Ad Tech and Privacy

Expert Roundup: The Rise of First-Party Data

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Data privacy is perhaps the most prominent topic in the worlds of marketing, media, and commerce. There’s a combination of handwringing and opportunistic disruption as the door slams shut on the unfettered user tracking, targeting, and AdTech norms of the smartphone era.

This means that the privacy era we’re now entering will have different rules of engagement. That’s bad for established players unable to pivot and demonstrate agility. But like any revolutionary period in tech, it will be good for innovative players who can build tools and practices around new realities.

To see what this field of players is currently doing and thinking, we’ve rounded up top industry voices. This is part of Street Fight’s monthly ritual in which we tap our community to provide insights on each month’s editorial theme. We’ll do this in three installments, starting here in part I.

Street Fight’s July Theme: Data’s Next Era

Raquel Rosenthal, CEO, Digilant, on the rise of first-party data

With consumer data privacy regulations on the rise, advertisers must rethink both data collection and audience targeting strategies. They can collect consumer data in many ways, but a common thread is the demand for transparency on what data is being collected, who is collecting it, and how it will be used. Apple’s pending iOS 15 update is a good example of how companies are making it easier for consumers to access this information. Today, advertisers are rushing toward the gold standard for consumer data – first-party data – as part of the sales transaction process, and perhaps more important, when capturing data from mid-to high-interest audiences. First-party data collection is consent-driven and inherently more transparent than other collection methods, and advertisers who can act on collected data will have a leg up against competitors and the fast-changing industry.

Beyond first-party data, it’s important for advertisers to get educated on (or reminded of) all of the other data that’s available to them, including contextual or content-based data, device-based data, and search-based data. It’s easy to get caught up in what we lose with new regulations and the depreciation of third-party cookies, but there is still ample data at our disposal that can fuel smart strategies that have longevity.

Dmitri Lisitski, CEO and Co-Founder, Influ2 on AI and the new AdTech

Looking back, the adtech industry has lost a huge opportunity. Ten years ago, we were living in a world where you could purchase data through one or multiple platforms and serve ads using this data on a variety of other platforms that were combining thousands of media properties into one, easily accessible pool. While it feels like we are still in that situation, the truth is, we aren’t. A huge part of consumer attention is now controlled by FAANG. They, in turn, use stricter data regulation to solidify their monopolistic power by transforming into closed ecosystems with limited access to their inventory at their own terms.

Adtech could leverage data and AI to serve appropriate ads to the right audiences, making ads useful for consumers and, in turn, effective for advertisers. But instead, we’ve put little thought into how data and AI could be leveraged for both advertiser and consumer benefit and have spent more than a decade chasing consumers with irrelevant and repetitive ads. This current practice provides little increase in efficiency with huge deterioration of consumer trust scared by these stalking techniques.

Now, we need to regain trust by making advertising good — not only for advertisers, but mainly, for consumers. There are two key success factors to make ads good.

First, rich first-party data should be obtained in an appropriate way. We learned to collect all possible data and then, how to obtain consent for that data. But now, it seems everyone is educated. We witness how players, ranging from behemoths like Google and Facebook, to smaller players like Quora and Reddit start leveraging their first-party data in much smarter and delicate ways. They optimize their ad serving capabilities every year, and it continues to get better. This will be a default playbook for the fast-growing newbies like TikTok or Clubhouse that challenge the status quo of the monopolies.

Second, I believe that everyone has realized by now that AI is not just about deep neural networks. Math offers so many tools to make sense of data of different quality and volumes. Now is the time to stop being lazy and open the textbooks to solve the problem. Therefore, the second key factor is to use AI to make advertising truly relevant.

Zora Senat, SVP Marketing and Partnerships, Infutor, on email and the first-party advantage

News of Google delaying its expiration date on cookies was a reminder that nothing concerning identity data is certain. And as such, the digital ad ecosystem continues to evolve. This isn’t surprising. Everyone from the big guys like Google and Apple to the smaller players are reacting to nuanced market forces, privacy legislation and their bottom lines. For Google, it seems the costs of eliminating a problematic identifier like the cookie haven’t yet exceeded the benefits.

However, even amid these changes, brands and publishers will continue to transact on data as the currency driving the ad industry. And initiatives to diversify the variety of identifiers on a customer’s profile will continue. From email-centric identifiers like Trade Desk’s UID 2.0 and LiveRamp’s ATS to mobile ad IDs and cookies to contextual targeting using relevant data, the market will keep rolling out new innovations with an eye on the prize. That prize is incremental improvements on the brand and publisher side and, ultimately, better economics that we experienced pre-cookiepocalypse. Something’s gotta give, right?

Regardless of tactics, brands will still need a strong first-party data set anchored in offline identity alongside a robust consent management program. These are table stakes in 2021. And much of this data is secured by an email address which supports so much more than just email marketing. It is an app log in, a user ID, social media ID and more. It serves serves as a primary, persistent identifier that connects various data sets, offline and online, to build a treasure trove of user data profiles.

As brands and publishers work toward strategies to obtain more email and other data with the appropriate consent mechanisms, consumers will begin to ease into an authenticated experience.

Chuck Moxley, SVP of Marketing, Mobivity, on messaging’s role

Brick-and-mortar chains, QSR, restaurants, and retail are all under pressure to more consistently and effectively engage customers digitally. In part, this was a result of the pandemic driving consumer adoption of digital ordering and engagement faster than brands could keep up. But it’s also thanks to increased scrutiny of privacy practices, causing tech providers to limit the use of third-party cookies and mobile device identifiers to target ads and measure campaign success.

This perfect storm means that first-party data for brands is now more than ever the golden egg. But a channel that marketers often overlook that can help glean first-party data is text messaging. As the most used app already installed on all mobile phones, text messaging provides a fast, low-friction path to building a first-party digital audience. Online ordering via websites can, too, be cumbersome and non-standard. Relatively few customers will download an app or keep it, and email is way too slow for the back-and-forth of timely retail ordering. Offers, loyalty programs, and customer service-related issues are all ways to engage customers via text messaging in a one-to-one marketing channel where first-party data can be garnered.

And unlike social networks and apps controlled by behemoth tech companies with their own agendas, text messaging channels are owned and controlled by brands. User responses and feedback enable targeted offers and two-way direct interaction with customers and would-be customers, adding to the first-party data that has become the “new oil” in digital marketing. In this emerging world, where one-to-one relationships with users represent invaluable engines for customer growth and retention, text messaging is a powerful data generating channel that shouldn’t be overlooked.

Aaron Grote, Director of Identity and Attribution, Stirista, on data’s all-or-nothing dynamic

The advertising ecosystem is at a crossroads. What we have come to think of as “traditional” data-based targeting relies on first collecting behavioral data on as many subjects as possible and detecting the identity behind as many impressions as possible, then applying that knowledge to media buying in a one-to-one way. In this model, companies with the best data outperform others, but even companies with mediocre data can still do well enough to generate lift and satisfy clients.

The scale at which our industry will collect behavioral data and identify the user behind an impression is declining due to operating system and web browser changes, which has led to an increasing share of ad impressions occurring in no-identity media contexts. Those trends will only increase.

That brings us to the crossroads, and how the industry is reacting to it. We seem to be shifting to two poles of a spectrum. One pole has us implementing universal identifiers that track people even more precisely than the system consumers are rebelling against now. The other pole is giving up on behavioral targeting entirely and leaning into solutions like content-contextual buying. But there is a middle ground alternative most people are ignoring.

The middle ground alternative first uses data to influence targeting in indirect ways in no-identity media contexts, then layers rigorous measurement to fine-tune that targeting both within and between campaigns. So instead of applying your data in one-to-one transactions, you are applying it in a one-to-many system.

However, because the data used in this approach has an outsized impact on performance, the quality of that data becomes even more important. Mediocre data will not succeed … it will amplify failure. Instead, high quality data is even more important because if it is applied smartly and measured rigorously, it allows advertisers to preserve both the performance and intent of traditional behavioral targeting.

Stay tuned for the next installment, when we’ll spotlight a fresh batch of voices…