In this first blog in a series about data collaboration, Graham Tricker, VP Revenue UK at LiveRamp looks at the macro-trends for 2024, at the impact they’re going to have, and at the maturing technology that will help companies survive and thrive in this new environment.
2024 is going to be a pivotal year for business. A number of trends are coming together that will reshape the way companies build relationships with their customers. In turn, this will force companies to rethink how they operate, in their marketplaces and internally. As a result, I surmise the most significant trends are;
The drive for greater privacy: 2024 will see the death of the third-party cookie. This is a huge shift for our industry. Our CEO, Scott Howe, describes it as our “Galileo moment”; the point when we realise what we thought about the nature of our universe is wrong. But what replaces the third-party cookie in our cosmology remains unclear. Google Ads’ new tools include software such as Performance Max and Demand Gen that help marketers to design and promote ad campaigns to specific audiences, with the help of its generative AI software, called Gemini. Alternatives include Meta’s AI-powered Advantage software, as Dan Taylor, global head of Google Ads, put it in a recent interview “AI is not replacing marketing expertise: it’s meant to multiply it. I can either write 12 text ads and hope that they work or I can get 40 suggestions from Google Ads based on my website that AI predicts will perform as well, or better, than the ones that I wrote. That to me is empowering to a marketer not replacing [them].”
The emergence of new digital channels: Connected TV (CTV) and TikTok have both been around for a while, but they’ve only recently entered the mainstream. In October 2023, TikTok was the fifth most used social network in the world, with 1.22bn active users. Meanwhile the arrival of mass-market CTV has added TV advertising to the list of media that can be traded programmatically, and at scale.
Economic uncertainty: Businesses traditionally approach marketing in tough times in two ways. They look to increase its efficiency and effectiveness, and they focus more on maximising the value of existing customers than acquiring new ones. In both these areas, CMO’s are being asked to do more with less. So we’re increasingly seeing brand budgets being shifted to addressable channels where budgets can be more effective and more accurately measured.
The evolution of technology: AI has dominated discussions of technology for the last 12 months, and there’s no question it has enormous potential (with over 140 AI events in San Francisco in February alone!). But as Jeremiah Owyang, tech industry veteran and General Partner for Blizscailing Ventures, commented during his ‘Plot Your Path: Navigating the AI Landscape’ session at our recent RampUp 24 event; “The important thing to note is that if you’re going to participate in the AI revolution, you better have your data together”. Technologies such as Data Clean Rooms – virtual, data-safe, neutral spaces where silos can be housed and broken down, connected and enriched, analysed and activated for marketing – can be critical here. Data Clean Rooms allow data collaboration and partnerships to exist without either party/parties having access to the others’ data. This means data can be shared between businesses in a way that complies with data regulations, and respects consumers’ desire for improved privacy.
The perfect storm
The factor common to all these trends is first-party data. The data that a business collects directly, with permission, from its customers and prospects is the key to driving growth and efficiency in a post-third party cookie world. It makes ad targeting more precise, which in turn improves advertising efficiency, effectiveness and most importantly makes digital media more relevant and optimised towards the type of journey the consumer expects. At the same time, incrementally improving understanding of the customer, coupled with what should be a continuous value exchange – data for benefits – increases customer loyalty and value. It should also improve new product development, and the roadmaps for existing products.
First-party data tells you exactly who your customers are, so it’s a great seed for finding similar-looking high-value customers. This again improves the ROI from your advertising by only targeting people who match the behaviours of your existing base.
Finally, if first-party data is collected and used properly, employing it as the basis for one-to-one targeting will allow you to favour precision over prediction in your marketing, in a privacy-centric way.
This is why every brand is offering incentives to persuade customers to share their data, and to grant the brand permission to use it. For example many grocers offer their customers coupons and increasingly member only pricing, as the margins realised through leveraging this data vastly outweigh the costs.
Why data collaboration matters
However, first-party data on its own can’t take on all the heavy lifting done by third-party cookies. CPG businesses that sell through retailers, for example, have very limited opportunities to collect data from the consumers who ultimately buy their products. That’s why data sharing, or collaboration, is becoming so important.
There are two main areas of data collaboration. One is where non-competitive businesses in the same sector partner to share their first-party data. A CPG brand might partner with a retail chain to gain access to the retailer’s first-party data about sales of its products. Or a hotel chain might partner with an airline to share each other’s first-party data on the behaviours of their mutual customers. Then the other area of collaboration is between a brand and a business that supplies third-party data, usually demographic or psychographic.
Until recently, the problem with all this sharing was how to do it in a way that respects data privacy. That’s what data clean room technology does, and why it’s so crucial.
What this series of posts is going to cover
In my forthcoming posts, I’m going to look at these topics in more detail, starting with data clean rooms. I’m going to explore all the sources of business value that data collaboration can unlock, and examine which brands are leading the way. I’ll also outline the key things you need to think about to get started, including technologies, skills and structures, starting next time with an in-depth look at data clean rooms.