Data Marketing In an age of privacy

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When Apple released iOS 14.5 in 2021, the Cupertino hardware and software company dropped a bomb on the Internet’s advertising industry. The update for iPhones and iPads included a new privacy tool. App Tracking Transparency requires app-makers who want to track activity across apps to ask their users’ permission before they can collect that data.

For advertisers and marketers, that need to receive approval marks one of the most important shifts in Internet marketing since Google started monetizing search results.

Before the update, companies could embed trackers in their apps that quietly shared information about the user’s phone activity on other apps. A user who had installed Facebook on their phone, for example, then searched for a new computer on a shopping app might later find ads for similar computers in their Facebook or Instagram feeds. Users wouldn’t notice that apps like Facebook might be spying on their activities when they surfed the web, played games or searched a shopping app. But those companies could then use precise data about the user’s individual interests, collected surreptitiously from their phones, to build a detailed profile of their current habits and target their ads.

Users have always been able to stop app tracking, but they usually needed to dig deeply into an app’s settings. Few knew where to look or how to make the adjustments, and even fewer bothered.

The update rolled out in the previous version of Apple’s mobile operating system has made opting out of tracking much easier. A large panel now appears over the screen when opening an app, asking the user if they want to allow the app “to track your activity across other companies’ apps and websites.” Although the app-maker can explain why users should allow that tracking, the question is framed in a way that invites users to refuse. From an opt-out model, Apple has effectively shifted to an opt-in model that assumes users don’t want to be followed.

The result was felt immediately. One study released shortly after the release of the update found that as few as 6 percent of US users had opted in to allow tracking. That number has since risen as apps have tightened their appeals and better explained how tracking enables them to provide their services. A study published in December 2021 found that the opt-in rate across all app categories hovered around 40 percent.

But that’s still a significant decline and a meaningful loss of data available to marketers. Platforms that depended on trackers expected to suffer. Facebook predicted that the changes would cost the social media platform $10 billion in revenue in 2022, a painful blow that comes as its userbase ages, younger users turn to competitors like TikTok, and Meta pours billions into a metaverse that still has no legs.

Trackers, though, aren’t the only way that apps can follow users across their devices. Fingerprinting uses information about a user’s device, such as the browser and hardware, to collect data about a user’s activities and site visits without triggering Apple’s pop-up. And websites have long used cookies—small pieces of software embedded in web pages—to track online activity and serve targeted ads.

But fingerprinting is crude. Lots of people use similar phones with similar hardware and software. And even cookies are now coming under pressure. Although the date has already been pushed back twice, Google now plans to remove cookies entirely from Chrome by the end of 2024, a move that will bring them in line with rivals Safari and Mozilla. The kind of over-the-shoulder spying that has formed the foundation of Internet marketing for so long is coming to an end.

Marketing in a Private Market

The changes sound disastrous for marketers but restricting tracking doesn’t make effective ads or marketing less effective. Advertisers and marketers will still be able to reach audiences, and good copy well placed will still turn leads into conversions. Campaigns may become less efficient. Without detailed data, marketers will miss more often and they’ll struggle to understand which of their messages in which places have had the best effect.

“The issue is in transparency,” explains Simon Kingsnorth, a digital marketing expert and author of Digital Marketing Strategy: An Integrated Approach to Online Marketing. “Overall results shouldn’t be affected for most businesses, but it can be harder to allocate conversions on some channels. If a user is sent to another app to convert then the data for that journey breaks. This makes it harder for marketers to know exactly what efforts are driving goals and therefore where to optimize.”

That loss of clarity extends beyond app tracking. Apple’s replacement for cookies, Private Click Measurement, creates delays of up to three days in attributing data for iOS users. Marketers might see a conversion on one site or app without being able to see the chain of actions that triggered that conversion. The revenues may still continue to flow, but marketers will struggle to optimize their advertising, improve their efficiency and produce better results for their campaign budget.

So as privacy tightens, users win a stronger grip over their own data and transparency fades, what should marketers be doing to improve their results?

For Kingsnorth, increased user privacy creates opportunities as well as threats. “Protecting individuals’ data is critical and marketers should be adapting to this,” he argues.

Marketers should apply first-party data strategies, he continues, collecting information directly from users and customers. That data might include purchase histories, social media interactions, survey data or website activity such as reading reviews and filling a shopping cart. Those interactions are data points that don’t depend on third party platforms like social media sites and they can bring the brand closer to their customers. When sellers contact buyers directly to ask about specific purchases, they gain both feedback and the start of a personal relationship.

That may explain why while Facebook has been laying off employees, email marketing is continuing to grow. Email marketers can maintain their own databases, segment their lists and send different messages to different groups based on purchase history and activity reported by their own email software. Brands can then replicate and even improve on the results achieved by data tracking. Thirty-seven percent of brands reported that they planned to increase their email budgets in 2022 and more than three quarters of marketers say that they’ve seen an increase in email engagement over the previous twelve months.

“With first party data we also have the opportunity to create better relationships with our customers and drive more value from them,” says Kingsnorth.

The data those interactions collect can then be fed into customer data platforms that allow marketers to assemble information from different sources. With a complete picture of leads and customers derived from their own first party sources, brands will be able to use that data to design integrated campaigns.

From Data Marketing to Relationship Building

What the shift towards stronger privacy is bringing then may be a new era of relationship marketing.  Contextual advertising that targets ads to the subject of a web page will become more important as brands lose access to browser histories. List segmentation will become more detailed in order to make up for the loss of platform data.

But instead of hurling copy at platforms using data those platforms have quietly collected, brands will now have to get to know their customers themselves. They’ll need to collect their own information, establish trust and provide value. They’ll need to reward customers well enough to make those customers want to maintain a relationship with them. And that deepening relationship should bring not just extra sales, but also referrals, brand awareness, reviews, endorsements and shares. 

“This will build trust, conversion rate, lifetime value and improve your overall metrics,” says Kingsnorth.

The old platforms will still have their roles. Meta’s Facebook and Instagram will remain powerful channels for delivering messages. Search marketing, email marketing and all the other ways of reaching potential customers will remain part of a marketer’s arsenal. And the messages sent through those channels will have to be as compelling as they’ve always been. In fact, creative will need to be even more persuasive as it aims at a broader audience consisting of people with both deep and shallow interests in the product. But instead of relying on the data that the social media platforms collect, brands will have to make use of the data they’ve built up themselves. They’ll have to put that data together and operate without the clarity of a transparent chain from lead to conversion.

Instead of building a relationship with their FB account manager, brands will need to get to know the people actually buying their products. That should see them in good stead when the next change comes.

“Of course, we have more challenges in visibility of performance and we all need to adapt to that,” says Kingsnorth. “But this is not the first major challenge placed in front of marketers and it won’t be the last.”

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