Are brands ready for a cookieless world?

A new study by IAB suggests leaders' optimism may be shortsighted and that much more investment may be needed to succeed.
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While brand advertisers have come a long way when it comes to collecting first-party data, solving for a cookieless landscape and understanding what can and should be done with data requires much more investment and industry collaboration, according to an IAB US-commissioned study co-created with Ipsos.

Entitled the State of Data 2021, the study polled over 200 data leaders from across brands, agencies, ad tech and data organizations in January, specifically to identify trends in spending when it comes to data, areas of focus related to data and what the concerns and obstacles data leaders felt they would be facing this year.

While based on U.S. respondents, the study revealed three core findings that are relevant to marketers north of the border, according to Sonia Carreno, president of IAB Canada.

First, even though 67% of data leaders polled feel they are prepared for a cookieless landscape – although brands were the least optimistic, at 48% – and 76% responded that revenue and resources won’t be overly impacted by the loss of third-party cookies and identifiers, the study calls out that this optimism may be shortsighted and likely doesn’t take into account the investment required going forward, which “in aggregate, will cut into profits, decrease margins and alter future financial strategies.”

Secondly, those same leaders and the industry at large haven’t done more than scratch the surface when it comes to knowing what first-party data can do for brands. In fact, just over half of data leaders polled are collecting basic first-party data, such as “contact info.” The next most popular forms of data being collected are device data (50%), demographic data (46%), location data (44%), and employment information (23%).

Meanwhile, less than half are collecting more sophisticated data, like transactional (45%), campaign exposure (44%), consumer preferences (41%) and behavioural (36%). Ultimately, despite collection efforts, the study reports that more than half (53%) of first-party data isn’t being leveraged for media (advertising and marketing) efforts.

And finally, despite optimism around a privacy-first supply chain and improvements in managing first-party data, there’s still considerable concern over effective targeting and addressability (such as authenticated audiences, contextual targeting and cohort-based models). More specifically, 45% of those polled expressed concern with audience targeting limitations, 42% around retargeting, 41% on campaign KPIs and ROI, 38% with reach and frequency management and 34% with on-site tracking and attribution.

In other words, the study suggests there’s still much to be learned when it comes to analyzing the data and making it actionable.

“Brands will require additional operational investments in the area of information and technology,” says Carreno. “The reality is that the future role of marketers will become more heavily ensconced in information and tech. Understanding what to do with data sits at the centre of modernized marketing.”

The investment needed is more than many brands realize, Carreno notes. There will be some reallocated funds – budget previously earmarked for third-party data expenditures - but Carreno cautions many advertisers “will experience sticker shock as the cost of third-party data usage has, to a large degree, been baked into the media investments.”

What’s more, she says, “the three-tiered approach to addressability will require more substantive operational investments as well as partnerships.”

Add to that the uncertain time frame that exists around change of this magnitude. Carreno recalls the General Data Protection Regulation. When the implications and enforcement of the GDPR loomed, the “rush” to adapt and change was slow at best, she says, and many organizations weren’t ready.

“The industry has a history of drawing out eras of change,” Carreno admits. “Looking back, the ‘year of mobile’ felt like a decade and the sun-setting of Flash on Chrome was a three-year affair. Privacy is an issue this industry has been cracking on for years. The one constant truth remains – consented, authenticated first party audience data should be the number one focus for advertisers and publishers. While tech solutions are developed and tested, there will be a lot of red herring headlines. The best advice for advertisers is to focus on what is in their control – understanding their own [data] stores.”

Luckily, brands don’t have to do it alone – nor should they, the study stipulates. Industry collaboration is key.

Where senior-level data analytics expertise and investment in technology is lacking, agencies are often well-positioned to provide support, Carreno says. “Most agencies have experience working with several customer data platform types and are able to help bring their clients new and stand-out ways of interacting with the media supply chain.”

Ultimately, privacy-first means every player in the ecosystem will have to ensure they are adhering to the highest possible standards when it comes to collection practices and privacy.

“Advertisers need to focus on their data stores and ensure that they are using rock solid consent platforms to ensure that they have the flexibility to work with the data in meaningful ways as we move towards the sun-setted cookie,” Carreno says.

“Data leadership looks a lot more like science than art,” she adds. “Brands that are able to move away from one-dimensional CRM towards dynamic and rich data mapping strategies will be best equipped for the future.”

Editor’s note: A previous version of this article mistakenly noted the study was commissioned by IAB Canada. Strategy regrets the error.