Data-driven Marketing without Data?
Conventional data-driven marketing is threatened with running out of data this year. What companies should expect in 2021 and how they can combat this effectively in three steps.
Creating more digital touchpoints for the customer – that has been the strategy of many companies during the Covid-19 crisis. Customers too have increased the intensity and extent of their usage. So instead of acquiring new customers, many companies in brand management are focusing on integrated customer journey management by implementing a high proportion of communications on their own platforms and through CRM channels. To personalize these communications, many firms have already introduced so-called Customer Data Platforms (CDPs) or Customer Intelligence Platforms, which can be used to consolidate user data and analyse user behaviour.
But does this mean that marketing is sufficiently prepared for the future? Unfortunately, no, because conventional data-driven marketing is threatened with running out of data permanently in 2021 if steps are not taken to combat this. The traditional kind of data collection is coming to an end, not least because desktop and mobile browsers are blocking third-party cookies. Today, even first-party cookies are already being partially blocked. Without taking action to combat this, an increasingly high percentage of users (at least 60 per cent) can no longer be analysed appropriately and data-driven activated. In addition, there are risks from the European Court of Justice’s case law on data protection, which imposes very strict conditions on legally compliant data collection and processing when US systems are used.
Here’s how companies can actively combat this:
1. SIMULATE VARIOUS SCENARIOS
The lack of data results in imprecise analysis and prognosis, ultimately making it increasingly difficult to plan budgets and sales. Companies should develop scenarios showing what the quantity and quality of their data will be like in the future, and then evaluate these scenarios in terms of their financial impact on their own company. For example, what can be offset using forecasting models? Which budget expenditures or income forecasts have to live with what kind of uncertainties? Brands should urgently use both the remaining time and the data they have in 2021 to work on models using their business intelligence to create new norms for today’s circumstances.
2. HAVE A “PLAN B”
Companies should develop a “Plan B” so that their prior technology investments and their marketing channels are protected in the best possible way.
What do new communication paths or new formats for data exchange between users and companies look like? What do new, direct technology solutions between advertisers and publishers, such as the major publishing houses look like – as an alternative to Google and Facebook, who are using their currently strong, almost excessively powerful market position to further monopolize the path to the customer? What technological consequences does this have for the infrastructure of their marketing technology?
Also, the question arises of which service providers – for example in retargeting or affiliate channels – will still exist in the future? How do these companies build their mostly 3rd party cookie blocking solutions? The question also arises as to which service providers – for example those working in the area of retargeting or affiliate channels – will still exist in the future? How do they convert their cookie-based solutions so that they are not affected by 3rd party cookie blocking? Is that even possible? Shouldn’t the marketer instead have to collect and work with its own retargeting data? What does this mean for the marketer’s AdTech or MarTech area and operation? What processes will be needed in media buying and campaigning in the future?
Ultimately, companies should also check if their system landscape is compatible with systems using data transfer in third countries, especially in the United States or China. Which systems can no longer be operated in a legally compliant manner as defined by the "Schrems II" European Court of Justice ruling of July 2020, without taking additional technical and organizational steps? This is the case when personal data such as cookies are transferred by the system to non-EU countries without a comparable level of data protection, for example to the USA. Basically, access by a service employee from the USA to the European installation of the US provider is sufficient for this. It is therefore urgent to use so-called data transfer impact assessments to determine the data protection risks for users within the EU who are operating a software or a process that transfers personal data to third countries outside the EU. If these countries don’t have a comparable level of data protection, it is advisable to minimize these risks by taking technical measures. Upon request, such assessments can be submitted to the supervisory authorities if requested, so that the systems can continue to be used risk-free.
3. BECOME MORE INDEPENDENT
It is important to build up a significant amount of so-called persistent data. Traditionally, this is CRM data such as email or postal addresses. These kinds of persistent data help companies to become more independent from the threat of the ever more transient world of cookies and device IDs, or the gatekeepers Google and Apple. Whatever the new ID world looks like, an identifier based on persistent data (e.g. via a login) means the identifier is linkable and can be analysed. Therefore, actions or campaigns that generate more logins or newsletters currently have a significantly enhanced strategic, quantifiable value.