The third-party data party is over. What comes next for marketers?

We explore how the battle for privacy, demise of the third-party cookie, growing investment into first-party data and second-party data partnerships are changing nature of data-driven marketing

The marketing sector is no stranger to enthusiastic debate, but the battle between privacy advocates and the holders of customers’ personal data has become especially impassioned.

At one extreme, the debate is characterised as a struggle of the commonfolk against commercial organisations keen to exploit their data for maximum profit, with only a cursory regard for ethics and consumer rights. At the other end, it is a quest to provide exceptional customer experiences while maximising commercial returns and ensuring the existence of a free and open Internet.

For marketers, it all comes down to their freedom to collect, analyse and use customer data for their own purposes, including through second-party data partnerships with other organisations.

But how they exercise their freedom will ultimately determine whether they are portrayed as the heroes of villains in this struggle. Because with governments around the world watching closely, any mishandling of customer data, be it intentional or inadvertent, is likely to bring down the hammer of regulation.

The case for regulation

In Australia, these freedoms currently hinge on the outcome of a current review of Australia’s Privacy Act by the Attorney-General’s Department. In addition to submissions from industry and other parties, this review will take into account the Australian Competition and Consumer Commission (ACCC) 2019 Digital Platforms Inquiry final report, which examined the impact of online platforms on advertising and the media.

The ACCC report raised numerous consumer privacy issues, including whether consumers are making informed choices about how their data is collected, and whether the data collected can be used in ways that harm society. It also includes the view that when dealing with digital platforms, ‘few consumers are fully informed of, fully understand or effectively control, the scope of data collected and the bargain they are entering into with digital platforms when they sign up for, or use, their services’. In addition, that there is ‘a substantial disconnect between how consumers think their data should be treated and how it is actually treated’.

Signals of outcomes from Attorney-General’s Department review will be contained in a discussion paper, expected to be released soon. Should the review identify market failure, including demonstrated harm to individuals or organisations, new regulation is likely.

Whether regulation will focus on the platforms, or all holders of customer data, is unknown. Either way, marketers are on notice to continue behaving in such a way as to not make additional regulation necessary.

Former Australian Privacy Commissioner and founder and lead privacy advisor at Information Integrity Solutions, Malcolm Crompton, is very much of the opinion more needs to be done to protect consumers’ rights.

“Law closes the gap between where the market is and where society wants the market to be,” Crompton tells CMO. “We are witnessing a general interest in community unease, and the trend line is trending up. The market has failed, and we need some regulatory help, because we haven’t worked out how to get it right.”

Crompton argues consumers need to have greater trust that the people who are using their data are doing the right thing, not just because they have consented, but because it is the right thing to do. And he believes data holders will only do this if they are regulated to do so.

At the heart of his argument is the assessment consumers simply aren’t aware of how their data is being used. It is therefore vital those organisations holding their data consider why that might be the case.

“It is all very well to say you are meeting customer expectations, but if you have misled the public, then what you are reading as customer expectations is not appropriate, because the customer doesn’t know what is going on,” Crompton says.

Focus on rights and responsibilities

Google and Apple recently took steps to bolster consumer protections by curtailing third-party tracking. In doing so, the emphasis shifted to other techniques marketers can use to track customers and enhance data, such as through first-party data collection and second0party data sharing arrangements.

Read more: The future of data in a cookieless world

As the cookie crumbles, what comes next for digital advertisers?

Is contextual marketing the answer to the end of third-party cookies?

The right to use of first-party data is a topic of great interest to the team at Flybuys, especially following the release of its enhanced digital audiences service Flybuys Unpacked last year. The loyalty program, which boasts 8.6 million members, has now inked deals with multiple partners including various media agencies and publishers, News Corp and Seven, to help them better engage with key consumer segments using FlyBuys’ first-party data. The ambition is seeing the impact of marketing at every step of the advertising workflow.

Flybuys’ chief product officer, Harley Giles, describes Unpacked as part of a longer-term strategy to diversity towards being Australia’s largest engagement and data platform.

“Of the segment that was exposed to that advertisement, we will be able to tell you what was the sales uplift that occurred in store as a result of people being part of that advertising campaign,” Giles says. “That is bread and butter when you are dealing with pure-play online. But when you are trying to understand the impact of online advertising to offline sales, that is really something only FlyBuys, a loyalty program that has that online identity to offline transaction connection, can offer.”

With much riding on the success of Unpacked, good data policies are part of the licence to do business.

“The number one thing we think about is data security and privacy,” Giles says. “The type of data we share is de-identified information. It is used for the purposes of managing campaign activity, it is used for things like website personalisation and online advertising campaigns. But none of that information can be used by third parties to identify and target individual members.

“That doesn’t give you carte blanche to do whatever you want with the data. You have to be really clear with people about what you are using the data for. You’ve got to be really clear about their ability to discontinue the use of their data. Having very clear and transparent consent frameworks for when you are collecting data, what you are using it for, and why, is very important in all of this.”

Giles is also aware Flybuys’ ability to operate depends not just on the behaviour of his company, but of the entire community using customer data, in a sector that he says at times has resembled the Wild West. Hence, he is in favour of the recent changes made by Google and Apple.

“In some instances, consumers would just have no awareness that data has been collected on them, and profiles have been developed, and that has been used for targeting,” Giles says. “By making those changes, you are cutting the ability of those rogue operators off at the source. It is going to be first-party data in first party ecosystems that can be used for targeting moving forward.”

He also applauds the actions of some advertisers, such as Procter & Gamble, which have been forthright in their expectations of data providers.

“The awareness and sophistication in some marketers has been lacking, and it is only now with some of these changes that they are getting greater awareness of what good data is … and what bad data is,” Giles says.

Up next: How to tool up for a first-party world, plus the rise of second-party data relationships

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