How first-party data supports Australia’s current spotlight on privacy
Finally we are starting to see Privacy Reform in Australia with the first tranche of reforms based upon the Attorney General's review of the Privacy Act. While it does seem a little light, with only a handful of the 106 "agreed" or "agreed in principal" reforms from the Government Response to the Privacy Act Review Report, there is a significant focus on protecting privacy, with serious penalties for privacy invasion.
With the enhanced spotlight on privacy, we are entering a stage where personal information collection, unification and activation best practices will be defined based upon privacy legislation. From my experience, the success of modern digital marketing depends on highly personalised and precise marketing and advertising designed to improve and enhance a customer's experience with a brand. Digital technology makes tracking user behaviour almost invisible to the consumer without the right controls in place. One of the biggest culprits of the internet-age have been third-party cookies, creating a web of connecting vague, inferred and opaque datasets about you.
Ethical, first-party data strategy
Earlier this year, Google's decision to reverse its plan to deprecate third-party cookies from its Chrome browser was met with a resounding "meh". Advertisers have argued that the removal of cookies without a viable alternative would disrupt their business models and lead to significant revenue losses.
Over the last four years marketers have invested in moving away from exclusive dependence on the third-party ecosystem, adapting themselves to a world that demands personalised experiences balanced with privacy delivered in a first-party context.
Despite all these changes, we still have a trust problem with only 40% of consumers saying they trust brands to keep their personal data secure and use it responsibly. Consumers have continued to take matters into their own hands by installing ad-blockers in their browser, or by utilising features such as Apple's App Tracking Transparency (whereby users can elect to be tracked or not), users have more control in their hands than ever before about how they like to be advertised to (or in many cases, not).
The questionable efficacy of third-party cookies
Since Google's announcement in 2020, the past few years have revealed that third-party cookies were not as valuable as previously thought. Double-counting, stuffing, and bot traffic have regularly led to noisy conversion data, giving publishers a love-hate relationship. Additionally, cookies have always been a poor proxy for identity, with cookies needing to be synchronised between technology platforms and fraught with low match rates.
While third-party cookies have certainly allowed advertisers to scale their addressable audiences quickly and easily, they have often done so at the expense of accuracy, quality and impact. Research shows investing in advertising campaigns using first-party data generates up to 2x higher return.
As an example, Domino's turned to Twilio Segment to create a universal view of the customer, which led to better visibility of ad campaign effectiveness and enabled the iconic global pizza brand to drive more revenue. By creating hyper-personalised audiences, Domino's increased return on ad spend (ROAS) by 700%, not to mention lifting revenue and incremental orders across all paid and owned e-commerce channels.
The web is changing
Other popular browsers – such as Apple Safari – have eliminated third-party cookies a long time ago and enhanced privacy controls around tracking.
Wisdom might dictate that advertisers would shun such browsers and turn to those that facilitate third-party tracking. In fact, the opposite has happened and made advertising on highly restrictive ecosystems such as Apple more attractive due to its significantly higher conversion rates.
Apple's decision to enforce stricter controls around third-party tracking has grown their advertising network as a result.
Globally, businesses operating within the confines of more progressive privacy laws are increasingly creating a clean, consistent and consented view of their customers. Beyond compliance of the updated privacy laws, Australian organisations should anchor their approach to transparency around consumer preferences and the experiences that engage, excite and delight supported by a compliant technology stack.
In a world where 50% of the web is already cookie-less, the industry should continue down the path it was already on – developing strategies that prioritise both privacy and effectiveness, regardless of the evolving cookie landscape.
