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

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.

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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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Tooling up for a first-party world

The shift from third-party data still leaves some marketers scrambling to find workarounds. Their shift to building first-party data capabilities comes at a time, however, when rising public interest in data privacy has also raised awareness among their colleagues of the importance of using and protecting data.

“It has gone from a back-office topic to a CXO topic,” says Mulesoft chief marketing officer, Lindsey Irvine. “If you think about business in general, everyone is realising the importance of data because of the criticality it plays in delivering new digital experiences and services.

“For marketers and others within the business, [the challenge is] to think of data and integration as critical to their ability to accelerate digital transformation and accelerate the innovation that they need to deliver value for their customers.

“Increasingly it is becoming top-of-mind for business leaders, because without data you can’t deliver what your customers are requiring.”

Irvine suggests the future lies in creating data architectures that are flexible, secure, compliant and governable at the data asset level.

“You need to create a data architecture that allows you to plug-and-play and unlock data in a way that is designed for change,” Irvine says. “How you do it matters, because of the regulation and the compliance environment, and because of the risks associated with it. Unlocking data in a way that drives security and governance and compliance at the API level, so that you can ensure it can be managed and monitored and the right permissions applied to it.”

While some marketers may have been caught off-guard, according to Adobe’s APAC head of product strategy and marketing for data management, identity and privacy, Gabbi Stubbs, many of the topics being debated now have been in play for the better part of a decade.

“What is surprising to most of us is that nobody really acted on this,” she says. “Some of what we are seeing at the moment are levels of panic around people trying to operationalise or infill strategies and technologies at the eleventh hour.

“Those mature clients are significantly well off, and their positioning has been a steady growth path as opposed to a real step change. They are at the point where they can do really strong reach-outs to other parties around collaboration, which is where the biggest market change starts to happen.”

In the post-third-party cookie world, Stubbs says the future will see second-party partnerships between brands, publishers and other parts of the ecosystem become critical.

“The technology that is going to be the saviour is technology that enables clients to centralise and operationalise their own first party data and be able to activate off that,” Stubbs says. “What this does is also provide significantly better opportunities for higher quality second-party relationships with either publishers or other brands. Most of that will be centred around explicit consent and being able to build out the trust of the consumers and ensure that the applicability and the use of the data is highly relevant, highly personal, highly respectful, purposeful, makes sense, and is being used for a legitimate business reason.”

Walking the knife edge

But as these partnerships become more common, they are also likely to attract greater scrutiny from privacy advocates and regulators. It may only take one significant breach of trust – deliberate or inadvertent – for the regulatory regime to be re-examined once more.

Globally, the focus on consumer rights and privacy protections has put everyone on notice that current freedoms will only remain place so long as regulators are satisfied they are not being abused.

“We’ve got an opportunity to regulate ourselves,” says SAS CMO and executive VP, Jennifer Chase. “The more we as marketers recognise that privacy is a competitive advantage, and not just something you need to do because you are afraid of some upcoming legislation, we will elevate the craft of marketing if we can all think that way.

“There are so many passive ways that data is collected, we need to make sure we are honouring the gift of the data that’s given to us.”

With this in mind, Chase says SAS has created an internal privacy champions network including representation from product development, legal and IT, as well as marketing, to constantly look at practices and what legislation might be coming, while also understanding how customers want to engage.

“[We are building] the ability for us to understand our customers and build our first-party day more strongly and then design and curate customer journeys that are very personalised and contextual,” Chase says. “It sets us up to be future proof for any legislation. We know legislation is coming our way. It is just going to happen.”

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