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Goodbye Cookies and Pixels

Each week, we take an in-depth look at strategic, organizational, and operational challenges facing business leaders, with insights on emerging best practices.  Today, we dive into innovations in the critical path to establishing and transforming first-party customer data and a data-driven culture, as third-party cookies are phased out and pixel-blocking becomes widespread.

One of the biggest challenges for marketers, membership directors, subscription managers and organizations in general is the ability to reach and engage current and prospective customers and members while maintaining compliance with a growing list of country and state regulations, not to mention adapting to today’s technology-driven changing landscape.

Transformation to an actionable, transparent data-driven business model is critical to address the complexity of compliance, personalization, and privacy. Mastery of data is complex considering system limitations, lack of skillsets and/or lack of understanding of the definition, value and actionability of customer data.

At 2040, our core belief is that true data-driven cultures and business model embeds, understands and focuses on concentric circles of interrelated data and establishes the priority for high quality data collection across every internal and external process in place. Data must have definition and meaning in context of the organization and the relationship with its customers.

Regardless of where an organization is on their path to becoming data-driven, the entire ecosystem is about to change. These shifts will drive critical changes in strategies and tactics of any plans or practices already in place if an organization seeks to survive in the evolving dynamic digital marketplace.

Data Points

As digital has evolved, so have the opportunities to leverage data collected by an organization or others through second- and third-party data. Majorly, organizations to date have relied on data collected by third-party aggregators, anonymous data aggregated by platforms into “look-alike” audiences, and/or data created directly by current customers via an organization’s web and app-based interactions.

Over time, organizations have grown accustomed to leveraging the variety of currently available data to curate and engage current customers as well as create awareness of their value with prospective customers. The quality of data used to date has always been in question. However, it was the only available data and seemed, even with limits, to generate results. It also allowed for measurement of actual effort/spend contrasted to the historical “spray and pray” tactics of broadcast or physical print-based efforts (mail, newspapers, magazines). Data provided a credible method to evaluate performance that was more objective than subjective.

What Is Changing?

At 2040 we work with our clients to demystify the entire data/privacy/compliance situation. We have often found that that many organizations address compliance needs holistically and in totality without considering the true nature of how all the different constructs impact business. This approach can lead to some serious missteps.

Let’s start with what is often a major confusion point between EU and US in-force regulation. The Government Data Protection Regulation (GDPR) in the EU puts direct control of personal data into the hands of the consumer and requires that a consumer opt-in before a company or organization can seek to interact with them. In the US, the in-force and in-process regulations to date recognize that organizations need a mechanism to create awareness in the marketplace.

To put it into perspective, the US has a business first policy structure aligning with a free market economy. Therefore, an organization is given the opportunity to engage a prospective customer, but at any point that prospective customer has the opportunity and legal right to opt-out of any or specific communications from an organization. An organization must respect the consumer’s direction in all current and in-process scenarios or be subject to fines. In short, it’s opt-in in the EU and opt-out in the US. Find more details on compliance here.

Third-Party Cookies

For the record, third-party cookies are bits of information that companies can place on a user’s device and then access over time across various websites. They allow companies to see what a user is looking at and interacting with across all sites visited and at a level of granularity which leads to revealing insights across the interests, demographics, geographical location, and other information about the user.

Leveraging available third-party data became standard practice and helped justify marketing efforts and dollars expended to quantifiable, objective results. Well, that is all about to grind to a stop.

Google’s Cookie Phaseout

Some companies have grown accustomed to using third-party cookies for user tracking without transparency or explicit consent as the legal or regulatory basis to do so didn’t exist. Another common practice is retargeting — the ability for marketers to send targeted ads that show you an item that you previously looked at on a website or present you with offers for services across all websites you visit. Retargeting has been one of the most successful practices that leverages third-party cookies. The advertising spend is easily matched to tracked conversions. Retargeting can be highly effective and 2040 has written an accessible guide to help organizations achieve their goals by understanding and leveraging human behavior.

In February 2020, Google announced the phaseout of cookies by 2022, explaining, “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.” According to Adweek, “Unless you’ve been hiding under a rock and avoiding the quickly approaching deprecation of the third-party cookie, you should already be taking proactive steps toward discovering alternative solutions for the cookie-less future. New solutions must be not only smarter, but also enable you to create and customize a precise content strategy to compete in the new ecosystem.”

Deloitte adds, “This is a big deal for many brands and organizations because third-party cookies have long been a key enabler of the commercial internet and of fine-grained digital ad targeting specifically. The massive growth in online ad revenues over the past 20 years is due, in large part, to the fine-grained targeting that third-party cookies enable. For digital advertising, they have helped achieve unprecedented audience segmentation and attribution—helping to connect marketing tactics with results in ways that were virtually impossible in more traditional forms of media.”

Apple, Privacy, and the Pixel

Apple is making digital marketing more strenuous. Adweek reports that “During its Worldwide Developers Conference (WWDC), Apple announced its latest round of privacy features that will debut later this year as part of its iOS 15 software update.” The changes will prevent the ability of the “pixel” to communicate back to email and marketing automation platforms and shut off the ability of marketers to see if, and when, an email is opened through Apple’s Mail app. This change could have a large effect on the measurement of organizational campaigns. The newly released strategy also reveals that users (and companies) will have the ability at will to hide IP address and device ID information to prevent tracking web usage.

As a consumer, you may breathe a sigh of relief and feel more protected; as an organizational leader, you should be very concerned and stressed as the result may significantly impact organizational prioritization and planning.

The Criticality of First-Party Data

Many marketers have not embraced first-party data because of the ease of using third-party cookies, automation and email pixels, and the like. However, for an organization’s survival, marketers need to move their plans and processes to focus on first-party data starting now to mitigate and minimize the coming challenges.

The data your customers share and generate with you has always been critically important, but it is going to be even more so in the very near future. First-party data can be defined as the data you collect via your customers and the constituencies that interact with you and the actions they take with what you offer. This data includes internally capturing data of purchase or interaction, implicit or explicit attributes (demographics and inferred or direct psychographics), duration and frequency of interaction and more.

To master the power of first-party data requires an organizational focus on strategy and tactics – not the least of which is bringing capacity and capability in house. The providers and platforms you have relied upon may not continue to be of value. Now more than ever, you need expertise and capability built into your internal workforce and processes.

Your most important goal is to build strong relationships of value with your current and future customers.  Becoming first-party data-driven (with the right amount and depth of relevant and actionable data) will actualize new tactics, and processes. Ultimately, first-party data is generated via the trusted relationship you have with your stakeholders and can be used to further offers and sales and deliver value. It’s a virtuous cycle, and your trust relationship produces more data that can be leveraged for insights and intelligence — even planning. A trust relationship has many benefits, and ultimately can fill the void of the soon non-existent third-party data. Read more on strategies and tactics on first-party data and building trust.

Why Should First Party Data be Your Primary Focus?

First-party cookies that track basic data about your own website’s visitors are still safe. With a first-party cookie, you can learn about what a user did while visiting your website, see how often they visit it, and gain other basic analytics that can help you develop or automate an effective marketing strategy around them. However, as HubSpot has recently stated: “you can’t see data related to your visitor’s behavior on other websites that aren’t affiliated with your domain.”

As a result, you may lose awareness of referral traffic that generates traffic on your site. Much of the data produced by users who don’t log into your properties remains anonymized as there currently is no mechanism to identify them unless they are already in your CRM or automation systems. Even then, if Apple proceeds with their plan, the user choice to block IP and Device IDs will keep them anonymous to you.

The trick to counter new policy challenges is to get your users to log into your web properties, applications, and apps. With that simple action, whomever creates the data is connected to you as a known user and then recorded in your customer files.

A Fork in the Road: Strategic Transformational and Tactical

We appear to be at a fork in the road. Either organizations transform to remain competitive and on a growth curve that delivers value-based relevance to the marketplace, or they take a step back and let others take their place. It really has become that polarized. The market and the landscape have already set the scene. It up to an organization to rise to the occasion.

Technology remains critical to transformational plans and strategies, but remember technology is a tool that enables transformation of a culture, value proposition, workforce, and processes along with competitive market positioning.

The first-party data discussion is dense and complex, so let’s recap a few critically important facts:

  • The European Union, California, Illinois, and fourteen other states have already enacted various iterations of internet privacy legislation.
  • Google, to date, offers a privacy-light approach that may not stick given current legal challenges.
  • Apple has set the stage for aggressive privacy controls. A user has full control to make their own personal decisions and if a developer bends or breaks Apple’s privacy protocols, the App will disappear from the App Store.
  • Build trust relationships with your stakeholders and commit to provide meaningful value. A relationship of trust will compel the customer to share more and more data with you as they are getting value from you in return.
  • We believe in returning to fundamentals by building direct and transparent consumer feedback channels. Think in terms of omnichannel, a recognition of all the ways customers interact with your organization. Look at your business holistically to get to know your customers on the basis of a value-producing relationship that creates the first party data you need.
  • Find natural intersections between your organization and your stakeholders. Focus on real-time signals of interest. Identify moments of receptivity. Double-down on first-party customer data that you already own. Create a walled-garden ecosystem. Bring key data-driven functions in-house.
  • Redefine current strategies and tactics to sustain and grow as a data-driven transformed organization that focuses on producing valuable relationships with your customers (members, subscribers, constituents, or other).

We at 2040 work with our clients to help them transform and adapt in a changing landscape. Our clients know us as transformation, marketing, communications, and data geeks — and there is truth to how they see us. We know the value of transformation and what a data orientation brings to an organization.

Above all, we know how to move the culture, people, processes, and systems to align with an organization’s strategies and goals.

Connect with us to let us help you navigate the shifting sands of data, privacy, and transformation to stay ahead of evolving policies and regulations and market dynamics. It’s a battleground out there for customer engagement and loyalty; we know how to deploy the strategies that work for you.

Explore Past Issues of 2040’s Ideas and Innovations Newsletter or Explore More Articles in this Series.

Get in touch with us!

2040 helps organizations navigate the sea changes of finding their new normal. We offer actionable expertise in the strategy and operations of digital growth and engagement, empowering an empathetic workplace culture, strengthening your value proposition and driving revenues.  We’ve been in your shoes and we know what impedes transformation … and what unlocks it.

Onward and upward from the 2040 Team

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