The screws are tightening on the data ecosystem. Now that we are in a post-GDPR landscape, platforms and publishers have rapidly made moves to distance or close themselves off from the third-party data used to target and measure digital ads.
Marketers have watched these changes take place over a dizzyingly short period of time. The past three months alone saw data brokers, such as location data company Verve and cross-device targeting firm Drawbridge, reportedly pull back on their EU operations. Meanwhile, YouTube suspended third-party ad serving in the EU.
Other developments have had a global impact well beyond GDPR’s formal jurisdiction. Google recently announced that it will restrict User IDs and Partner IDs through DoubleClick Campaign Manager (DCM) in the US.
In another move with US implications, Facebook announced that it would end Partner Categories, radically limiting its exchange with Acxiom, Datalogix and other third-party data brokers.
Across the board, it’s becoming more difficult for marketers to rely on third-party data to target audiences or measure campaigns. But as these data rules begin to reshape the industry, this change may mean emerging opportunities and advancements for marketers to improve data-driven targeting.
These developments will impact advertisers differently. Brands that spend healthy amounts on advertising, but still need third-party data, will require new data strategies across the majority of their advertising campaigns. CPG (consumer packaged goods) brands fit this description, as does any brand that doesn’t control its own point of sale.
On the other hand, brands with robust CRM (customer relationship management) files may find that only their third-party-data-reliant prospecting and awareness initiatives need a new toolset, while their loyalty campaigns may go on unchanged.
Scale is also a major factor. The uncertainty around third-party data favors both brands and data providers with scale, experience and deep pockets. Companies like Acxiom, Neustar and Datalogix have decades of experience handling sensitive consumer data and a clear business incentive to invest in the costly legal process of staying in compliance with changing global regulations.
The trouble is that the largest data providers with the deepest pockets are built to service large enterprises: the largest advertisers with the deepest pockets. The CPG brands conglomerated under, say, P&G or Unilever, fall into this category. It wouldn’t be the first time that large brands used their market power to extract concessions from platforms.
But what about the millions of brands that spend less on digital? These are the brands that are also less likely to have the resources to build out a solid first-party data asset — the brands that rely heavily on third-party data.
The larger data players aren’t structured to service their needs as well as the larger advertisers, and these advertisers have therefore become dependent on getting this kind of data from the likes of Facebook and Google (which are limiting its use, as mentioned above).
For these brands, the coming months are a time of uncertainty — and an opportunity to rethink the approach to data, targeting and measurement. These brands have watched the toolset at their disposal change rapidly over the past few months, but they still need to find new customers.
Who can service the mid-market?
There’s an opportunity that’s opened up in the world of ad tech and martech: to recreate a data infrastructure that provides broad targeting insights and can be used efficiently by the mid-sized advertiser. The prospect of capturing this market could become a major driver of innovation and M&A (mergers and acquisitions) in a post-GDPR landscape.
Third-party data might be more restricted, but it is not going to disappear. Over the long term, GDPR compliance and the drive for digital privacy will tighten the supply chain for data and ensure that personal information flows only through those organizations that uphold the best practices for data governance.
It also creates a long-term incentive for brands to develop a one-to-one relationship with their customers, backed by a solid first-party data asset. All of this is to the advantage of marketers and consumers in the long run, big or small.
In the short term, the rapid pace of change favors the platforms and advertisers with the most financial resources and the broadest scale. At the same time, a large swath of the market is left without old tools and in search of new ones. Marketers need an alternative to Facebook and Google when it comes to customer acquisition and campaign measurement. The question remains as to who will emerge with that alternative.