Retailers recognise the unrivaled benefits that data sources contribute as they enable businesses to paint a picture of individual preferences. Accurately understanding your customer is paramount to be able to serve them relevant content that will resonate.
Having this information means retailers can more effectively engage their target audience by personalising content to optimise marketing budgets and achieve a positive return on investment.
Historically there were more relaxed laws about the data retailers and advertisers could harvest from website interactions however, with recent changes to the privacy laws aimed at giving consumers greater protection, coupled with the death of third-party cookies, retailers have lost some of their ability to use personal data to their advantage and so freely.
To overcome this challenge and continue to provide an optimal customer experience, retailers need to be harnessing first party data.
The benefits of personalised marketing efforts
Ensuring messages that are served to those interacting with your brand are targeted specifically to the person receiving it has a win-win result for both the brand and consumer. For the individual they are provided with visuals and information that is tailored to their likes, interests as well as their demographics like age and gender.
This means they aren’t bombarded with irrelevant content that is of no interest to them and instead can enjoy a shopping experience that seems to seamlessly respond to their needs. On the flip side, the retailer is less likely to waste precious marketing dollars if they can customise and more effectively target their approach increasing the likelihood of a sale.
Hold up, what’s the difference between first- and third-party data, what’s a cookie and why do they matter?
A first party cookie is predominantly used to streamline someone’s online experience of a website. It’s generally information that person provides and doesn’t go beyond the owner of the given site. An example of this is when someone adds items to a shopping cart but gets distracted and closes the browser window, next time they return to the site the brand will recognise their IP and the same items will appear in their cart.
Sites also use these to recognise a person’s previous browsing activity on the platform. This enables the brand to reconfigure the contents so items they’ve historically shown interest in are more prominent as it presumes their habits will remain consistent.
Third party cookies are often created by advertisers and track the behaviour of individuals, following them website to website picking up pieces of information about them. Third party cookies learn what someone buys on one site to serve them similar advertising content on sites they visit down the track. For example, if someone clicks through an Instagram ad to get the price of a dress but takes no further action, over the next few days the dress will appear in banner ads across other unrelated websites they visit.
Recent changes to laws, cookie usage and rising privacy expectations of consumers
Late last year the Australian government responded to the Privacy Act Review report. The revamp aims to strengthen Australia’s privacy law, to “bring privacy law into the digital age”, protect individuals and increase corporate accountability. The reforms pledge to lead to greater transparency and give individuals more control over their information through consent mechanisms.
One of the key government responses stipulated in the report was that an entity who has collected the information from a third party or disclosed the information to a third party must inform the individual about the third party and notify the third party of the erasure request. This, in practice, is observed by the pop ups retailers must have on their website homepages that ask for cookie permissions.
Third party cookies are now blocked by Apple, Microsoft and Mozilla and earlier this year Google turned them off for one percent of Chrome users with the intention to completely disable all of them by 2025. This is the third time, that Google has delayed the deprecation of third-party cookies on its Chrome browser. It cited regulatory hang ups and insufficient industry readiness.
A 2023 survey found 83% of Australians wanted more control and choice over how their personal information is collected and used. While consumers are increasingly more aware of the importance of data protection, the new reforms will give customers greater assurance due to the additional rigor being applied.
Moving forward, consumers will have more of a say about which data they’re comfortable sharing and exactly with who. Due to this, we predict they’ll be more inclined and comfortable sharing information with the brands they trust. They’re also more likely to understand sharing the requested data is in their best interests and will lead to a better overall experience.
How to leverage first party data and why it’s so valuable
While the death of the third party cookie might be a hurdle for brand advertisers, all is not lost and now, more than ever, it’s critical to explore new marketing channels and double down on your first party data gathering techniques.
To maintain targeted marketing tactics it’s worth looking for alternative ways to tap into first party data. Forging partnerships with other ecosystems and connecting with platforms that have a significant user base to supply to brand and retailer partners is increasingly becoming key to success.
Harnessing first party data platforms means, while brands can both maintain a finger on the pulse by keeping across their audience preferences and behaviour, they’ll also have the peace of mind that the individual has given their permission for the business to do so.
Tyler W. Condon is head of partner success and commercial at Klarna Australia and New Zealand.