Building robust data strategies for a privacy-conscious world

Today, we consider data to be the lifeblood of innovation, human development and business. Yet what happens to data once it’s created continues to be a topic of contention, with more and more consumers asking to take ownership of their personal data.

Perhaps no one event has drawn as much attention to this topic as Apple doing away with IDFA last month. This unique ‘Identifier for Advertisers’ makes it possible for brands to serve up highly personalised advertisements in mobile apps, offering products that the user previously searched for online or other apps they might enjoy based on their previous digital interactions. It was widely expected that this move – which Apple sees as giving power back to consumers – would lead to the majority of users refusing to give apps permission to track them for advertising purposes. However, even the most pessimistic estimates fell short of what happened in reality, with a whopping 88% of global users (including 96% of US users) opting out of ad tracking.

There is a growing consensus that, if people have a choice to opt out of their individual data being shared across sites – known as third-party data – they will. Apple is not alone in recognising this. Take Mozilla Firefox or Google Chrome for example – the former has already phased out third-party cookies on its browser and the latter plans to do so by 2022. Then there are privacy regulations such as the EU’s GDPR or the California Consumer Privacy Act. Increasingly stringent rules are seeking to limit how companies can collect, handle and share customer data, and in turn enable greater education among their subjects. With government legislation and major advertising companies making changes to data collection and retention, the industry is marching towards a privacy-conscious world.

So is third-party data about to bite the dust? And whose problem is it if it does?

Third-party data is going the way of the dodo

The reason why companies rely on third-party data so heavily in the first place is that it helps marketers and advertisers target digital ads with high precision. For example, if a consumer abandons a digital shopping cart with a £30 blue blouse in it, an ad for the exact same item can then follow the user around both online and on mobile in an attempt to persuade them to go back and buy it.

Niamh O’Brien

Marketers usually rely on adtech platforms or monetisation partners to ensure the right messages are reaching the right people, so it’s no wonder that opting out of ad tracking is expected to deliver the biggest blow to these companies. Taking IDFA away from them is like taking a pair of glasses off a short-sighted person. By contrast, the entities retaining the clearest vision of consumers going forward will be the companies that can secure their data directly and build on this as the relationship evolves. After all, third-party data is not the only way marketers can connect with consumers in the digital realm – nor is it often the most effective. This is where first-party data comes in.

Making first-party data work

Without the ability to leverage third-party data effectively, marketers will now need to shift back to their roots and prioritise leaning on the data they know they can trust – first-party data. This means data the company collects directly from the customer and owns with their consent. The CRM system, the e-commerce platform, the company website and all other digital channels can be sources of valuable first-party data on a customer’s wants and needs. It then follows that, in order to get both a more holistic and a more granular view of customers, businesses will look to expand the number and usage of these data sources – and herein lies the challenge. While before, marketers did not always need to incorporate CRM data or do high-volume A/B testing to get good results, they will now need to rely on these methods to maintain a strong connection to consumers. High volumes of data can either maximise a company’s marketing potential, or inundate its systems with unstructured data.

The most common problem businesses experience when expanding their data sources stems from the lack of a comprehensive data strategy. If the point of adding more data sources is to get a single source of truth from the customer, then having the data sit in siloes is a wasted investment. Isolated or disparate datasets lead to an incomplete view of marketing programmes, which can impede advertising efficiency and undermine lead generation.

Key to making first-party data work is the ability to see all relevant data in one place. Data analytics and business intelligence (BI) tools perform best to a company’s advantage when they are fed up-to-date, structured data from all corners of the business.

A modern data stack

The effectiveness of marketing campaigns depends on how well data within the organisation is synchronised and interpreted. This makes data centralisation a foundational requirement for most organisations. And while any consolidated system will deliver advantages over siloed or manual data processes, cloud-based systems provide the most flexible environment for companies looking to expand their first-party data sources. With data pipelines automatically carrying data into a centralised cloud warehouse, adding new platforms such as Hubspot, Marketo or LinkedIn Ads into the marketing mix can be as easy as plugging a gadget into the mains.

There is a growing consensus that, if people have a choice to opt out of their individual data being shared across sites – known as third-party data – they will

A BI tool sitting on top of the warehouse then enables marketers to create quick visualisations, track performance and even make projections based on patterns in the data. Why was one campaign successful but not another? Which advertising channel brings in the most valuable, highest revenue-generating customers? Which customers are in danger of churning and what’s the best way of advertising to them? Having access to first-party data in one place enables marketers to link up information from different tools and spot trends that make a difference on the bottom line – for example, by integrating a financial analytics tool to factor in cost metrics into return on investment calculations.

When data centralisation is guided by a cloud-first approach, automation and actionable business intelligence, the result is a modern data stack that ensures data is always analytics-ready and, in turn, capable of underpinning customer relationships and trust.

You’re only as successful as your customer relationships

The rising demand from consumers for data privacy, coupled with the demise of third-party data and more stringent regulations, make it clear that businesses must tread carefully when handling data. To stay agile in this fast-changing environment, organisations should prioritise their reliance on the data their customers directly trust them with – first-party data.

As new industry developments play out, the correlation between effective data-driven decision-making and strong customer relationships will continue to increase. Maximising first-party data sources and analytics capabilities will help businesses monitor for even the smallest changes in customer behaviour and sentiment, and adjust marketing and advertising programmes to respond with timely, informed action to drive revenue and increase customer satisfaction and loyalty.


Niamh O'Brien

Technical Success Manager at Fivetran


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