First-Party Data is More Valuable Anyway

by Barry Levine
Jul 01, 2020

Suppose you owned a neighborhood restaurant. To keep business flowing, you might weigh whether you should put more emphasis on getting new customers or on getting current customers to come back more frequently.

For digital marketers, that “customer acquisition versus retention” debate is commonplace. But now it is heightened because of the death of a certain type of data-third-party cookies.

Third-Party Cookies Are Dying

Third-party cookies are snippets of code dropped by data and ad providers on visitors to others’ websites and are used to track those users as they go from site to site. They are the reason why, if you look at hiking boots on one retailer’s site, you could see ads for those hiking boots on other sites for days to come.

In other words, third-party cookies track unknown users across the web. And, because they track behavior without consent, the browser makers are phasing out support for third-party cookies.

By contrast, first-party cookies are dropped by a website on its own visitors, or on their logged-in customers. Since they help brands remember users who decided to visit the brand or buy from it – and to tailor content, direct custom offers or remember purchase history – browser makers are fine with first-party cookies.

Because they track the behavior of large numbers of unknown users, third-party cookies can help target those ads about hiking boots to zillions of people who have visited various web pages that feature, say, hiking boots or info on outdoor leisure. Those ads, of course, can help introduce a retailer to those users, and possibly make a new customer.

And now those target-guiding third-party cookies are dying.

Fishing Advice

There are major efforts by Google, identity resolution provider LiveRamp, and others to come up with a way to target unknown users in a privacy-friendly way that doesn’t involve third-party cookies, but, so far, there’s no widespread solution.

This changes the “acquisition versus retention” assessment by digital marketers. Because spraying ads at lots of unknown users is a fading practice.

What now?

Two major strategies are emerging for marketers.

First, fish where the fish are.

Mining Your Own Data

In other words, the brand already has data – and cookies – for users who know the brand, some of whom are customers, so a key strategy for brands is to better mine their data on their own customers and visitors, whom they can continue to identify via first-party cookies.

One obvious way is to emphasize customer retention, a huge issue in an age when brand-switching is often only a click away. Keeping and selling more to your current customers is more cost-efficient and more profitable than boiling the ocean for new customers.

According to a survey from Invesp, a provider of conversion rate optimization software, it costs five times more to attract a new customer than to keep a current one. Brands have a 60-70 percent likelihood of selling to an existing customer, who already knows your brand, compared to 5 to 20 percent for a potential customer.

Similarly, market research firm Gartner found that a 5 percent increase in customer retention can increase profits 25 to 125 percent.

Incentivize Your Customers

There are many emerging strategies for better utilizing one’s own customer base. Marketing, A/B testing, and content management systems with artificial intelligence, for instance, now let brands better deliver targeted emails, offers and, content to ongoing customers, making the experience more useful and more enjoyable for the user.

Additionally, brands are beginning to understand that existing visitors and customers have their own journey with the brand, such as exchanging slices of additional personal data –which can help refine targeting – for specific benefits.

Site visitors, for instance, might be willing to provide their zip code in exchange for an additional free page view of a publisher’s content. Another free view might be available in exchange for, say, the user’s gender. The more data a brand can acquire on visitors or customers, the better it can determine what kinds of products, content and offers work for specific segments.

Which brings us to the second major strategy for thriving in the age after third-party cookies: acquiring new customers.

The best way to acquire new customers is to incentivize your existing customers to generate referrals. To return to the restaurant example, happy diners who enjoy the Luncheon Special are the best advocates for selling their friends.

Back to ‘Mad Men’

Additionally – at the risk of over-extending the metaphor – you can also fish where the same kind of fish are.

If you really understand what your current customers like, you can advertise for “lookalike” customers through interest-based ads that don’t employ third-party cookies.

For example, you might discover that a large number of your customers who bought hiking boots have a special interest in weather forecasting. They follow forecasts carefully, since their hiking depends on them, and many buy their own weather predicting tools, like barometers.

To find new customers with similar interests, who might also crave good hiking boots, you might run ads on web pages with weather forecasts, or with articles about weather prediction.

Of course, this is a return to the classic proximity-based targeting that began in the Mad Men years of advertising and before. If you want to sell pots and pans, advertise on a cooking TV show or on web pages related to cooking, instead of targeting users whose third-party cookies show they’ve visited a cooking site.

But, these days, digital marketers have access to customer data and to intelligent tools that marketers during the days of Mad Men couldn’t even dream about. With strategic planning and resource allocation, today’s marketers can once again shift their focus to accommodate the changing times. And the results could be both a better use of resources and happier customers.

Photo Credit by Yolanda Sun on Unsplash

Barry Levine writes about marketing tech, ad tech and related topics. He has covered this space as a staff Senior Reporter for Marketing Land, MarTech Today and Search Engine Land, as a staff Senior Writer for VentureBeat, and as a reporter for Marketing Dive, ClickZ, RampUp, CMSWire and NewsFactor. You can find him at LinkedIn, and on Twitter at @BarryLevine.

PRAM Organization Aims to Guide the New Privacy-First Digital Ad Landscape
The Partnership for Responsible Addressable Media is made up of advertising groups, tech platforms, and advertisers. But what will it do?
What’s in a Name? Your Entire Brand
Alexandra Watkins’ book, "Hello, My Name Is Awesome" turns the highly subjective task of naming a brand into a more objective exercise.
First-Party Data is More Valuable Anyway
Third-party cookies are disappearing, but marketers could always do far more and far better things with their own data.