Power Hour Executive Series Vol. 1
Party Data to Fuel eCommerce Growth
In 2020, the pandemic presented brands with a unique opportunity: grow their businesses by reaching stuck-at-home audiences.
And brands like Health-Ade Kombucha that historically focused on retail to grow, pivoted their strategy to meet the needs of online shoppers.
“The brand has been around for close to 10 years now, but it was largely built in the brick and mortar natural channels,” states Calvin Lammers, Health-Ade’s Vice President of eCommerce and Digital. “Translating a retail-built brand into digital has been an interesting scenario, not only in building a direct-to-consumer, eCommerce business but also analyzing how it impacts the brick and mortar business.”
However, in June 2021, Google announced that it would phase out third-party cookies and cross-site tracking from Chrome by 2023. And, in September, Apple announced that iOS 15 would enhance its existing Intelligent Tracking Prevention (ITP) by hiding user’s IP addresses from trackers via mail privacy protection (MPP).
That sound you hear—it’s the death rattle of third-party data harvesting. And for brands that once relied on such techniques to identify consumers, provide a personalized experience, and gauge a digital campaign’s efficacy, the sun is setting on that third-party data world.
And, while the Summer of 2021 was the most agonizing of times for eCommerce brands to date, not all is lost and those who have a first-party data strategy will be poised to dominate the future of eCommerce across these key marketing platforms.
Industry-leading brands have already pivoted and many are still in the process of pivoting. They’re no longer focused on unreliable, anonymized data. Instead, they’re zeroing in on the individual customer, using first-party data to better understand their audience, forge deeper relationships, and completely transform their brand experience online.
The Challenges in the “Age of Privacy”
The recent actions taken by Google and Apple reflect a swelling movement across the country. To put it simply, in an increasingly digital world, consumers value their privacy more than ever. They’re tired of being tracked, fed up with the constant feeling of being monitored. By and large, consumers dislike the idea that if they search for a product, advertisements for that item will then show up on a different site. And even though the intent of third-party tracking is to create a more personalized shopping experience and help connect consumers with goods or services they’re likely to want, it can still feel invasive to some consumers.
Now, what modern consumers want is more choice, transparency, and control over how their data is being used and collected. For brands, this trend toward privacy presents a significant challenge.
There are a couple of areas where we’re seeing brands face challenges right now with regards to shifts in data privacy,” says Jeff Mason, President of Power Digital. “Number one is being able to access it. There are so many brands that have an incredible amount of data on Shopify, but find it very challenging to access. The second is understanding how to aggregate this data and separate it into cohorts based on behaviors, in order to better understand exactly what’s happening on the website and their eCommerce platform. With that said, the ultimate challenge is how to then make sense of this data so that they can make strategic marketing decisions based on these insights.”
In Merkle’s 2021 Customer Engagement Report, marketers were asked to name some of the areas of marketing that would be most significantly impacted by the rise of privacy-related data restrictions. They include:
Of the respondents, 52% said that the ultimate solution to this paradigm shift was to prioritize digital experiences and strategies in order to collect more first-party data. Along those lines, 77% of respondents said that they would be increasing investment in technology and vendor solutions to help them gather more consumer data and insights.
|41%||Digital media activation|
|35%||Digital media measurement|
|35%||Digital marketing activation|
“The reliance on third-party data really arose from the need to have deterministic, one-to-one attribution,” says Ben Dutter, Power Digital’s Vice President of Performance Marketing. “At some point in the last twenty years many marketers forgot the fundamentals; they started focusing on what the algorithms and black boxes would tell them. Just because Google, Facebook, or Oracle says that a conversion occurred because of your ad impression doesn’t mean that the conversion was actually incremental to the business. Attribution does not equal contribution. We’re guiding many clients to shift toward a more holistic approach to measurement through a combination of Marketing Mix Modeling, Matched Market Testing, and first-party data. When we run marketing experiments against an audience, how does that audience respond? How does one market respond differently than another? Do we see an overall lift in the KPIs that actually move the needle for the business? And once we do, we optimize from there.”
How Brands Are Leveraging First-Party Data
As the clamor for data privacy increases, savvy brands have already begun to abandon old strategies in favor of new ones. Increasingly, they’re leveraging first-party customer data as a competitive asset that can be used to segment new audiences. And in the world of eCommerce, first-party data provides some of the most valuable and actionable insights about your current and potential customers. Unlike third- or second-party data, it’s all yours; first-party data is the direct result of interactions you’ve had with your consumers across various touch-points in their buyer’s journey. According to Total Retail:
By pairing unique identifying information with a comprehensive, real-time record of each customer’s individual attributes (e.g., behaviors, interests, preferences, customer scores, consent status, etc.) and making it accessible to growth-focused teams, a single customer view enables retailers to deliver bespoke experiences across all touchpoints that no competitor can replicate.
Done right, this can help retailers optimize the way they operate, allowing them to perform multi-dimensional customer segmentation, modeling, and analytics. This, in turn, helps improve a customer’s experience across the entire lifecycle.
But what first-party should marketers and CMOs be paying attention to? The most important include:
Tools and Technology Brands Are Using to Access and Leverage 1st Party Data
Online shopping has changed the world of retail. But it’s not just the shopping experience that’s undergone a shift. The relationship between retailers and consumers has also been indelibly altered.
As a result, brands must continue to figure out new ways to engage and target their most valuable customers. Here, once more, 1st party data can be a vital asset.
“By leaning into direct-to-consumer, Health-Ade has been able to attain consumer insights that we didn’t have before,” Lammers shares. “This presented a huge opportunity for us to gain that one-to-one relationship with our consumers and how we use that to better meet their needs and desires in the retail business as well.”
And the good news is that most eCommerce brands have already collected a plethora of first-party data from both online and offline sources, including:
The issue, however, is that this data tends to be siloed and decentralized.
For many major eCommerce brands, data management platforms (DMP) such as DataQ, Power Digital’s first-party data platform, are the solution to this problem, making it easy to centralize, access, and analyze customer data across disparate systems. DataQ presents a solution to the challenges brands are facing with aggregating and understanding their data,” says Mason. “This platform allows brands to not only access their 1st party data that exists on their Shopify and Magento platforms, but it also provides valuable insights into who their clients are, what their purchasing behaviors look like, and how to best market to multiple cohorts.”
“A tool like DataQ is so critically important for a brand to leverage,” says JJ Bannasch, the Global Director of Digital Marketing at Nixon. “It gives you a more automated fashioned view into some of the first-party data and how you can actually build into other platforms.”
Armed with such information, you can apply customer segments and actionable insights to your marketing campaigns, emails, and offline strategies.
Steps Brands Have Taken to Expand their Online Presence and Maintain a Competitive Advantage Using Data
So, how have brands used their first-party data to drive their marketing efforts?
Here are a few of the more effective strategies:
Leveraging Google and Facebook – Facebook’s Custom Audiences and Googles’ Customer match let brands create customer lists according to first-party data. By applying this information to campaigns, brands are able to improve audience relevance scores, match rates, and strengthen relationships with customers.
“When it comes to Facebook advertising, we’ve been challenged with iOS 14, just like any other brand or marketing firm, but have really leveraged two things to help our brands scale and maintain advertising cost that is sustainable for their business,” states Sarah Mcloughlin, Vice President of Paid Social Performance at Power Digital. “The first being big picture reporting. We don’t solely rely on in-engine metrics to optimize. Instead, we’re triangulating overall business metrics (Google analytics and Shopify) with in-engine metrics to see not only high-level trends but also daily shifts that need to be made. The second is creative innovation. Engaging content will always win and we’re incredibly focused on creative storytelling that’s platform appropriate.”
Personalized marketing campaigns – First-party data empowers brands to create audience segmentation and gather actionable insights which can then be applied to email, Facebook, PPC, and other campaigns in order to increase conversions.
For a company that caters to a wide range of demographics like Colgate, first-party data has enabled them to make more informed decisions on how to market to different generations and carry out a more personalized approach. “Leveraging opt-in first-party data has enabled us to better understand our consumers and their needs,” says Shah. “We know different generations have different needs, and through insights, we are able to understand those needs better. For example, some consumers are more looking for gum health solutions, while others, who are in early oral care journeys, are interested in learning about breath and freshness. It helps us understand what type of content we should serve to our consumers and how we can stay relevant with changing consumer needs. This is part of our overall efforts to deliver a more personalized experience from content to products.”
Customer retargeting and innovation – Abandoned carts, product interests, page visits, and other first-party metrics make it easier to successfully retarget customers. Armed with this information, brands can increase repeat purchases, cross-selling opportunities, and the customer’s lifetime value. However, in a world where consumerism is driving eCommerce sales, it’s no longer enough to simply launch a new product that people want. It’s also about analyzing the customer behavior data behind current product lines and those that are already popular to find out what customers want and need. While many brands are moving towards new products to drive sales, others are utilizing customer behavior data to build strategies around existing products to drive innovation.
“Sometimes innovation isn’t just for our formulas or innovation, it’s also how we position our current offerings from a bundling strategy standpoint,” says Bianca Bolouri, Chief Marketing Officer of Moon Juice. “By analyzing the data from our customers’ purchasing behavior, if we see that certain customers are gravitating towards the same thing, maybe not even in the same basket, but just in how the customer passes through the product architecture, we’ll look to digitally bundle products to drive the business.”
Before jumping into all new products, it’s important to first look at what your first-party data is telling you, and leverage these insights to drive additional sales through existing SKUs.
Predicting customer behavior and leveraging eCommerce insights for omnichannel strategies – Customer profiles based on first-party data are more accurate and applicable. They give you insights that make it easier to predict what type of user will convert or what actions they will take in response to your content. This knowledge empowers you to create a bespoke marketing and sales experience.
Health-Ade Kombucha is one brand that has been utilizing the power of first-party data to inform and optimize their customers’ experience, not only just for eCommerce, but from an omnichannel approach as well.
“First-party data has been hugely insightful for us, not only for optimizing our eCommerce business, but it also ties back to our brick and mortar business. If we’re seeing certain flavors perform better, that’s also going to then lead back into our in-store messaging and our point-of-sale (POS) materials. So, for example, if we see certain products performing best for repeat customers online, we’ll feature that in more of our materials to drive point-of-sale.”
By utilizing the valuable information they’re gathering from their first-party data, the brand is able to better understand the needs and preferences of their customers as well as develop more impactful, targeted messaging for cross-channel campaigns.
For Nixon, first-party data analysis has played a key role in their strategy development to compete in the crowded accessories market. Harnessing the power of first-party data, Nixon has been able to tap into a wealth of customer insights and then utilize this data to drive a number of changes in the luxury watch brand’s marketing and product strategy.
“You have to be smarter than the competition which really comes down to being able to out-strategize them with your approach and figuring out the value of what you’re willing to pay to get your brand in front of people,” says Bannasch.
“I personally have to have an understanding of what it’s worth for me to introduce Nixon to a new consumer and what demographics they fall in or what behaviors they possess. By analyzing our first-party we can understand what predictive value is, then we can start going after and paying premiums for things that are worth premiums to us. The better you can take action from your data, the better you are at going head-to-head with other brands that are going head-to-head with you.”
The Future of eCommerce
In addition to this movement toward first-party data preeminence, what are some of the other biggest eCommerce trends impacting how brands market and sell their products?
Here are three trends to keep an eye out for:
Currently, brands are embracing TikTok because it boasts a massive user base. People are spending more time on the app than they are on Instagram and Snapchat, which means brands have a chance to gain exposure for their products. They’re also able to better tailor their content to specific groups of users based on their interests.
“I think TikTok has to work or e-commerce brands are going to completely plateau because a majority of Gen Z and younger customers are living on TikTok now, instead of Instagram. If TikTok can’t figure out how to profitably allow e-commerce brands to scale then it’s just going to price people out of Facebook ads.”
TikTok has quickly become a platform for brands to market to their target consumer through its ability to target specific audience segments with the right type of content at the right time. As more companies adopt TikTok to boost their business, it’s likely we’ll see more companies boost their presence on it in an effort to capture the attention of this fast-growing audience.
As Google and Apple continue to phase out third-party data, eCommerce brands need to act. Now’s the time to start shifting toward a first-party data approach.
Going forward, the right strategy can help you better understand and segment your target audience. From there, you can then build custom marketing and sales campaigns that are more likely to resonate and convert.
At Power Digital we leverage our team of the nation’s top digital marketing experts, data scientists, and creatives, along with our first-party data collection and analysis platform – DataQ – to empower your brand.
If you’re struggling with the new shifts in the marketing landscape as a result of third-party data and need help with aggregating and comprehending your data, connect with us today. Power Digital will simplify the process, provide you with a portfolio of solutions to drive marketing innovation, and guide you through the new terrain of digital marketing to scale your business.
Together, we can build a first-party data-based strategy that fuels your eCommerce growth.