Why companies need to prioritise first-party data

Google recently announced it won’t be replacing third-party cookies with alternative user-level identifiers. Cory Munchbach, COO at BlueConic discusses the implications for organisations building first-party data strategies.

Posted 6 April 2021 by Christine Horton

When Google stated back in January 2020 that it would phase out support for third-party cookies in Chrome within two years, several technology providers stepped forward to create a replacement identifier that could be used by advertisers and publishers for data collection. 

On the surface, these attempts to ‘fix’ the third-party cookie problem were intended to be seen as an ideal way to re-architect the ecosystem. In reality, these replacements are nothing more than a cookie in another ID’s clothing. Google recently made its own position on this issue known by announcing it won’t be replacing third-party cookies with alternative user-level identifiers.

In the advertising and publishing industries, the fallout from this announcement has been seismic and far-reaching – albeit unsurprising – with many hedging their bets to see whether to put their efforts into Google’s cohort-based approach to targeting, known as Federated Learning of Cohorts (FLoC), The Trade Desk’s Unified ID 2.0 user-level identifier (which is seen by industry stakeholders as FLoC’s main rival), or other individual solutions led by publishers.

Despite the myriad options claiming to offer a viable solution, the bottom line is that data collection strategies must be grounded in trust and in the promise (and delivery) of relevant and valuable customer experiences. Buying into what is effectively a new cookie pool with ad tech vendors won’t only open the door to potential regulatory headaches, it will also undo any goodwill or consumer trust that businesses have built up. The very reason we are in this situation now and why the GDPR came into existence is because of the misuse and mistrust over how data is collected and used, and because adtech had no incentive, and thus no action, toward transparency about how consumer data was being captured, stored, and used. 

First-party data

So where does this leave businesses and why does it matter? According to a recent survey by Deloitte, 45 percent of companies that reported a positive business impact from digital transformation also reported higher net revenue growth. Since the demise of third-party cookies also represents a loss of the third-party data upon which to base transformation and growth initiatives, companies need to adjust their data strategy to prioritise the collection and use of first-party data instead.

Leveraging first-party data to fuel companywide digital transformation efforts isn’t always an easy task, however, particularly for CPG companies that have historically lacked access to customer data and/or depended on retailers to share. It’s much like the relationship between travel companies and online travel agencies (OTAs) or publishers and the major browsers that enable access to their digital content: generally preferential toward one party over another, who feels like something is better than nothing.

For these and other businesses that are grappling with the potential implications of a cookie-less world, it’s time to put the emphasis squarely on the consumer – something giants like Nike and Disney and other digitally native companies like Netflix and Lemonade have perfected over the years. The first-party data these companies have accrued over time is because they offer tools and services that consumers want and are happy to provide their information for in return.

In building out a first-party data strategy, businesses need to put themselves in their customer’s shoes and ask questions such as: What do customers need from us? How can we provide value to them in return for their first-party data? What does that value exchange look like and how can we use the data they give us to improve the customer relationship further? Reallocating a greater percentage of budget to creating mutual and ongoing value exchanges with consumers offers a path for businesses to build their first-party data assets and reduce their dependency on third-party cookies.

Publishers, meanwhile, will have to fill the data gap by providing their own mechanisms to buy advertising against if they want to compete. That means prioritising direct relationships with readers and embracing cooperatives and other alliances that can help build up their audiences and increase their appeal to advertisers.

With the clock now officially ticking, it’s up to brands and publishers to take control of their own destiny. Waiting around for Google or The Trade Desk to solve the problem isn’t the answer – nor should it ever have been. Now is the time to prioritise first-party data strategies that can help create more meaningful relationships with consumers, and a more solid and lasting growth trajectory for businesses.

Cory Munchbach is COO at BlueConic