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Why First-Party Data is the Key to Personalized Marketing

With Google's decision to phase out third-party cookies from its Chrome browser, marketers are presented with the conundrum of finding new ways to personalize targeted ads for their users. 

Currently, marketers use third-party cookies to gather information about users and create a detailed profiles of their interests and preferences. This information is then used to tailor advertising content to specific audiences, with the goal of attracting new customers to their websites and apps. By analyzing audience sentiment, marketers are able to optimize their advertising strategies to more effectively reach and engage with their target audience. 

Around 70 to 80 percent of retargeting audience profiles are created from third-party cookies, perceiving the future challenges for marketers, the importance of first-party data is growing exponentially.  

As a result, a lot of companies have started building their data warehouses using the Customer Data Platform (CDP) or Data Management Platform (DMP). These platforms help marketers create user profiles based on their activity on the website or app. Furthermore, they enable marketers to retarget users as per their purchase history, especially in the OTT and E-commerce segments.  

Are the Indian marketers ready? 

According to a survey conducted by MMA EY, 71% of Indian organizations have started integrating their third-party and first-party data with the phase-out around the corner, while 58% have identified and accepted gaps in their data.  

In response, Google and Facebook have introduced innovative solutions like Enhanced conversions and CAPI-G. These will help marketers link their first-party data tracking with Google and Facebook cloud servers for further optimization of their first-party data. 

Along with the industry giants, a lot of digital marketing agencies are innovating ways to help clients with first-party data optimization — ranging from predictive modeling on first-party data to integrating Customer Relationship Management (CRM) with the CDP and DMP to create detailed user profiles.  

As data security is among the top concerns for marketers along with ROI when it comes to implementation, such measures have a slow adoption rate.  Even though the Personal Identifiable Information (PII) is being tracked by the client they are reluctant to share the same with agencies which further delays the process.  

Do these solutions work? 

The phase-out has led marketers towards asking some considerable questions: 

Why is predictive modeling important?  

Does enhanced conversion help get better ROAS?  

Can’t we use CRM data without integration with the data platform?  

Have first-party data solutions been implemented for other clients?  

Market trends suggest that organizations will have to spend considerably more to achieve the digital marketing targets set out in 2022 and 2023, in order to be ready for the cookie-less future. 

Post the phase-out, first-party data will play an important role. As Behavioral Targeting and Audience Profiling are predicted to be the most affected fields by the phase-out, brands need to start working with first-party data proactively.  Currently, marketers use the audience list from their DMP or CDP for retargeting or user acquisition. First-party data can be a lot more than just past purchases, as it can track in-app and website search data, view through events and other such user behavior data to understand user needs. These touch points combined with past purchase history can assist marketers to understand user preferences and can leverage first-party data for more efficient performance marketing strategies.

Possibilities with first-party data 

It is certainly possible to build an audience persona and utilize behavioral targeting by leveraging data warehouses. Marketers who rely on third-party data are more likely to develop strong resistance to change. Consequently, they overlook the importance of their CDP and DMP data, which is no less than a goldmine. Such an enormous amount of data can help them to grow their current and prospective ad revenue. First-party data can help in collating a list of users with high intent of performing a certain action for Google and Facebook Ads, rather than one with a mix of user intents. 

In conclusion, the need of the hour is to move on from solutions dependent on third-party cookies. At the same time, it is necessary to recognize that alternative solutions are bound to experimentation and will take time to be implemented as per the campaign KPI requirements.  

We at Merkle Sokrati are actively working towards preparing our partner brands for a cookie-less future.