Why First-Party Customer Data Is Better Than Using Cookies (Really)
Marketers have grown reliant on third-party ad tracking and cookies, but the news is this: First-party data and back-to-basics strategies will yield more bang for your buck. Here’s why.
Have you ever shopped for something online and then, moments later, found yourself inundated with ads for an eerily similar product? These are third-party cookies (tiny invisible bits of ad-tracking code that record our activity) in action. But the cookie was originally meant to facilitate shopping and browsing. It was not meant to replace first-party customer data or be the basis of an increasingly arcane and intrusive online advertising industry.
It turns out that as much as we appreciate thoughtful personalization, none of us want to feel as though we are being spied on. We don’t like the uncomfortable sense that someone is tracking our every move. Privacy advocates and regulatory bodies have pushed back against adtech’s dependence on this kind of surveillance for years. Brands have been trying to walk a fine line: reaching consumers in a relevant way without compromising anyone’s sense of privacy.
Most agree, however, that companies have generally not been very good at maintaining this high-wire act. Now, here we are, with third party cookies disappearing in 2024. But private companies are acting far sooner than that. Apple announced it would block third-party cookies on its Safari browser. Google announced it would phase them out of Chrome.
“Users are demanding greater privacy – including transparency, choice, and control over how their data is used – and it’s clear the web ecosystem needs to evolve to meet these increasing demands,” wrote Google in its initial announcement of the phaseout.
Customer data platforms (CDPs) for a cookie-less world
When third-party cookies go away in late 2024, first party data (the stuff you collect directly from consumers) will become absolutely crucial. How will you mange it all? A CDP collects, unifies, and activates all customer data, and enables you to pull amazing insights.
That web ecosystem now has until late 2024 to evolve, giving developers, marketers, and advertising firms a finite amount of time to answer the question of what comes next.
“The whole infrastructure behind third-party cookies has become unwieldy,” said Salesforce senior vice president Marty Kihn. “It’s time for a rethink and a reset. I’m optimistic about what comes next, but the transition period is very uncomfortable.”
It’s time for an ad tracking and third-party cookie reset
I don’t have your typical chief marketing officer background. My career has taken me from the U.S. Air Force to management consulting; from Delta Air Lines to Tableau. Essentially, I’m an engineer who accidentally became a marketer. When I first started in marketing in 2002, my analytical background made me an outlier. But over the past several years, analytics and being data-driven have become increasingly core to my field. I have found this shift to be a compelling one. And yet the shift to data-first marketing comes with some potential pitfalls.
The first is trying to replace the cookie with another silver-bullet data solution. In fact, I don’t believe there will be a single direct replacement for cookies. It’s true that some companies are floating various potential alternatives. One of the most widely discussed plans from Google is called Federated Learning of Cohorts (FLoC). With FLoCs, user data is not sold individually to advertisers but rather in a batch with other users who share similar interests. That way marketers could theoretically target groups of soccer fans, home chefs, or expecting parents without compromising customers’ individual privacy. Other options include various Universal ID proposals that would allow users to seamlessly opt in to tracking at various websites with full consent.
But I’m skeptical. The effectiveness of FLoCs and Universal IDs remains an open question. And I’m not sure these alternatives actually offer any meaningful privacy benefits compared to cookies. After all, in order for users to be placed into FLoCs, browsers would still need to track them. We might just be replacing one form of tracking with another.
Let’s say we did find that perfect cookie alternative: We would still be overusing third-party data, still get lazy, and still break our users’ trust. If anything, the cookie-less future offers the promise of a better path. Data-savvy, forward-looking marketers can glean substantive and long-lasting insights about their customers using multiple touchpoints, signals, and sources of data. And getting that data blend right can make or break your business: Our recent research reveals the vast majority of business leaders believe the future of their business hinges in part on a complete and consistent view of their customer. But fewer than one-third of those leaders currently have that complete and consistent view.
“When we talk about the death of the cookie, it sounds like it’s doom days, right?” said Chandra Mostov, the chief operating officer of marketing automation and personalization at Wunderman Thompson. “But in reality, it’s the reaction to a broken system where brands have been exploiting the fact that they could capture data behind the backs of consumers without them really knowing it.”
Gather better, more reliable first-party customer data
There is no magic bullet or secret ingredient to building meaningful customer relationships and developing community around a brand. You have to do it the hard way: Respect and level with your customers. Offer them something that will improve their experience with your product. The best data is the first-party data that our customers share with us willingly.
“Marketing has always been about brand and community building, and the internet helped with that,” said Matt Day, head of brand communications, digital marketing, and ecommerce at Spalding. “But what data did is make a lot of things more about clicks and targeting. It made it easy to lose sight of the core of what you’re trying to do, which is connect with people in a meaningful way.”
Spalding is a legacy brand in the sporting goods space with high name recognition. That legacy has been a work in progress for more than a century. It began with the company’s founder, Albert G. Spalding, who made it his mission in life to do exactly what marketers are still trying to do today: Forge meaningful connections with customers. Spalding started out in baseball equipment. In 1888, to move people to buy his gear, he rallied a roster of superstar players and set out on a world tour. Spalding’s team traveled across Australia, Asia, and Europe and even played at the base of the pyramids in Egypt.
“You always have to use channels to the best of your ability and evolve the ways that your message is delivered,” said Day.
These days, for Spalding, that means digital. The company has built an ecommerce presence that relies on retailers such as Walmart and Target as well as direct-to-consumer sales on its own website. However, the need for Spalding to own its relationship with its customers across multiple retailers prompted the company’s leadership to refocus their strategy on community building. That meant distancing the brand and its marketing efforts from third-party data and constantly shifting social media algorithms.
Early direct successes prompted Spalding leadership to further reduce the company’s use of third parties and constantly shifting social media algorithms for marketing.
In 2018, the company launched a free membership program called Spalding MVP as a means of collecting first-party data about customers while giving them in return direct value from the brand. Since MVP’s launch, the company has seen three consecutive years of triple-digit direct-to-consumer growth.
The benefits of first-party data are clear:
- It comes directly from users, with their explicit consent.
- it comes with contact information and opens up the possibilities of direct communication.
- It comes with the clear understanding that your users are interested in your company’s product or services.
You get more reliable data, and you actually own it, which means that you don’t have to rely on third-party ad tech companies to learn about your most loyal customers.
Creating a vibrant first-party program such as Spalding MVP requires more than just the marketing department. It happens in sales, on the back end of the website, and at the point of contact with users at retail stores. It also requires thoughtful data management and buy-in from across the company. Even with all that, Day said it’s worthwhile.
“There’s certain third-party data that’s very valuable. It helps you reach people that are looking for your product,” said Day. “There’s also a lot of strong reasons to build a community, create for that community, serve that community, and use that first-party data to better your brand experience – but it takes a lot of commitment.”
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Data management is essential
Without third-party cookies, brands will need to work harder to analyze and act intelligently on the data they do have. That means building robust customer data platforms (CDP) to manage first-party data and whatever future third-party data the post-cookie world allows for – whether it’s FLoCs or something else entirely.
Data management is important for intuitive reasons: It enables companies to understand their real and potential customers while making smart decisions on how to engage them. But it also goes beyond that. Organizations who manage their data well will be in a better position to use machine learning and AI to recognize and target customers while predicting their behavior in even more sophisticated ways.
The truth is, we don’t know exactly what the post-cookie world is going to look like – and most companies won’t be in a place to make broad determinations about what it looks like, either. That means we need to focus on being agile so that we will quickly and effectively be able use the tools that become available.
“I think that the death of the cookie is an opportunity for brands to reset and take control of their data,” said Mostov. “An opportunity to be more firmly on consumers’ side and to respect them.”
We also need to embrace the idea that marketing is not a silo. Any company’s ability to excel in a post-cookie world is going to depend on leveraging talent and knowledge across teams. Once upon a time, a company might have had a handful of analytics folks on their marketing team running the numbers and then handing reports over to the creative types. These days, business moves way too fast for that.
Organizations will need their marketers to be able to read and interrogate the data themselves so they can make smart, fast decisions. Marketers will need to understand who their target audiences are and where they are on their journeys, and to make direct decisions based on that knowledge. This does not mean that every marketer needs to be an expert-level data scientist. But it does mean that organizations need to give their marketers the tools to analyze and visualize that data effectively.
“It’s going to be a world where a lot more people have tools that are easier to use, where they can do things like segmentation without necessarily being developer-level coders,” said Kihn. “That’s the idea of no-code or low-code that’s catching on.”
Data analytics and creativity make the most of first-party data
We’ve been marketing long before the third-party cookie existed. Even without the cookie, the tools at marketers’ disposal are greater now than at any time throughout history.
But those tools do not excuse us from ignoring the tried-and-true practices that predate super advanced targeting: Creativity, sincerity, empathy, and relevance.
“You have to go back to communicating what differentiates you as a brand, how the product is distinct, and actually speak a message that is going to connect in a meaningful way to your audience,” said Day. “It goes back to what the root of marketing should do, which is connect people to meaningful stories about your products and connect with them in deep, emotional ways that build a community.”
When I started my career in marketing, I believed that data and logic would provide the answers. After all, I was an engineer. Then I built teams full of creative souls and leaned into ideas that I never in a million years would have come up with myself. It turns out that the best marketing happens at the intersections of data analytics and creativity. And neither of those things require third-party tracking.
You don’t need cookies to know if an idea is worth trying. You don’t need cookies to gather data on your own campaigns and make smart decisions about how they can scale. You don’t need cookies to meet your customers directly and honestly.
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