Marketers are realising the need for a strategy around data and identity as the cookieless future that was anticipated in 2020 rapidly transforms into the cookieless present. Third-party cookies have traditionally served as a valuable identifier for internet users. Their imminent deprecation adds complexity to marketing’s oldest problem — targeting the right consumer, with an appropriate message, at the right time. This is particularly relevant for audiences on the open internet, beyond the walled gardens of Facebook and Google.
Articulating these concerns, Johnnie Leung, director of business development at The Trade Desk, said, “One of the biggest factors when using data is tying it to an identity. When there are no cookies, how are we going to leverage first-party data and scale third-party data? What common denominator will allow us to see the user journey?”
Leung was speaking at ‘Untapped opportunities in the open internet,’ an event held in Hong Kong organised by The Trade Desk and Campaign Asia Pacific to discuss the criticality of data and identity-linked solutions in marketing.
Building a data and identity strategy
The first step in creating a strategy for the cookieless world is to understand the difference between data and identity. In Leung’s analogy, identity is akin to a safe deposit box, with data as its contents. However, there are problems inherent in accessing the same box repeatedly to deliver a message. A single consumer could have multiple online personas — accounts with Google and Facebook, as well as within various ecosystems on the open internet. Leung said, “Without an identity strategy, you are pitting every version of the same person against themselves, making for extremely inefficient media buying.”
Formulating an internet identity requires combining both first-party and third-party data, but third-party data — particularly third-party cookies — is being phased out due to privacy concerns and regulatory changes. Initiated by The Trade Desk in collaboration with other industry bodies, Unified ID 2.0 (UID2) is a widely adopted solution that does not rely on third-party cookies. UID2 aims to protect user privacy and preserve the value of relevant advertising on the open internet, which is to fund the content that consumers love. Leung said, “UID2 takes authenticated, consented identity such as email or a phone number, encrypts it to scrub away personally identifiable information (PII) and then assigns a code that is usable, portable, and compliance friendly.”
Why identity matters on the open internet
While large tech platforms have historically attracted the lion’s share of digital budgets, the open internet represents a huge and untapped opportunity for brands.
Speaking at a panel discussion following Leung’s keynote address, Chris Ngan, general manager, Hong Kong and Taiwan, The Trade Desk, cited research about consumers across North Asia using eight digital channels unavailable within the walled gardens of Google or Meta to access connected TV, music streaming, shopping, and gaming. He added, “An eMarketer report says that globally, customers spent 70% of their time outside walled gardens.” He recommended that brands activate their customer relationship management (CRM) solutions on the open internet to truly unlock its potential.
There are several benefits to investing in an identity strategy built around first-party data.
1. Improving the effectiveness of media investment: Once activated, a universal ID helps marketers communicate across all channels effectively and reduce wastage. Brands can expect better results with the same budget.
2. Increasing customer lifetime value: A good first-party data strategy gives brands insights into the right moment to upsell or cross-sell.
3. Making customer acquisition more efficient: With a brand’s existing customers used as seed data, the most relevant audience with similar attributes can be found, thus reducing acquisition costs.
4. A richer first-party data set: Ngan said, “Google and Facebook will never give user-level data. You won’t get additional insights to benefit your first-party data strategy. But by activating your media investment in the open internet — for example at The Trade Desk — we can share data and ingest it into your system. The overall quality of first-party data will get enhanced in the long run.”
A recent playbook, created by The Trade Desk in partnership with data specialists Epsilon, has outlined the steps on the best use of first-party data which include defining the objective, putting infrastructure in place, audience segmentation, enriching first-party data, optimising, and reinvesting.
This approach is particularly important considering how complicated harnessing first-party data is, even for companies with vast reserves of customer data.
The challenge for marketers in using first-party data
Edward Bell, general manager of brand, insights, and marketing communications at Cathay Pacific candidly addressed the challenges encountered while embracing a data-driven route.
His company is amid a business transformation to become “one of the world’s greatest service brands” according to Bell. This ambition pits Cathay Pacific not just against other airlines but brands with a reputation for great service, such as Netflix or Apple.
There is a practical reason driving the transformation: an average customer flies the airline five times a year. Becoming a well-regarded service brand gives Cathay Pacific more opportunities to engage with its audience in between travel. The company has a membership programme that aims to harness the value it can add in the broad travel arena.
However, this is easier said than done. Among the factors to consider are the percentage of the user base who have provided marketing consent; the number within that base who can be identified in media; and if they are genuinely visible to be targeted with programmatic advertising.
Another key issue has to do with compliance. Bell said, “Currently, standard practice would be to submit a request to a privacy officer every time you need to use first-party data for marketing. When you take into account that each request is bespoke and requires manual approvals, that process can easily become slowed down.”
How identity can help solve the challenge of personalisation
Identity is the foundation of every meaningful engagement according to Paul Rao, solution consulting manager, Hong Kong and Taiwan, at Adobe. Highlighting the difficulties in the transition to first-party data, he said, “60% of personalisation experience currently available is dependent on third-party cookies. Only 37% of professionals are very prepared for a cookieless world. It substantially changes the way brands acquire customers. That’s why moving to a first-party data strategy is crucial for future growth.”
There are three critical steps to making the shift.
A shift to durable IDs: Cookie restrictions require a new approach to future-proof customer data management. Durable IDs help overcome the limits set by modern browsers and mobile devices on the validity of identifiers. At Adobe, designing and implementing first-party customer ID is a key part of every data-driven solution.
Ensuring the identifier brings together the known and unknown customer data into an actionable profile: It is important to consolidate multiple identifiers associated with an individual and combine them to create a profile. Ideally, this should happen in real time and on a very large scale. The profile serves as the foundation for personalisation.
Honouring data privacy, customer preferences, and complying with dynamic privacy regulations:
Privacy ought to move from being just a disclaimer at the bottom of a page. Rao said, “We have seen some brands create preference centres to reassure customers about being in the driver’s seat, with absolute control over data collected, and how it is used.”
Ngan presented a case study for Marriott International from The Trade Desk on how UID2 could help deliver multiple results. As a leading hospitality company, Marriott has several brands catering to different market segments — luxury properties like St. Regis and Ritz-Carlton, and the more family-oriented SpringHill Suites.
Visitors to the website who didn’t make a booking were typically retargeted with a generic message. Ngan said, “The expectations of a business executive looking for a suite in Ritz-Carlton is very different from that of a parent looking to room a family of three. Why should they see the same ads?” Using dynamic creative rules from The Trade Desk, Marriott passed the data to its ad server. A personalised ad was created based on different data signals, derived from Marriott’s first-party data, including the visitor’s profile if they were using the app.
Ngan said, “It helped deliver offers by audience segment. We got a 3x uplift in bookings over the campaign period and a 65% increase in return on ad spend. The lead time to booking dropped from eight to five days.”
The move away from third-party cookies is inevitable — whether out of compulsion or choice. But making the switch sooner than later gives brand owners a chance to become adept at using first-party data and unique IDs. Or indeed, to find how these strategies can help them navigate digitisation and business transformation. Having a future-proof data and identity strategy in place is a vital first step.