer base and their affinities. And gradually,there will be an awaited shift to retail media networks for targeting audiences. Such partnerships will be the key to unlock user data from retailers such as pharmaceutical brands and banking sectors. The challenge here is to ensure consistent consumer data security.

Brands Need To Transform Content Monetization: Advertisers aren't the only ones benefiting from third-party userdata. Marketers, specific creators, and brands also must shift towards a compelling user experience to repair the dent created by third-party data cancellation. For creators, content monetization should be an ideal balance between providing free and paid premium content, where they must encourage consumers and audiences to register or subscribe.

Create Transparency Around How Data Flows: Restrictions on third-party data do not mean that ads will fade away. Inreality, despite their aggressive approach towards App Tracking Transparency,Apple is still allowing certain apps or services to collect user data; it's just that the liberty of opting out is still available to its users. From website pop-ups to checking out information in online stores, letting customers decide creates the transparency they expect from brands.

Can Advertisers Survive This Change?

Yes! A complete ban on third-party data collection and sharing can be troublesome for advertisers in the shortrun. Still, they will open more opportunities and allow them to brainstorm on new advertising strategies. If your marketing model relies heavily on third-party user data, start revamping them right now. But where to gather more information from?

For more information on this topic, please visit Cogent InfoTech or drop an email at hello@cogentinfo.com.

No items found.

COGENT / RESOURCES

Real-World Journeys

Learn about what we do, who our clients are, and how we create future-ready businesses.
No items found.

Download Resource

Enter your email to download your requested file.
Thank you! Your submission has been received! Please click on the button below to download the file.
Download
Oops! Something went wrong while submitting the form. Please enter a valid email.