The world of data management is becoming ever more complex. Ben McDermott, senior analyst and lead consultant at Teavaro, provides a view of an industry in transition, but with an opportunity to strengthen.
This past year has been particularly hard for digital marketing due to the ecosystem’s reliance on third-party data. How does one kick the habit on which the marketing ecosystem has been built? Well, ad-tech will innovate and a class of marketing tools – the Customer Data Platforms (CDPs) – are poised to be the solution and the opportunity that advertisers and media owners need to overcome the pains of regulation, competition and consumer behaviour.
As platforms that create a persistent, unified customer database, dealing in single-customer views and accessible to other systems, CDPs allow companies to take control of their data future and move to a first-party data strategy.
Commenting on the recent pressures of the GDPR on the digital marketing ecosystem, Johnny Ryan, head of ecosystem at PageFair, an Ireland-based ad serving technology company said:
“Companies who create value only by using data and tracking people across the internet will have to find a way to build a relationship with the customer. They will have their businesses seriously disrupted”
The stage has been set for first-party data strategies, not only by regulatory change, but by the rise of ad-blocking, and the free movement of browsers towards cookie-blocking defaults – no doubt with one eye on strengthening their market position – eroding the efficacy of previous third-party models. These changes will mean that data (ID) sync using third-party cookies will no longer work at scale, and agencies will not be able to buy audiences on behalf of their clients or use third-party data as they currently do.
In this scenario, companies that are gaining traction – like our own Teavaro – are those who support organisations in consolidating different types of identification data points and first-party data to create and activate customer profiles and valuable insights for brand marketing, performance marketing and customer base management across digital channels. The buzz about CDPs reflect this shift in strategic focus.
A New Beginning
The landscape of digital marketing has always been one of change, undulating with trends and technologies, forever in transition. But the ground underfoot currently feels unsure, with evolving consumer trends (i.e. ad-blocking), an oligopoly of ‘walled gardens’, and new legislation in Europe (and Japan) conspiring to bring a watershed moment to the industry: a new beginning, and a new focus on first-party data.
How has this caused such upheaval to a fruitful industry? GDPR in particular has sent tremors throughout the ecosystem, with Drawbridge last week announcing it is to abandon its European advertising business due to the pressures of regulatory compliance. This might seem a rare feat for what is ostensibly a prosaic list of regulatory additions and updates, but what this regulation has brought to the surface are some shocking gaps in data practices; gaping crevasses that have been exploited time and again to the detriment of consumers and company coffers (and indeed reputations) alike. In short, it has exposed the rotten core of the ecosystem.
Hard Truths for Soft Options
The ecosystem has created a reliance on the nimble adtech vendor. Adaptable and generally cooperative, advertisers and media owners could easily stack these marketing solutions high upon legacy systems to satiate their growing needs far more quickly and easily than developing in-house solutions. But a reliance on third-party technology has brought with it a reliance on third-party data too. And it is this reliance that is challenged by the new regulations.
Thus, GDPR and its acolyte ePrivacy (PECR) have come to mean more than following a compliance checklist. Companies are waking up to the need to think strategically about new business models, and to adapt proactively to the new terrain. Advertisers and, particularly, media owners are realising that they are the new gatekeepers to customer data. With this new control, there comes the opportunity to put their customers and their data first.
Enter Customer Data Platforms
The solution is the involvement of the customer – in controlling and consenting to the use of their data they provide balance. Thus the customer relationship, the ability to converse and convince, is renewed in value. As the marketing ecosystem – built on distance, on third-party exchanges of third-party data – is no longer positioned to influence the customer, the value of first-party data increases. This data might include a plethora of device- and customer-specific identifiers, in itself extending capabilities into identification traditionally offered by these adtech vendors.
But why wasn’t it this way before? To date, first-party data - both online and offline - has often lived in silos owned and accessed by different teams, or been recorded in formats that prevent their combination, or not been able to be shared in a secure way with partner organisations.
Customer Data Platforms (CDPs) can combine these different data points from a marketing perspective, capturing data sources across channels usually not recorded by Customer Relationship Management systems (CRMs) and not locked into Data Management Platforms (DMPs), and tracking the interaction of that customer cross-device. One core feature that distinguishes CDPs against their third-party comparisons is the ability to make precise decisions about content personalisation using real-time information about the status and behaviour of the customer.
In contrast, DMPs are storing data that they can share with any paying client. They are in the business of creating and sharing audiences and their competitive advantage derives from how you could match them with your own data. But the new environment creates hurdles for the DMPs’ effectivity.
Firstly, DMPs can only use personal data (whether it is one or multiple data points leading to an identifiable person) in anonymised form, and are unlikely to gain permission from users to change that. Even if they were, they are not in a position to handle the granular informed consent that the new legislation requires from a data controller.
The key functions that have gained DMPs a central role in adtech, such as serving up data for advertising, facilitating audience acquisition, and retargeting are mainly based on transactions using cookies/ID data that identify devices rather than individuals. Overall their core functionality is tied to the third-party, and is thus not sustainable as it is.
First-party data activation is key
An industry survey (ConversantMedia) of CMOs has suggested that only about 15 per cent of such professionals feel confident that they could tie up online and offline data about their customers, reach them across multiple devices over time, or deploy personalised ads. All this calls for a strategy that unifies the precious data points that your company has about status, purchasing habits and interactive behaviour.
CDPs can provide the essential elements to enable first-party data strategy quickly and efficiently:
• the combination of different sources of user identification across different touchpoints;
• the integration of different sources of data such as login details, website visits, order history, or social media interaction;
• enabling the marketing department to gain insights from this data; and,
• the activation the data either autonomously or in partnership with the first-party data of other brands, publishers or platform in a transparent and privacy-compliant way.
For example, Teavaro’s FunnelConnect platform has enabled a large enterprise (inhabiting both media owner and advertiser roles), both in real-time and through batch-transfer, to unify and activate their first-party data assets across the wider marketing ecosystem.
Our integration is designed as a synergy that is transparent, operating with permissions of all parties, and using ID graphs to make it possible to identify an audience for a campaign without the use of third-party cookies. As such this enterprise has found an opportunity to build their marketing strategy based on their first-party data, while continuing to utilise a marketing stack developed on the adtech ecosystem (SSPs, ad networks, agency trading decks / DSP, etc.) dependent on third-party cookie ID syncs.
Advertisers and media owners alike should be focussing on a strategy that enables them to extract all the marketing potential of first-party data, utilising up-to-date, unified customer profiles to deliver better customer experience while improving engagement and sales. This can be achieved by partnering with organisations that help bridge silos, not create new ones, and seamlessly connect in real-time, pulling data from different sources in a secure and privacy-compliant way to create promising marketing insight. This is what CDPs can facilitate.