We are living in a new age of data privacy regulation. When the General Data Protection Regulation (GDPR) came into force May 2018, it set a new standard for data protection regulation.

Nearly 18 months on, what has this meant for marketers and advertisers who process personal data, as well as agencies tackling the in-housing trend? (This is just one of the questions posed in Econsultancy’s Top 100 Digital Agencies report 2019, sponsored by MiQ).

Having the unambiguous consent of data subjects is key under the GDPR, in the absence of other legal bases for data processing. So it has become much more problematic for marketers and advertisers to rely on third-party datasets whose subjects may or may not have consented to their data being processed.

First-party data – the benefits

Enter first-party data. First-party data is data that an organisation has collected from its customers ‘first-hand’; the organisation is the sole owner of that data. This makes it a unique dataset and one that gives an insight into the company’s customer base, both of which are significant business advantages. First-party data is also much more reliable when it comes to forecasting future customer behaviour trends, and can be used to provide deep personalisation for an organisation’s customer base, such as through audience targeting and micro-segmentation, or product and content recommendations.

The movement towards focusing more on internally-collected, first-party datasets began before regulations like the GDPR were passed into law: Econsultancy’s 2015 report, The Promise of First-Party Data, published in association with Signal, observed that, “today’s highest performing companies are increasingly looking internally, to their first-party data, in a data-driven marketing revolution that is in full-swing.”

However, this movement has gained significant momentum in the post-GDPR era, as more and more companies look to their own internally-gathered data in a bid to stay on the right side of data protection regulation. Some major corporations, like Unilever, are snapping up direct-to-consumer brands in part because of their unparalleled access to first-party data and customer insight.

Agencies shoring up data capabilities

On the agency side of the table, large firms are similarly bolstering their data capabilities. Earlier this year, Publicis Group acquired Epsilon, a former subsidiary of Alliance Data that provides a broad range of loyalty marketing services, sending billions of permission-based emails each year.

In 2018, IPG acquired audience solutions, data and decision science company Acxiom, and a year on from the acquisition, has credited Acxiom with helping IPG navigate the new data privacy landscape. Sir Martin Sorrell has also spoken openly about his bid to acquire a first-party data company to augment S4 Capital.

Brands bringing data back in house

However, while agencies are moving to put data at the heart of their offering, brands are moving to bring their data capabilities in-house. Martech Today noted that, “Recent surveys show more than 80 percent of marketers are data self-sufficient or working towards the goal of self-sufficiency. Even before GDPR, marketers were shifting priorities and investments toward a heavier reliance on data. Because of this, there is a trend towards bringing these efforts “in-house” closer to the CMO and not under the purview of an agency.”

One recent example of this from a mid-sized brand is PropertyGuru, which brought its media buying in-house in June in a bid to be more agile with first-party data. Bjorn Sprengers, CMO at PropertyGuru, told The Drum that the decision was not a reflection on its media agency’s performance, but was driven by strategic considerations, and that PropertyGuru has not taken the option of working with other media agencies in the future off the table.

The data inhousing problem for agencies

In-housing is by no means a new trend, of course. Still, the fact that brands are specifically in-housing data capabilities at a time when they are more valuable than ever presents a particular problem for agencies.

How can agencies ensure they remain competitive in the new data privacy landscape if brands are increasingly opting to be data self-sufficient?

  • Invest in data talent: Many brands might have access to first-party data, but lack the capability to get the most out of it. According to a recent survey by Advertiser Perceptions and MightyHive, marketers on average believe they have only tapped 47% of the potential of their first-party data.

This is where agencies can close the gap, by demonstrating that they can unlock the full potential of a brand’s first-party data and all the benefits that come with it. Agencies should ensure that they are staffing their ranks with top data talent, or forging partnerships with companies who can bolster their data capabilities.

  • Be prepared to meet in the middle: Aside from concerns about data privacy regulation, brands who set out to make better use of their first-party data often start to want more control and visibility than they typically receive from agencies and adtech platforms, who ‘silo it away’ and don’t provide easy access. To prevent brands from deciding that in-housing is the solution, agencies should be prepared to provide as much data visibility and transparency as possible.
  • Offer value added insights and analysis: According to recent research by Sizmek, An Insider’s Look at Data, Walled Gardens, and Collaboration[7], 88% of marketers agreed that they would find it valuable for a partner to take a consultative approach and help them understand and gain insights from data.

While not all agencies can double as legal firms, there clearly is an appetite for an additional level of analysis from data teams. In a 2017 report by consultancy MediaSense and ISBA, Media 2020: Refresh, 54% of marketers said they rely most on their in-house team “for strategic advice on data management”. Agencies who can offer this ‘value added’ to brands will stand a much better chance of competing as brands rely more heavily on insights from first-party data.

This essay was originally published in The Top 100 Digital Agencies report 2019.