'C' Is For Cookie: What does third party data leaving even mean?
If you have been listening to the news over the past 12 months, at some point you would have heard something along the lines of ‘third-party data and cookies are leaving the internet so you are going to have a hard time doing anything in digital, let alone grow.’ Unfortunately, you are probably going to hear more scaremongering tactics, and every second person is going to tell you something different you should be doing: 'Invest in brand, digital is dead, you are going to get screwed,' etc.
If you are like most, you probably don’t even know what third-party data and cookies are, and so you have absolutely no idea why their leaving is even a problem.
So what is third-party data?
Third-party data is information about you that's collected by companies you don't directly interact with. They gather this info from different sources like websites you visit, apps you use, or even purchases you make. Then they sell or share this data with other companies so that they can target you with advertising. For example, if you've ever seen ads that seem to know your interests or habits, that's often because of third-party data. But lately, and for everyone's privacy, there are more rules about how companies can collect and use this data because of privacy concerns and GDPR. So, it's becoming less common for companies to rely on third-party data.
Now, why does this make growing your business harder?
Using third-party data to understand customers and target them with ads has been a big help for businesses. It's like having a cheat sheet on what your customers like and where they hang out online. But now, with new rules and concerns about privacy, companies can't rely on this cheat sheet as much. They have to find other ways to learn about their customers and reach them with ads. This means they might have to work harder or get more creative to grow their business. It's like losing a shortcut on a video game—you've got to figure out the levels on your own now.
So what do we do now?
Naturally, getting to customers who want what you sell/offer is going to be harder. But that doesn’t mean you should just throw out the book, give up and go back in time and give up on measurement and any strategic thinking.
Two serious avenues you can utilise to mitigate third-party data losses are:
Have a first-party data strategy.
Invest in media mix modelling.
Firstly, It’s useful to know what first party data is. Simply put, first-party data is data you've collected directly from your customers. This could include:
Your website analytics, CRM, EDM, Surveys, Loyalty programs & many more.
You own your first-party data, and the more you own, and the cleaner it is, the more impactful it will be when you go to use it. Having clear infrastructure and a plan around first-party data allows you to gain a real understanding of who your customers actually are. And then that should be what informs everything you do moving forward giving you continuous learnings that can be optimised upon.
The second is investing in media mix modelling.
Media mix modelling is like having a playbook for your advertising strategy. It helps businesses figure out the best way to spend their advertising budget by analysing data from different sources, like TV ads, online ads, or social media. With the disappearance of third-party data, businesses need to find new ways to understand their customers and reach them effectively. Alongside first-party data, media mix modelling steps in to fill the void. By looking at all the different channels where businesses advertise and how they perform, it helps them make smarter decisions about where to invest their money. It's like having a GPS for navigating the changing advertising landscape—you can still reach your destination even if the old shortcuts are gone.
In summary, the doomsday rhetoric that everyone is preaching about data privacy and the ‘cookie apocalypse’ is largely hype. CEOs, CMOs, and whoever is in charge of growth just need to get a bit more scientific with everything they are doing and have a sound plan. The end customer is still the same; we just have to find them in new and more innovative ways.