As the digital ad industry prepares to say goodbye to third-party cookies, brands will need to reconsider how they target and engage with consumers. According to a new report by Wunderkind, 75% of marketing professionals say they are still reliant on third-party cookies, while 48% say they feel concerned about the upcoming changes.
Google recognises that there is reticence. In June, it announced that the deadline for Privacy Sandbox – which will see the phasing out of support for third party cookies in Chrome – will be extended to 2023 in order to give the industry more time to properly prepare.
Elsewhere, Apple’s IDFA update (among a flurry of other privacy-related updates) is forcing marketers to rethink their acquisition and retention strategies in order to account for reduced in-app targeting.
One solution for all of this is to build and develop first-party data to create more relevant and meaningful relationships with customers.
Identifying LTV (and maintaining long-term ownership of customers)
The immediate benefit of first-party data is that it is privacy-safe, as customers have already opted in to providing it. When stored and implemented in the right way, it can also provide a joined-up view of the customer journey, allowing brands to target customers at the right moment in their journey and with the right message, according to their needs.
Online retailer MandM Direct is a strong example of these benefits in action. Around five years ago, it moved from a marketing-focused approach to a customer-first strategy, a shift which involved building a ‘data lake’ that enabled the brand to create a single view of the customer.
Phil Twigg, Head of Acquisition for MandM Direct, expounds on the brand’s multi-year first-party data journey in the sixth episode of ‘Marketing that Matters’.
“Where we’ve got to now with first-party data is having this centralised audience structure, which then feeds into Google and Facebook. And so, from a customer perspective, we can be really consistent with our messaging across platforms.”
Prior to this, Twigg continues, “you’d have different audiences in Facebook than you would across Google, and the same across our CRM platforms as well. So, there wasn’t a joined-up approach.”
By creating a centralised audience structure, MandM Direct is not only able to understand which customers are worth targeting – but when in their lifecycle they are more likely to convert. “Having that then leads into lookalike audiences but then also encourages your key customers to shop again and again, because you’re able to target them across multiple platforms,” Twigg explains.
Meanwhile, Tom Goode, Customer and Ecommerce Director for MandM Direct, describes how identifying the brand’s ‘VIP’ customers enables the brand to calculate lifetime customer value – a key metric for the brand – and in turn, to optimise ad spend.
“By understanding their value and how much a customer will want to interact with us, we’re able to define how much and how visible we would like to be to that customer on all platforms,” he says. “That allows us to be more efficient with our spend and deliver more relevant content at the right time to customers.”
For MandM Direct, this type of ‘audience ownership’ also feeds back into advertising strategies.
“First-party data [is about] making sure that we own all of the understanding of our customers… as long as we own that understanding, we can share that with partners to drive value and to drive relevance to customers.”
With an increasing spotlight being shone on data security, MandM Direct is at the same time focused on consumer privacy. Nicola Fry, Principal Industry Manager for Google, explains how the company has set up a steering committee in partnership with MandM Direct, “all around data, platforms, and privacy, because we knew that was of critical concern.”
Fry further explains that Google “shares with [MandM] our latest thinking, whether it’s around the privacy sandbox or regulatory changes that they should keep in mind.”
Keeping up with complex buying journeys
One way for brands to build first-party data is by selling direct to consumers. Of course, Covid has spurred on big investment in this channel, as more consumers made the shift to shop online during lockdown. Since the pandemic, a number of big CPG companies (that have traditionally relied on third-party retailers) including Unilever and Nestle have invested in direct-to-consumer channels, opening up direct relationships with consumers, and in turn, building first-party data.
Samsung is another example, with the retail brand striving to build on the rise it saw in online sales since the pandemic as well as counteract the closure of brick-and-mortar stores that it had previously heavily relied on. Speaking on the second episode of ‘Marketing that Matters’, Mike Durey, head of digital, CRM and data for Samsung UK, explains how the focus on DTC increased as the pandemic hit.
“The ambition we had set internally,” he says, “by the end of 2020 was to reach 10% [of DTC sales]. And by the end of the year, we were there or thereabouts.”
As a result of the DTC shift, Samsung has made paid search a significant priority within the brand’s marketing mix. Mike Durey says that, impressively, “paid search continues to contribute, approximately, a third of the overall revenue for Samsung’s DTC business at the moment.”
Samsung’s paid search strategy is about more than just keyword intent, too, with the brand harnessing deeper audience insights to create a better customer experience. “That audience understanding behind the scenes allows you to expand into what traditionally were mid or upper funnel keyword searches, but overlay the right data points to actually understand where that consumer is [in their buying journey],” says Durey.
“By using that audience understanding to feed into insights you then suddenly unlock a much greater understanding of what’s happening in search; you’re able to tailor your creative messaging, tailor your on-site experience to that person and deliver a much better experience online and therefore, hopefully, a much better conversion for your products.”
Durey explains that big product launches can often result in a surge in DTC sales, with the release of the Galaxy S21 device leading the brand to “overshoot that 10% mark” early on in 2021, while a shift back to physical retail was expected throughout the year.
However, with consumer buying journeys remaining complex post-pandemic, Lynne Vishani, industry manager at Google, says that automation can be hugely valuable for growing DTC brands, enabling the likes of Samsung to keep up with complex buying journeys, and increasingly unpredictable customer behaviour.
“Samsung is using automation to really tailor that messaging to customers in real-time, and responding to the multiple signals and audience types,” she says. “There are so many permutations, and the complex mix of channels added to that means that developing creative for every person and format is incredibly time-consuming.”
Since implementing automation, Samsung has been able to concentrate less on time-consuming tasks like data preparation and tagging and place a greater focus on strategic thinking.
Vishani says that “harnessing Samsung’s powerful customer data” has also been critical to wider advancement in digital capabilities, such as CRM integration, “to build a more complete picture of their customers, but then also bringing that into the Google platform and into search, display, and YouTube,” she explains. “By bringing this data in they’re really able to gain a fuller picture of the impact their media has had against their business outcomes.”
Personalised interactions (that build loyalty)
For Samsung and its consumer-facing retail brand, this type of laser-focused targeting strategy also underpins DTC strategy. John Melton, performance business director at Performics, says that creating personalised experiences from first-party data is integral to bringing customers into Samsung.com (as opposed to third-party retail sites).
“One of the really exciting things that we’re able to do through the integration of Samsung’s data and our automation approach is pushing the sort of messages that we know are going to best resonate with individual customers,” he says.
For instance, Melton says the brand can determine the model of phone somebody already owns and tailor communications to that fact, such as to promote Samsung’s trade-in programme, in which customers can swap their existing phone for a new device to obtain a discount.
With new and more stringent privacy-related measures being implemented by tech platforms and legislative bodies alike, Samsung’s recent focus on DTC has come at the right time, bringing with it the opportunity for more sophisticated personalisation – and the potential for longer-term loyalty as a result.
“The idea is that DTC will continue to grow, it will continue to accelerate, and it will be the way that we transition from branding to point of purchase; having a more direct one-to-one relationship with our customers,” says Melton. “That is why I am excited for the future of Samsung.”
Indeed, for many brands looking to get closer to their customers, it seems first-party data is the only way to go in a cookie-less, post-Covid world.