Times and the market have changed—and relying exclusively on a third-party data strategy to acquire new customers could put your advertising effectiveness (and budget) back in the dark ages. In a recent blog, we explored the impact of declining third-party audiences. Now, we’ll dive deeper into the implications—and opportunities to generate even more revenue—posed by the deterioration of third-party data signals.
What’s making digital advertising so hard
We’re talking about the four horsemen of data deprecation again. And here’s why they’re here to stay:
Consumers are disengaging
Personalization feels creepy, more intrusive than beneficial
Consumers are opting out of third-party tracking and data storing by using ad blockers, “do not track” options, and clearing browser history
More restrictions on browser and operating systems
Third-party cookies restrictions, changes to mobile ad IDs, and the rise of privacy-first browsers are undermining identity-based marketing (Apple ITP, Firefox ETP, MAID restrictions)
Growing privacy regulations
Regulators are limiting advertisers’ abilities to track and store data (GDPR, LGPD, CPRA, ePrivacy)
Walled gardens
Closed ecosystems are restricting data extraction which inhibits cross-channel planning, buying, and optimization (Amazon, Facebook, Google, and retail media networks like Target and CVS)
The walls are higher. Signals are dimming across the open internet. And you’re probably feeling the heat.
The 3 major effects of data deprecation
It threatens nearly all forms of online behavioral advertising. Your own first-party data is the last viable source standing, along with publishers’ data either contracted directly with publishers or through second-party marketplaces.
It resets the digital media ecosystem. The long dying of third-party cookies has broken the communication mechanism that DMPs have with DSPs. In particular, real-time bidding between them is now in the crosshairs of regulators as there are concerns about data leakage during the process. The entire ecosystem is being rebuilt to suit a more sustainable, private, and consumer-friendly future.
It complicates measurement. Amazon, Facebook, and Google have already forbidden advertisers from extracting tactic-level marketing performance data for measurement models. This limits insights across platforms, breaking the ability to actually do retargeting of unknown users and cap frequency across publishers.
It’s an identity crisis
The identity resolution situation isn’t pretty, either. Identity solution frameworks rely on a range of pseudonymous and known identifiers to assemble a precise, scaled view of consumers. Without that, there are splintered and duplicated identities, so it’s becoming harder to match a consumer's offline identity to their mobile devices.
It’s not just social and display—remarketing lists for search ads are also losing efficacy without behavioral data from non-Google properties.
Four pain points you’re probably feeling right now
Advertisers are definitely feeling the heat while navigating these challenges, especially around measurement and business and campaign strategy.
Symptom check: If you had to rate your pain on a scale of one-ten for the following; where would you land?
Pain #1: Data trapped in silos
The privacy revolution prevents DMPs, data aggregators, and traditional media platforms from collecting the signals ad networks need to effectively target ads. Marketers know they have to switch to first-party data for digital ads, but struggle because internal data is messy, siloed, and inaccessible.
Pain #2: Difficulty extracting useful insights
The death of third-party data means marketers can’t target individual users. Marketers struggle extracting actionable insights to create segments that achieve their business goals. If the audience is too narrow, then you might miss reaching those who are willing to buy. If the audience is too broad, then you’ll waste ad dollars on audiences who will never convert.
Pain #3: Low match rates / small audiences
Consumer privacy protections are breaking the infrastructure of traditional digital advertising. Reaching your target audiences through programmatic advertising by using digital IDs like cookies & MAIDs are failing, because third-party data is restricted, expired, or incomplete. As a result, addressable audiences and match rates are falling.
Pain #4: Incomplete measurement
Paid media marketers struggle justifying their budgets as they can’t accurately measure the impact of digital advertising across channels. Third-party cookies and pixels often misfire or expire before a conversion event can be measured. Transactions that happen in-store or completed later digitally are generally missed.
Intelligent growth starts with a better data foundation
A poor customer data foundation can be the greatest barrier to your growth. Incomplete & inaccurate customer profiles are the root cause for many underperforming campaigns.
Balancing ROI, personalization, and privacy requires paid media marketers to find a new operating model beyond third-party data reliance. And they need to do it now.
Advertisers rallying around unified customer data and associated processes using a customer data platform (CDP), like Amperity, are already experiencing a considerable amplification effect with first-party data as their fuel.
Here’s how else they’re winning with Amperity:
Matches made in heaven: Machine learning unifies all their online and offline data to create a unified view of every customer. So, if a customer has different email addresses, has moved, changed their last name, or is using a different handle, they’re able to bring it together.
More effective lists: The comprehensiveness of client’s profiles gives ad networks a huge data set to match against.
Stronger connections: Their ability to associate multiple identifiers and PII data helps them connect with customers on ad networks.
Smarter timing: Incorporating transactional data helps them suppress ads after a sale online, in-store, or even in a partner marketplace.
Better insights: Loyalty data helps them create valuable segments to reach their best customers to drive sales.
A brighter future: Predictive modeling helps create audience seeds for lookalike models based on the behavior of their best customers.
Amperity customers like SPARC Group, owners of Aeropostale, Lucky Brand, and Reebok, have seen a 5x increase on ROAS.
Let there be light
Should third-party data deprecation spark some fear? Absolutely. But this is more about opportunity – now’s the exact right time to shift to a first-party data strategy to make more money and deliver better customer experiences than you ever could before. Check out more ways to drive revenue, optimize ROAS, enhance customer acquisition, and deliver even better customer experiences.