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Customer Data First (Part 1)

Working in an agency provides a wide view across different clients, however it also has blind spots. For media agencies this blind spot is customer data and its growing importance in marketing strategy. Media agencies struggle with customer data because it's not historically part of the media planning or buying task. For example, using a client's customer data to buy 'custom audiences' on social is popular because the audiences are created and managed by the client - the agency then selects the audiences in the buying process. Additionally, many agencies won't touch client data in case they breach GDPR - a healthy fine from the regulator is not a good look or an affordable option.

Until recently this hasn't posed a problem because digital media was running on old rails - lots of adtech, lots of 3rd party data and lots of targeting scale. But that world is changing fast as 3rd party cookies start to disappear. Apple & Mozilla (Firefox) have already blocked these tracking cookies, which means 40% of UK web users are unknown to advertisers today. Google have committed to blocking 3rd party cookies in Chrome by the end of 2021, so without alternative solutions, 90% of web users will be unknown. (I'm not going to cover alternative identity solutions in this post, but if you want to find out more, do read this excellent summary by Paul Gubbins).

When everything runs with unlimited 3rd party data and cookie matched audiences, the digital marketing ecosystem is sustainable. However, in a shrinking pool of 'tracked' audiences it becomes less sustainable, and it's changing even faster on the back of a global pandemic. Marketing budgets have been slashed around the world and CFOs everywhere are placing far more scrutiny on paid media, the biggest expense of them all. So where should advertisers be focusing their attention and investment to prepare for this brave new world? The answer is 1st party data, particularly customer data.

I know several smart advertisers who obsessively use customer data first - an organisational approach that delivers insight, informs business decisions and drives the advertising strategy. By taking this approach, these advertisers are seeing a competitive advantage from their customer data and will gain (or maintain) leadership in their category. Understanding what your best customers look like and do, is now a critical function in today's marketing, but using this knowledge needs a new marketing rhythm (Hint: this is not achieved by asking your agency to segment your audience into 8 pen portraits!) This new rhythm starts with 1st party data, it applies data science and it creates a process to activate your audiences directly from your own tech stack. These smart advertisers make sure that customer intelligence and audience creation activity is led by themselves and nobody else - they are the ultimate customer data guardian. Agencies still have a role to play in this new marketing rhythm, but it's becoming more operational due to the nature of data ownership and data access. Instead agencies must also adapt and become a true 'agent' between their buyers and sellers. Agencies now have a wonderful opportunity to create data co-ops and partnerships between clients and publishers. This can now be delivered through neutral technology like Infosum, which is far more acceptable to clients than the previous 'agency owned' data platforms.

So what else will customer data provide? First and foremost there will be very little new innovation without data - just look at companies like Lemonade to see what can be achieved through the smart use of data. Secondly, it is economically critical for advertisers to know what their best customers do - this allows them to plan and buy bespoke audiences instead of the standard audiences available to everyone else. Advertisers should be looking to build out bespoke tribes, algorithms and connected technology so they're fully in control of how they buy on platforms and DSPs. Starting with customer data gives advertisers this unique advantage and allows them to use their data models to buy away from the pack.

But herein lies the problem. Achieving this new approach becomes very difficult unless you own your own data and technology. Customer data / 1st party data is extremely valuable, and it's the essential raw ingredient that can provide a competitive advantage through AI. Advertisers do not want this data to leave their building, so a new approach and marketing rhythm is needed to connect data intelligence to the existing digital marketing ecosystem. This is not a simple task especially when digital identity is up in the air.

In Part 2 of this blog I'll be discussing some of the methods being adopted by advertisers that are taking a customer data first approach.

For further details of the advisory services I offer advertisers, please click here

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