How Retailers Can Take Advantage of First-Party Data Right Now

Retail marketers may be unclenching their teeth knowing the digital industry has two more years to prepare for Google’s clampdown on third-party cookies. However, let’s not get complacent. Industry stakeholders need to make serious moves on solving identity — and for retailers, that means getting serious about their first-party data. If you don’t, you’ll end up forced into adopting someone else’s solution — possibly one that hands even more control over data to one of the Big Tech walled-garden platforms.

With the right data strategy, however, retailers can get inside the walled gardens and empower their brands to do the same. Retailers have data on consumer behavior that can provide the building blocks of identity, which will be extremely desirable to the walled gardens once they’re no longer able to track consumers across apps. This puts retail marketers at the forefront of the industry’s progression into the next era of identity.

It’s up to shopper marketers to take action while the future is still wide open. 

First, let’s talk about what’s at stake: user experience and the effectiveness of marketing. Without the ability to tie back behavior to a verifiable individual user, marketers will end up barraging consumers with ads of uncertain relevance. They’ll need to spend more on advertising to get the same results — and to do that, their companies will need to raise prices on products. Consumers will have to pay more and have a worse digital experience.

Here’s where retailers can help solve the problem. Retailers know what brands a consumer is buying. And brands can go directly to Google, Apple or Facebook because they currently have "pixeled the web" to be able to capture customer intent across sites, stores and apps. However, with cookies going away, brands will lose that ability and retailers become the next best option. This valuable first-party data is unique to retailers, and it will give retailers the leverage they need to grow their brands in a post-third-party-cookie world.

An example: Adidas wants to advertise to Chris, and wants Chris to buy its product at Macy’s. Adidas doesn’t “know” Chris, but Macy’s knows Chris has bought Adidas through its store or site. Chris is also on Facebook, which can’t track Chris’s intent across apps anymore. Macy’s tells Facebook it should display an Adidas ad to Chris. That gets Macy’s through the walled garden’s gate, allowing the walled garden to use its consumer profile data while retaining ownership over that data. 

Here’s the next level. Macy’s also knows Chris has bought Nikes through its site. However, Adidas is worried its ad spending through Macy’s is benefiting its competitor. Macy’s can deliver the transparency these individual competitor brands need. Like it or not, the retailer keeps brands’ ad spend flowing if it can prove to the brand that its advertising is working. In other words, Macy’s retailer database becomes its own walled garden, which allows it to strengthen its relationships with brands, publishers and social apps — controlling access to consumer profiles while mutually benefiting business partners.

Retailers own valuable first-party data on consumers’ interest in and purchase behavior around its brands — e.g., data from loyalty programs, activity on the retailer’s site, geolocation, etc. And now that third-party cookie deprecation has forced them to focus on this data, they’re realizing they have more first-party data then they might have expected. To harness the power of that data, retailers create consumer profiles with an identifier (such as a hashed email address or phone number) at its center. From there, the retailer has a view of the buyer’s path for multiple brands.

Basically, we’re replacing cookies and advertiser IDs with first-party data or hashed addresses — i.e., personally identifiable information (PII). While Google struggles to figure out how its own FLoC identifier can work the way it wants, retailers can get into this conversation and gain an advantage. The tech giants are fully aware that they need retailers’ data in order to understand the buyer’s path. Indeed, Facebook has created tools for retailers to share their first-party data via an API. That allows Facebook to match its users to consumer profiles for more relevant advertising, and retailers to verify with Facebook whether this consumer saw an ad from one of its brands.

Retailers have been hesitant to share their consumer data with social apps, apprehensive that the apps will simply use it to gain more of a data footprint. For example, Facebook Collaborative Ads, which allow retailers and brands to work closely to their mutual benefit across the Facebook platform, remain under-adopted, with just a handful of U.S. retailers on board out of tens of thousands. But with third-party cookies on the outs, retailers will need to change their mindsets. If they take the lead in this conversation, they can deepen their relationships with their brands and the tech giants — on terms that maintain both their control over consumers’ data and their consumers’ privacy. 

It’s essential for retailers to start these conversations today. The delay on third-party cookie deprecation creates an opportunity to innovate that we’re not likely to see again anytime soon. Retail marketers that have weathered the COVID pandemic are feeling the confidence that can bring them through this moment as well. And those that don’t act are doomed to repeat what they experienced during the rise of Amazon.com — another tech giant emerging with an agenda that disadvantages retailers. The next walled gardens in digital must be built and owned by retailers themselves.

Conor Ryan is the co-founder and CIO at StitcherAds, a Facebook and Instagram marketing partner helping retailers and agencies scale full-funnel O2O marketing campaigns.