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As brands elevate their first-party data strategies, getting to the single customer view presents great challenges—but greater opportunities.
This could have been a moment of despair for marketers. The deprecation of third-party identifiers (3PIDs)—such as cookies and mobile ad IDs—arrives at a time when many brands are still struggling with the basics of identity resolution. Take third-party cookies away, and the situation might have seemed bleak. But this transition comes amid a broader wave of brands focusing on restructuring and realigning their most valuable asset: first-party data.
The nascent customer data platforms (CDP) market—promising to unify customer experiences for more powerful personalization—has recently evolved to better support enterprise-level businesses, not just the mid-tier brands that built the category. Looking ahead, the CDP market is projected to grow to over $10 billion by 2025, and according to Gartner, CDP technology companies have received more than $1.8 billion in venture capital funding.
Brands are facing a serendipitous moment whether they realize it or not: CDPs brought the first-party data alignment conversation to a fever pitch, and 3PID deprecation pushed it from a want to a need.
“What it comes down to is deciding what your core competencies are and then being smart about choosing partners who can supplement what you already have.” —Rosa Pantoja, Data-Driven Marketing Lead for North America, Unilever (U.S.)
“The first-party model forces every brand to look at their most valuable assets,” says Helen Lin, chief digital officer at Publicis Groupe. “We now think of it as being very traditional, but digital was the evolution of television and print advertising, so there’s a carryover of old ways of planning with ‘buying audiences.’ But now, with identity resolution solutions, you can actually understand mindset, motivation and need-state, and you can continuously super-serve customers with the right information at every stage. This shift is actually going to help brands focus on what’s most important: building the best customer experience regardless of the channel.”
Some companies are already on this path. Unilever recently completed a massive data unification project across the 64 brands in its portfolio. And Walgreens revamped its loyalty program to better align customer data so it can match profile history to real-time personalization opportunities—getting as granular as reminding a customer to get a flu shot as they’re passing their local Walgreens.
“We’ve come to a place where there’s a general recognition that data has value and can be a competitive advantage. But unlocking that value has been a long journey,” says Rosa Pantoja, data-driven marketing lead for North America at Unilever (U.S.).
The challenge lies in fusing all those inputs—from sources that include external channels and partnerships as well as first-party interactions—into a single coherent, actionable view of each customer, also known as the golden record.
“Even brands that have done a great job with their own data are still going to be extremely challenged to reach those customers outside of their owned brand interactions in the future.” —Matt Feczko, Vice President of Product Management, Epsilon
“People expect big companies to understand every single customer touchpoint. But it’s so much more complex on the back end than most consumers know,” explains Dana Moroze, senior vice president of Epsilon’s Platform Solutions Management group.
As brands stand on the precipice of enormous first-party data alignment projects, the question becomes: How will they use that to solve for the same reach, scale and alignment to business outcomes they once had in a pre-3PID world?
As always, the answer lies in the data.
First-party data has always been at the heart of marketers’ efforts to deliver meaningful, personalized interactions. But identity is inherently a mix of first-, second- and third-party data. When enough data is woven together, it creates an accurate portrait of a person, their context and what they are likely to want from your brand at specific moments—driving unique and memorable personalization. With only one component and not all three, brands risk basing their marketing off a sliver of a person’s digital experience.
“Knowing your customer and her expectations is a fundamental necessity for moments-based marketing,” Forrester’s Joe Stanhope and Rusty Warner wrote in a November 2020 report, The Future of Enterprise Marketing Technology. “As such, identity resolution must be the foundation of any modern marketing engine.”
So what will marketers do once they’re missing a peg in that three-legged stool?
More than two-thirds of marketers expect digital advertising to take a step backward as a result of 3PID deprecation, and fewer than half (46%) feel very prepared for the transition, according to an October 2020 Epsilon survey.
“Even brands that have done a great job with their own data are still going to be extremely challenged to reach those customers outside of their owned brand interactions in the future,” says Matt Feczko, vice president of product management at Epsilon. “They’re going to start to waste a lot of dollars because they can’t recognize their customers out in the programmatic space anymore.”
“For a long time, it’s been easier to rely on third-party signals. While we’re losing some of that data, the industry is turning more to other solutions that enable us to tie individual-level identity to business outcomes and measure true lifetime value.” —Helen Lin, Chief Digital Officer, Publicis Groupe
And not all are convinced that these changes are coming from altruistic motives on the part of Google and Apple. Getting rid of 3PIDs benefits the tech giants because they have access to troves of first-party data—their own identity-based marketing products will emerge relatively unscathed.
The other—and arguably larger—issue is that the data from walled garden environments isn’t really portable outside of their platforms. Which, again, is a design choice in the name of privacy, but it forces brands to continue working with those platforms to keep generating insights for their audience on that platform, without being able to use that information across marketing activations.
“The audience is clearly on these walled garden platforms like Facebook and Google, but I’m not in a clean, well-lit environment,” said Lou Paskalis, senior vice president of customer engagement and media investment at Bank of America, in an interview with Beet.TV. “I am not able to really see if the media is performing the way that I need to understand it. I am not able to understand those data signals that are coming off so that I can curate more relevant experiences, not just within the confines of Facebook and Google, but across the digital world.”
Therein lies the challenge for marketing teams: needing to create their own universe of first-party data as their true golden record, which can then be leveraged across marketing activations, channels and instances.
“For a long time, it’s been easier to rely on third-party signals,” Lin says. “While we’re losing some of that data, the industry is turning more to other solutions that enable us to tie individual-level identity to business outcomes and measure true lifetime value.”
The good news is that marketers are already planning ahead. The 2020 Epsilon survey shows that 67% of marketers are looking at building a CDP, and 62% are strategizing around first-party data.
If the goal is aligned, actionable first-party data, what is needed to get there? Many brands rightfully struggle with this. Whether it’s due to legacy silos across systems, martech investments that don’t connect properly or simply poor data hygiene, brands struggle to get to a single unified view of their customers across online and offline interactions.
This is why many have turned to CDP solutions. But not every CDP is created equal.
“If you think about CDPs as broadly referring to a people-first technology platform, then absolutely that’s the only way forward. But I’d argue that CDPs are kind of a blank canvas,” says Liane Nadeau, senior vice president and head of precision media and investments at Digitas North America. “If we see CDPs as a kind of base and a technology, not a strategy, then we’ll be able to build something stronger on top of that.”
“First-party data is the strongest anchor you’ve got, and it’s grounded by purchases, registration, online consent, preferences, etc. You need that strong reference data and data hygiene to build your profile from the most accurate data set. If you don’t have that data in your arsenal, you should be figuring out how to get it.” —Dana Moroze, Senior Vice President of the Platform Solutions Management group, Epsilon
A 2020 Forrester report notes that legacy CDPs often struggle with unifying customer profiles across multiple brands and bringing together online and offline data to create advanced personalized experiences for customers.
“The CDP market continues to be a confusing and convoluted one,” the Forrester report says. “But to find a CDP that will meet not just current needs but also future ones, marketers must proceed with caution and seek CDPs that can deliver stronger capabilities than the tools they already have.”
Traditional CDP offerings typically have two major gaps:
It’s not uncommon for a brand to have four or more profiles for the same customer. For multi-brand companies, errors from multiple profiles are compounded and create a foundation of fragmented identities.
On top of that, many existing CDP solutions are lacking in that added data layer that can help turn owned insights into actionable information. Augmenting consumer profiles with unique insights around browsing history, demographics, lifestyles and propensity to purchase all help further differentiate each individual’s experience. Distinctive third-party data—that is not rooted in third-party cookies or device IDs—is required to create an enriched profile.
“First-party data is the strongest anchor you’ve got, and it’s grounded by purchases, registration, online consent, preferences, etc.,” Moroze says. “You need that strong reference data and data hygiene to build your profile from the most accurate data set. If you don’t have that data in your arsenal, you should be figuring out how to get it.”
CPG giant Unilever was in pursuit of that strong anchor as it sought to move beyond having email capture as its primary database for profile storing and instead align first-party data across its 64-brand portfolio. One of the first key decisions was whether to build a solution from scratch or partner with an outside vendor. Between ever-shifting privacy regulations and the complexities of safeguarding its own data while using it alongside second-party data sources, building and maintaining a resilient solution was a tall order.
There’s a delicate balance between data independence and strategic partnership, Pantoja says, but for Unilever, it was a path worth pursuing.
“Sometimes it sounds like I’m talking out of both sides of my mouth,” she explains. “I’m saying, ‘We have to have a laser focus on internal capability’ while also highlighting the importance of having a strong partner by your side to bring expertise and thought leadership. What it comes down to is deciding what your core competencies are and then being smart about choosing partners who can supplement what you already have and whose expertise fits with your ambition and your roadmap.”
“We’re connecting data to consumers in a way that we weren’t able to before.” —Rosa Pantoja, Data-Driven Marketing Lead for North America, Unilever (U.S.)
In partnership with Epsilon, Unilever launched its new enterprise CDP in September 2020. Pantoja focused on achieving quick wins to build internal support, capitalizing on the ability to synthesize efforts across brands. One early example was standardizing the signup forms at each brand site after determining the most effective approach to building user profiles.
Then the Unilever team aimed higher, using the platform to solve a problem that had vexed it for years: identifying users who had received email offers and then visited a brand website, but who did so without clicking on a link in the email. The platform quickly facilitated a fivefold improvement in those efforts.
“That gives us an opportunity to continue the conversation by personalizing the site experience and engaging these customers through media,” Pantoja says. “It was a gap that we’ve been able to close.”
The improved resolution has inspired the company’s leaders to seek even bigger gains.
“We’re connecting data to consumers in a way that we weren’t able to before,” Pantoja says, “and 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.”
First-party data alone won’t solve every marketing challenge. Reach and acquisition still matter, which means publisher partnerships will play a critical role, as will retail media networks—programmatic advertising exchanges pioneered by retailers such as Target, Amazon and Walmart, with brands like Walgreens and Ulta now following suit.
On launching its own retail media network (with the help of partners), Walgreens Vice President of Integrated Media Luke Kigel told AdExchanger: “In many ways, this has all been part of a multiyear macro transformation of Walgreens towards digitization. And from a marketing and communications standpoint, it’s enabling us to unlock the value of our first-party data—which is easy to say and not so easy to do.”
Brands like Walgreens leverage their vast first-party data to make high-value connections between customers and their brand partners, fueled by SKU-level insights, such as a product that a customer adds to their cart but doesn’t buy.
“Many marketers focus on reach as the fundamental pain point with third-party cookie deprecation, but ultimately that’s not what the marketer wants—they want better outcomes.” —Matt Feczko, Vice President of Product Management, Epsilon
“You still need the digital perspective of the consumer,” Moroze says. “And especially in COVID times, digital transactions and engagement are at an all-time high. The companies that can anchor through a network of publishers and partners while tracking multiple identifiers to a single person are going to provide that digital insight that adds to the first-party data in your CDP, resulting in a stronger customer view.”
Even though many 3PIDs are going away, the marketing ecosystem is getting smarter about how to deliver 3PID-style insights through different mediums and in a way that delivers more value to the brand and the consumer.
“Many marketers focus on reach as the fundamental pain point with third-party cookie deprecation, but ultimately that’s not what the marketer wants—they want better outcomes,” Feczko says. “Once marketers shift their focus from raw reach to specific goals, like better return on ad spend or stronger customer retention, they’ll likely find that new mix of tools in a post-3PID world to deliver positive results and a good customer experience.”
