Over the coming weeks, Edelman Canada’s head of digital, Matt Collette, will be diving into tactics that can help brands build an arsenal of zero- and first-party data to help them compete in a new era of privacy, as well as forecast the future and the changing relationship between brands and consumers. Today, he looks at how we got here, and why zero- and first-party data should be priority number one for relationship-focused marketers.

By Matt Collette

The advertising industry breathed a collective sigh of relief when it became clear that Apple would not be announcing further privacy restrictions for iOS 16 at its annual developer conference in June. The fact that the developer conference has become so closely watched by advertisers demonstrates how dramatically the privacy landscape has shifted and what its impact has been on how we engage consumers.

Yet, crucially, most companies have still not effectively addressed these changes. A recent survey conducted by Digiday shows that 71% of agency and brand execs “are worried and don’t know what’s next,” while more than 40% said that brands “will lose a lot” following the end of third-party cookie support from Google.

With all the focus on third-party cookie deprecation, I worry we are missing the forest for the trees.

Blinded to the massive changes we are experiencing in the privacy landscape, we are too narrowly focused on media solutions to regain lost effectiveness and lower cost. The biggest amongst these privacy changes occurred with the introduction of iOS 14.5. The release effectively reversed the default data tracking settings, proactively prompting users to opt-out. Paired with features like Hide My Email and Private Relay, consecutive iOS updates have sent a clear signal that while this trend may have started on social and mobile apps, it won’t end there. Apple has also signaled that device fingerprinting is “as kosher as pigs feet in matzah ball soup,” putting a stop to one of the most hotly pursued solutions for advertisers.

The furor around the end of app tracking highlights our addiction to third party data, which has fuelled a media flywheel that has benefited marketers for the last 15 years. Consequently, we have developed a dependence on media to drive growth and make up for underperforming elements of marketing strategy. Effectively, marketing has benefited by year-on-year improvements in effectiveness of ads and the efficiency of spend due to apps, smartphones, and the plethora of data they have served up.

But caveat emptor, the four horsemen are on the horizon and galloping quickly towards us. First came the ad blockers, then Apple iOS and shift to privacy. Cookie deprecation and the end of Android ID in 2024 will soon follow, and with it, the depreciation of consumer trust.

To highlight the impact of these changes on marketing strategy and tactics, we need to consider the implications of iOS 14.5. After its launch, marketers noted an 8% decline in web traffic to their sites from iOS devices. CPM rates on Meta’s platforms increased 66% versus a year prior, and impressions were down by 22%, despite a nearly 30% increase in spending. The increases in ad costs has had a dramatic impact on cost of acquisition.

With the heightened cost of advertising on social platforms, marketers did what they do best: They pivoted, shifting spending to Android devices and SEM. But Google will soon be bringing its own version of iOS 14.5 privacy changes to Android devices. And the pivot to SEM had its own set of cost implications. According to a recent Shopify report, cost-per-click for paid search ads increased by 15% between the second and third quarters of 2021. CPM rates have also increased dramatically across the board with Google, YouTube, TikTok and Snapchat rates up by between 64% and 108% year-over-year. And on top of all that, companies like Meta and Snap have repeatedly cited iOS 14.5 as a drag on the amount of revenue they are able to get from advertising.

With more privacy changes to iOS to come and the other horsemen on the horizon, the strategies and tactics that we use to reach consumers and drive growth must change. In moving forward, we must put an emphasis on building, nurturing and monetizing audiences and communities. In other words, we are now in the zero- and first-party data gold rush.

Matt Collette is head of digital at Edelman Canada, as well as the agency’s global managing director of digital growth.