Privacy changes long discussed in advertising circles are beginning to roll out, threatening the common retargeting and acquisition strategies of today. With Apple’s upcoming iOS 14.5 update shutting down IDFA (effectively, the cookies of the mobile landscape), and Google Chrome shutting down 3rd party cookies later in the year, these changes are coming fast and furious. Marketers are asking themselves: “Will my tried-and-true growth strategies continue to work? How will these changes impact my ability to reach new customers and scale my business?”
The Role of Data Privacy in Marketing
Unpacking these upcoming browser & regulatory changes, the biggest change is in an advertiser’s ability to target anonymous web traffic – visitors who come to your website or install a mobile app but aren’t logged in or registered. If we think of a growth marketer’s current advertising flow, it typically looks like the following:
Going forward, marketers must come up with alternative approaches to replace the reliance on pixels as outlined above.
Google, Facebook, and other social media platforms sit on a wealth of historical data, based on their logged in users. And while recent browser changes will curtail Facebook’s ability to track an individual’s real-time web browsing behaviors, Facebook will still be able to tap into on-platform activity, especially for their 2.8 billion MAUs, and use that as the basis for lookalikes.
Pixel-based website custom audiences (e.g. people who visited the site) will become less effective. However, lookalikes based on merchant’s first-party data and interests based on the platform’s first-party data will have fewer performance headwinds. The net impact of these changes is, the cost of acquiring new customers (using the traditional approaches via Paid Social) will continue to increase as digital advertising tactics adapt in the new privacy landscape and marketers need to adjust and augment their digital advertising tactics.
Acquisition Costs Rising, Pivot to Retention?
In the face of rising costs of acquisition and uncertainty, Shopify highlighted the opportunity to prioritize customer retention in their recent 2021 e-commerce trends report. The most economical way to build your business will be to shift marketing dollars from acquisition to cultivating existing customers through updated remarketing strategies.
While we agree with the importance of prioritizing customer retention, new customer acquisition will remain the top priority for emerging, high growth brands. Advertisers need to develop first-party based data strategies now to inform their marketing response.
Measurement, The Bigger Disruption
As much as the conversation has steered toward rising acquisition costs, in our view the bigger impact of upcoming privacy changes will be on the measurement tools many advertisers rely on – that is, self-reported conversions from the platforms.
As browser privacy changes go into effect, tracking pixels that have been the standard mechanism of data exchange to tie back conversion metrics will need to be replaced. In Facebook’s case, unless brands are willing to provide additional data directly to Facebook via the Conversions API, reported measurement from that platform will become even less accurate and more directional.
A question advertisers will have to grapple with in the coming months is: how much of the performance drop is real, and how much is perceived due to ineffective measurement?
How Can I Use my Brand's First-Party Data
Clearly, relying on the digital and social platforms alone for both targeting and measurement is no longer a viable strategy to support your customer acquisition efforts going forward. Leveraging your first-party data has always been critical for a marketer’s retention efforts. Now, it’s a critical asset for your data-based acquisition efforts as well.
Investing in a robust customer data analytics capability is essential for high-performance marketing going forward. Whatever technology you either purchase, develop or enhance, the solution must allow a marketer to capture, consolidate and organize all of your appropriate first-party data from media spend to conversion data.
The beauty of this approach is that your marketing efforts are built using your first-party data, and are less reliant on data provided by the walled gardens which you don’t control. This gives the marketer a single source of truth, with more flexibility and consistency in this evolving landscape. If done properly, the ability to measure efficacy beyond ROAS, and impact your brand’s continued success through more strategic KPIs like LTV, LTR and CAC, becomes easily possible.
Interested in learning more about Decile’s platform and how our customer success team and marketing strategists can help? Please schedule a demo with us.