Cookie crunch spells end of 'lazy digital marketing': The Iconic, Tourism Australia and ADMA unpack post-privacy landscape
The Iconic's CMO Alexander Meyer says the e-commerce darling realised "it's not enough to harvest purchase intent based on signals from people. You actually have to develop audiences,” as it shapes-up for a post-cookie digital marketing blueprint. Tourism Australia is working on its own unified ID as it goes cookieless while ADMA's regulatory lead Sarla Fernando says it's cookies that have awakened marketers to a wave of regulatory threats that will have an even deeper impact than Google's looming cull. Here's the next tour de force on what marketing must ready for.
What you need to know:
- The Iconic CMO Alexander Meyer says narrow, digital marketing approaches can no longer cut it. Marketers will need to go full funnel with proper strategies.
- "Your differentiator in the future cannot be the ability to out-target," says Meyer.
- Targeting and attribution will be most affected by incoming privacy changes and the end of cookies.
- Tourism Australia is building a post-cookie ID system, trying to gauge right value exchange.
- The Iconic is optimising around the consumer journey, not single channels.
- But there are unanswered questions for a first party world:
- Will targeting still be allowed in privacy sandboxes?
- Will profiling consumers in cohorts create new trust issues?
- Will rule changes create higher walled gardens – and does China offer a glimpse of Australia's digital future?
Programmatic media buying worked really well, to the point where a lot of businesses became lazy. They never really applied a full funnel approach on the back of a proper marketing strategy.
The rules of the internet – how data is used and how digital advertising works – are about to change forever.
Yet despite seismic data privacy and transparency shifts coming down the track, it’s Google’s looming cookie cull that has focused marketers’ minds, according to ADMA’s advocacy and regulatory lead, Sarla Fernando.
But she says that’s no bad place to start.
“[Members] look at cookies, then start to wonder where do we go next. Then they start to analyse the situation and understand there is change coming with adtech transparency and there's also change happening with privacy.”
At that point, the penny drops. “It becomes a very big regulatory conversation.”
The smart marketers started having those conversations years ago. But it’s never too late.
The Iconic CMO: Kicking lazy digital habits
The Iconic started preparing for the end of cookies about four years ago, according to CMO Alexander Meyer. He thinks the changes that are coming will ultimately mark the end of “lazy” single channel digital marketing.
“We realised we were overly dependent on one type of marketing, and overly dependent on two platforms – and that just didn't feel right, we realised we needed to do more full marketing,” says Meyer.
"Programmatic media buying, in essence, was really what garnered a lot of the success of a company like ours. It worked really well – to the point where I would say a lot of businesses that were built on this approach became quickly quite lazy. They never really applied a full funnel marketing approach on the back of a proper marketing strategy or a brand positioning approach." he adds.
“We realised that it's not enough to harvest purchase intent based on signals from people. You actually have to develop audiences.”
The Iconic began to develop a full funnel approach about four years ago. The end of cookies fell into that bucket, along with related issues such as Apple’s changes to ID for Advertisers. In preparing the business for what lay ahead, it borrowed Amazon’s playbook.
“The way we go about business challenges at The Iconic is we write strategic memos, something that Jeff Bezos at Amazon is always doing,” says Meyer.
"So memos on ITP and its impact on the Iconic; Apple IDFA impact on the Iconic; the business impact of Google and Facebook responses... As with any other business challenge, we look at it from different angles to see what are the problems that we might face and how do we deal with them.”
You must go from order optimisation by channel to customer lifetime value optimisation by customer cohort – and that journey is one that is really supported by all this [incoming change].
Optimise by customer, not by channel
Ultimately, Meyer says by considering all of those related challenges, the Iconic has developed a much deeper approach – to optimise not by channel, but by customer.
“In the past, with the low hanging fruits, it was always about optimising by every single channel: How do I get the most out of Google search? How do I get the most out of paid social? How do I get the most out of affiliates? How do I get the most out of display? But we realised that if you really want to be successful long term and develop audiences, you need to be channel agnostic.
“In essence, what that means is you must go from order optimisation by channel to customer lifetime value optimisation by customer cohort. And that journey is the one that we started on with our CDP and first party data,” says Meyer.
“So the path from optimisation by channel to optimisation by consumer journey is, I think, the one that is really supported by all this.”
Within the sandbox approach, the big question is, can we utilise first party data in a way that we can wash it with Facebook in their walled garden and then they can still target for us? Or will that also not be possible?
Sandboxes: will targeting still be allowed?
Meyer says The Iconic has has a "very deep CRM strategy in place" for the last couple of years and that integrating its first party data strategy with a customer data platform (CDP) has been an eye-opener.
“All of a sudden, that allowed marketers to understand segments and cohorts that correlate in their behaviour, or that show similar patterns in their behaviour – which we can then activate into marketing platforms through the customer data platform,” says Meyer. “That has been really crucial for us.”
However, what happens next with first party data – and how it can be used on the wider web or inside walled gardens – is anyone’s guess.
“What will happen to the value of first party data is one of the biggest questions for us. The way we understand the cookie changes and ‘sandboxes’ is that data is only used in a ‘safe space’. So a targeted one-on-one approach is no longer possible, only micro segments, up to 50 people,” says Meyer.
“Within the sandbox approach, the big question is, can we utilise first party data in a way that we can wash it with Facebook in their walled garden and then they can still target for us? Or will that also not be possible in the future? That is an unanswered question at the moment.”
Yes, individuals will possibly feel safer [in cohorts]. But at the same time, the minute they turn up to a website, it's like a confessional of where they've been before, which follows them and then puts them into a group.
FLoCs: Still a problem?
ADMA’s Sarla Fernando thinks the post-cookie cohort approach outlined by Google – FLoCs, where people are grouped by interests – may still raise concerns with regulators around people being profiled.
“It starts to become a different concern. It’s privacy of the individual against these cohorts. Yes, individuals will possibly feel safer. But at the same time, the minute they turn up to a website, it's like a confessional of where they've been before, which follows them and then puts them into a group,” says Fernando.
“So from a regulatory perspective, how Australia is going to consider all of that is very interesting, because consumer trust cannot be jeopardised in any way.”
Consent: When does yes mean no?
How consent is regulated is another big question in a post-privacy world.
“If people have opted out of being targeted directly, what does that mean for the first party data going into another walled garden? Is the opt out in the direct term also relevant for a generic opt out that has to be considered with first party data being used in a walled garden?” asks the Iconic’s Alexander Meyer.
“That is something that will be very interesting to see. What value is given to privacy of the individual versus privacy of the group and how does that apply?”
ADMA’s Sarla Fernando agrees consent is a major looming challenge.
“How do you give notice that is meaningful but also avoid consent fatigue? Because there is no attention span [online], you don’t have much time to get your message across. Are people really going to want to have to stop and think a lot more about their activities?”
We are building what we're calling Tourism Australia's unique identifier, a single ID that we will use for the replacement of third party data and in time, first party cookies. And we are launching proof of concept in about three weeks.
Tourism Australia: preparing for impact
Tourism Australia began thinking about the end of cookies four years ago when undertaking a tech project, according to head of digital strategy and transformation, Paul Bailey. “Then GDPR came out, and because we advertise in Europe, GDPR set the standard for us.”
Now its focus is on “understanding the value exchange … what you get in return for consent. As an industry we need to solve that, and I would like to see how Australia is going to solve that – and how much different that is to GDPR or California’s state code.”
Meanwhile, Tourism Australia also shifted its focus from digital transformation strategy towards customer experience.
“That is a big change, because we have moved away from [focusing on] technology, to what do we want users to experience from our brand, our content our videos – and where are we sending them next?” says Bailey.
“We build our websites to move people from being inspired to planning their trip – and then we move those audiences from our platform to our partner platforms, whether they're airline or accommodation or experience partners. Because that is our goal: we need to move audiences in a way that allows the industry to convert.”
Given the patchwork of privacy changes underway globally, Tourism Australia is keen to gauge how local changes will impact overseas operations – and vice versa.
“It would be great for us to actually understand what changes coming in Australia will mean to how we bring audiences to, say, the Qantas website – an Australian website, but also targeting Americans.”
Building post-cookie IDs
In the meantime, TA is building its own post-cookie ID system and how that transacts with consumers.
“We are building what we're calling Tourism Australia's unique identifier, a single ID that we will use for the replacement of third party data and in time, first party cookies,” says Bailey.
“We’re working with Digitas, UM, Adobe plus Tourism Northern Territory and South Australia. We have a group of partners and we're trying to understand the value exchange of the data between all of us, what that identifier looks like to an individual user, and then what transparency and control of that data can we actually give them,” he says.
“And we’re launching our proof of concept in about three weeks.”
There will be solutions that allow the consumer to see the benefit of giving data to a company, incentivising a more targeted approach and a one-to-one relationship.
Death, rebirth and data rewards
The Iconic’s Alexander Meyer thinks the death of cookies and broader rule changes will create a level playing field upon which creativity and innovation wins.
“It has not changed our strategy. It is just solidifying that you have to have a good business and a good marketing strategy. That always has been about whom do you talk to, when, with what, and why.
“This is a really exciting time for marketing – because it challenges you to be more creative, to be more strategic and to be more relevant, not to just try to harvest the easy stuff,” he says.
Meyer thinks privacy-compliant third party ID providers will ultimately carve out a niche. He also predicts a “movement from consumers to business” or C2B shift.
“There will be solutions that allow the consumer to see the benefit of giving data to a company, incentivising a more targeted approach and a one-to-one relationship,” says Meyer. “So things will evolve. It is not going to kill businesses or industries, because there will always be space for innovation and they will always be space for creativity.”
Likewise, he says targeting is not dead, but in future will move from one-to-one approaches to small segments, bringing contextual marketing back to the fore.
“That was always the case in the past: You think about where the relevant audiences are and you enter strategic partnerships. So it’s not that all of a sudden everything changes.”
If we get down to that segment level and those sandboxes, we believe those audiences will become more expensive; those partnerships will become more costly.
Context and cost issues
“Context will be king,” agrees TA’s Paul Bailey, meaning marketers will need to be smarter with media and creative.
“We're losing that ability to have millions of signals from millions of people all over the web. So those strategic partnerships and ensuring that we're contextually relevant and impactful [become critical].”
But Bailey is wary that post-cookie solutions may come at a premium.
“If we get down to that segment level and those sandboxes, we believe those audiences will become more expensive; those partnerships will become more costly,” he says.
“When you have a finite budget and you're in a highly competitive industry, cost, reach and engagement are key. When your costs go up and your engagement might not, then it is diminishing returns.”
Most affected: Targeting and reporting
Targeting and reporting (AKA attribution) are the main areas affected by the death of cookies. But digital marketers shouldn’t panic, suggests the Iconic’s Alexander Meyer.
“On the reporting side, you will have less data. Within targeting [it will be] micro segments instead on one-to-one. But in essence the work you do is still the same. You will still work with data, you will still work with technology. You’re still trying to target as much as you can and you’re still trying to navigate between data and purpose,” he says.
If the key differentiator in the future cannot be the ability to 'out-target’ anymore, you need to look at the completeness of how you approach marketing.
Most affected: digital marketers?
Skillset requirements may change, says Meyer, but those changes were coming anyway for brands aiming to do marketing properly.
“If the key differentiator in the future cannot be the ability to 'out-target’ anymore, you need to look at the completeness of how you approach marketing.”
That means not mistaking tactics and a narrow focus for actual marketing.
“That is the reason Mark Ritson is a thing. This is gold for Mark Ritson's message, because it is fostering you to become 'complete marketing'.” That is, “to start with a full funnel strategy” and to “apply the tactics only once you've understood strategy well,” says Meyer.
“But I would say in the last 20 years, digital was the differentiator. The differentiator of the future is going to be creativity.”
Tourism Australia’s Paul Bailey “strongly believes” marketers will need to evolve – or more correctly perhaps, regress – in a post-privacy world.
“We'll go back to some very smart marketers, not just digital channel performance managers. I think we've lost that [full suite of skills] in marketing because we've played with the low hanging fruit and the easy wins – and we've got away with it for so long,” he says.
“I think the change is only going to be for the better of advertising – and the better brands will stand tall, stand true and actually create cut through.”
ADMA is trying to do is provide marketers with a toolkit that prepares them and allows them to understand what really matters in all of this for their own business.
Take a crash course
ADMA’s Sarla Fernando urges marketers to build a deeper understanding of what is coming down the track and upskill. “Then you’re able to quickly change tack if you need to,” and so can explain the business impact of privacy regulation to everyone within their business.
Fernando says the course breaks down what marketers need to know – and what their CEOs, CFOs, and others will want to know.
“At the end of the day, no marketer really wants to have to sit and go through legislation. I'm a lawyer and I don't necessarily want to read it,” says Fernando.
“So what ADMA is trying to do is provide marketers with a toolkit that prepares them and allows them to understand what really matters in all of this for their own business.”
Look to China for marketing’s future?
If privacy changes lead to a future of closed platforms and walled gardens, TA’s Paul Bailey thinks China may offer a glimpse of marketing’s future.
“China is made up of some very big wall gardens – Tencent, Mafengwo, Alibaba. All of those create big ecosystems of data and user experience and content. And you can target and drive awareness or create engagement within those platforms – but that stays in those platforms,” he says.
“That's a challenge Australia hasn't yet really had to deal with.”
Fear not these developments ... but understand that your differentiator in the future cannot be the ability to out-target.
What should marketers do now?
Marketers should use the market-wide reset to create competitive advantage – and become better marketers, suggests the Iconic’s Alexander Meyer.
“Fear not these developments, rather utilise them as an acceleration point to a more complete strategic and creative approach to marketing,” he says. “One that understands that your differentiator in the future cannot be the ability to out-target.”
Tourism Australia’s Paul Bailey thinks putting customer experience and transparency on a pedestal will always stand brands in good stead.
“Bring the customer to the heart and focus on transparency around first party data or first party cookies – that value exchange for your customer needs to be clear, concise and easy,” he suggests.
“That should help set you up in the future for whatever regulation comes, whether it's in Australia or if it is in other regions around the world. Bring the customer to the heart and the rest should just come easy.”
Ultimately, Bailey believes all the incoming change will create a better digital world.
“In the long run, when it comes out in the wash, I think we'll all be smarter in what we do.”
ADMA is an Mi3 commercial partner. It is hosting a virtual CMO Lunchtime Briefing on 21 April covering how the end of third-party cookies will affect different parts of the digital advertising supply chain, what regulators will focus on and how to avoid revenue loss. Details here.
The marketing and publishing worlds continue to watch with anticipation and unease as the rules of digital marketing are overturned via the recent Apple iOS changes and the impending cookie crumble. As the demand for greater privacy and transparency regarding access and use of personal data grows, after years of normalising tracking consumer behaviour online via apps and the web, the tide is turning. Consumers are now more informed and able to make the choice as to whether they accept these terms, whether the value exchange for use of their data is worth it, and the resounding answer appears to be no. So where does that leave the world of audience targeting?
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