Digital Transformation Third Party Cookie Data & Privacy

Why fear of third-party data is holding brands back from acquiring new customers

By Alison Harding, Vice-president of data solutions

June 2, 2023 | 8 min read

Growing commitments to consumer privacy shouldn’t preclude all uses of third-party data in marketing, argues Lotame’s Alison Harding.

Data illustration

/ Adobe Stock

The wild west days of irresponsibly sourced third-party data are behind us. The EU’s General Data Protection Regulation (GDPR) and similar legislation around the world have cleaned up data collection and consent, allowing brands to shop around safely for third-party data that can bolster their consumer insights, persona profiling and targeting strategies. At least, that’s what should be happening.

Put off by third-party data’s checkered past and confused by the implications of privacy regulations, many brands have thrown the baby out with the bathwater, causing them to miss out on enrichment, audience expansion and customer acquisition opportunities.

While first-party data strategies are the trend of the day, they often encounter scale barriers and are little help for brands without much data of their own, who end up turning to walled gardens instead.

Let’s look at why today’s third-party data market deserves a reputational reassessment and discuss the widespread benefits waiting to be unlocked by brands that utilize it.

Brands shopping for data today reap the benefits of a regulated market

Between the slow and highly publicized death of third-party cookies and privacy regulations putting the onus on businesses to verify their data provenance, the belief has spread that third-party data is outmoded or too risky to touch.

But the irony is that these factors have led to a data marketplace that is healthier and safer than ever. Without the ubiquity of cookies, data companies have drawn from a broader range of consumer data sources and invested in technology that can recognize the links between them and extrapolate valuable insights from limited samples.

Meanwhile, privacy regulations aim to ensure that any reputable data company operating today have robust procedures in place to ensure that no personal information is exposed.

The industry has also taken steps of its own to ensure that those shopping for third-party data can do so with confidence. For example, the IAB Tech Lab’s Data Transparency Standard establishes a baseline level of transparency for the origin of audience data, which compliant data sellers and vendors can then demonstrate via a ’data label’ that works much the same way as a nutrition label does for food.

Much of the fear around third-party data has stemmed from brands‘ misunderstanding of how they can do their due diligence around data privacy. Now that the industry has had time to settle into the new regulatory normal, it has never been easier to have conversations about data methodology, how data can and cannot be used under the law and the data handling responsibilities of each party.

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Relying on first-party data and walled gardens limits marketing vision

No brand should be under the illusion that a first-party data strategy alone is enough to see the full scope of audience characteristics and their movements between the various properties and channels they touch.

Robust first-party data is a gold mine for retention and improving the customer experience, but unless every prospective customer has the same characteristics as existing customers, it does little to aid acquisition. Brands need to understand not only who they are currently reaching with their marketing, but also who they have the potential to reach.

Third-party data allows brands to see their customers beyond the limits of direct transactions with them. Household income, media consumption, social media interactions, geographic context, online and offline shopping activity and much more can be utilized to find prospective customers and identify which channels will be most effective at getting their attention.

This data can be used by itself for market research and customer insights or layered on top of other first- or second-party data for enrichment purposes. One of the most valuable use cases is to add detail to seed audiences used in lookalike modeling, since the more accurately a marketer can define their ideal customers, the more efficiently matches can be found across general audiences.

What’s most important is that brands should seek out and utilize the data that best supports their goals, rather than put all their eggs in one basket. Even organizations with caches of first-party data that are the envy of the industry, such as retail media networks, are investing in second and third-party data to extend the reach of their audience intelligence and the advertising services that depend on it.

Brands that fail to capitalize on readily available third-party data are not only ceding ground to their competitors – they also risk becoming dependent on those with the most data of their own. The scale of walled gardens such as Google and Meta’s ad platforms guarantees that these players take a chunk of most advertising budgets, but the data they hold is not accessible outside of their strictly controlled and opaque reporting tools, making it difficult to integrate into a broader marketing strategy.

Breaking down silos unleashes third-party data’s full potential

Having data is not enough. Data also needs to be consolidated for ease of use within and outside of an organization. If data is stored in mismatched formats, stuck in inaccessible platforms or scattered across different departments, essential customer insights and opportunities for partnerships can slip between a marketers’ fingers without them even realizing. Alongside investing in sourcing data, brands must integrate platforms that can unify their data assets and ready them for activation across various marketing channels.

By developing a tech stack and pursuing data partnerships with an eye toward interoperability, brands can connect the dots across disparate sources and pursue an acquisition strategy that is not beholden to certain platforms. Maintaining independence is vital to staying nimble and responsive to unpredictable consumer behaviors and market forces.

This is another area where third-party data is on the cusp of a renaissance. There has been a widespread push to break down the silos that have formed in the fragmented post-cookie landscape and allow compliant third-party data to flow throughout the digital ecosystem in a way that benefits brands and consumers alike.

Brands that have readied their data infrastructure to capitalize on the coming flood of actionable insights will find themselves closer than ever to current and potential customers alike, without compromising the trust that is essential to securing long-term loyalty.

Alison Harding is vice-president of data solutions at Lotame.

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