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Identity resolution was a major challenge for marketers even before they were confronted with the phase-out of third-party cookies and mobile ad IDs. It’s increasingly important to construct a single, coherent, actionable view of customers across online and offline touchpoints, while understanding the barriers to bringing that vision to life. Take away third-party cookies, and it can make an already-difficult situation seem impossible.
But brands are discovering a way forward. The deprecation transition forces many marketers to reexamine their first-party data strategies, discovering they already own much of the data they need to gain the end-to-end view of the customer journey. Marketers are on a new quest for identity; it’s just a matter of unlocking their first-party data’s potential.
When it works, the effects of first-party data can be stunning. For example, when Unilever launched a data unification project across its 64 portfolio brands last year, customer identity resolution improved five-fold in just six weeks. And when Walgreens used first-party data to power a revamp of its loyalty program, it gained the ability to offer compelling real-time offers, such as reminding customers to stop in for a flu shot as they pass their neighborhood branch.
Successful identity resolution has long been a three-legged stool, depending on a combination of first-, second- and third-party data to achieve the highest-resolution view of the customer. Over time, one leg of that stool—third-party data—took on outsized importance, making the identifier deprecation transition especially daunting. When Epsilon surveyed marketers last fall, two-thirds expected digital advertising to take a step back as a result.
But to the extent that deprecation causes a rebalancing of the stool, shifting additional weight toward first-party data, brands could ultimately emerge from this transition with a stronger view of their customers than they’ve ever had before. Brands that are able to build out and better utilize their first-party data asset are realizing there’s more potential than they understood.
“We’re connecting data to consumers in a way that we weren’t able to before,” says Rosa Pantoja, data-driven marketing lead for North America at Unilever. “That’s sparked conversations: What are the other use cases? How do we bring this to life? How do we change how we’re engaging customers and extend that customer journey? I didn’t anticipate that would happen, and it’s been really nice.”
Building a foundational layer of first-party data can be a lift for organizations accustomed to relying on third-party data and audience segments, and whose direct interactions with customers often take place within walled-garden platforms. Even when there is sufficient first-party data on hand, it can be difficult to fuse it into something actionable and coherent, due to siloed systems and disconnected mar-tech solutions.
Bridging those divides can be difficult, but the payoff of a unified customer view is worthwhile. And it’s spurred the emergence and ongoing maturity of the customer data platform (CDP) market.
CDPs, which first emerged as solutions for mid-market businesses, are evolving to better support enterprise clients. The CDP market is projected to grow to over $10 billion by 2025, and Epsilon’s third-party identifier deprecation research shows that two-thirds of marketers are looking at building a CDP to solve for the impending loss of identifiers.
But, like any technology, CDPs can be misunderstood. These data platforms can struggle to unify profiles across multiple brands and touchpoints in a way that is actionable and useful to the marketer. CDPs ultimately need an identity management and resolution component if they’re going to work for enterprise-level brands. And that identity needs to be anchored by purchases, registration, online consent, preferences and much more. You need that strong reference data and data hygiene to build each profile from the most accurate data set. If marketers or CDP technology providers don’t have that in their arsenal today, they should be figuring out how to get it.
If first-party data alignment is the initial step, what can it be used for? Identity resolution will continue to rely on inputs from various sources that add on to and complement a brand’s first-party data. This allows marketers to connect with consumers in ways that are similar to today’s marketing ecosystem but in a post-third-party cookie world.
Those strategies involve leveraging strong first-party data that is aligned to second-party and even zero-party data (which can lead to the strongest consumer relationships when properly honored). With strategies where various data inputs can inform one another—in a privacy-safe context, compliant with regulatory environments and adhering to opt-out and consent best-practices—brands can activate in new ways without third-party cookies, like cookie-proof digital media integrations with publishers and retail media networks. Both are rising in popularity as brands and retailers learn to leverage their relative abundance of first-party data with advertisers that have traditionally been a layer or two removed from direct customer interaction.
Coming amid the transition away from third-party cookies and device identifiers, many see this as a season of uncertainty. But it’s actually an opportunity to build a better marketing ecosystem. The goal for each brand should be to have the right setup to enable relationships, so they can interact with consumers on their own terms. And naturally, more data-driven brands are going to have a competitive advantage for insights and reach vs. those that rely more heavily on walled gardens.
**This article was originally published on Adweek, March 2021.
