I’ve heard the term "personalization" so often over the last few years—usually in the context of “You need topersonalize content to connect with your customers,” or “Personalization will not only enhance the customer experience, but it will also help improve customer loyalty.”
While I believe these statements are still true, I don’t think personalization is truly a “nice to have” anymore, it’s more of a must-have at this point. Customers expect personalization.
The benefits and challenges of personalization
If you sit down and think about it, personalization has been around for over a decade, as you can argue that the launch of Google Analytics back in 2005 made personalized marketing more widely accessible.
Over the years, advances in technology like artificial intelligence (AI) and machine learning (ML) have allowed the “hyper-personalization” expression to emerge, which is more advanced personalized marketing that leverages real-time data to supply additional relevant content to every consumer. These advancements, though, have also brought regulations to protect consumers.
Today, I’m going to dive into some recent shifts that marketers and advertisers have had to face and how they are starting to adjust to the new reality when it comes to the ability to personalize customer messaging.
Magnification of data transparency can help marketers regain customers’ trust
Marketers, like all of us this past year, have had to adapt to many changes. In 2018, the General Data Protection Regulation (GDPR) became enforceable. This regulation is a legal framework that sets guidelines for collecting and processing personal information from individuals who live in the European Union. As a consequence of GDPR, marketers had to rethink how they gathered customer data with tools like website cookies and newsletter sign-ups and opt-outs, requiring them to provide more clarity of what opting-in truly means.
Then on January 1, 2020, the California Consumer Privacy Act (CCPA) became effective. The CCPA requires companies’ privacy policies to include information on consumers’ privacy rights and how to exercise them, giving them more control over their personal data. These regulations have brought an abundance of hurdles for marketers to face, but they also have shined a light on the need for data transparency to enable marketers to regain customer’s trust.
One way privacy regulations are impacting marketers is how they can go about targeting ads to consumers. Data privacy regulations have prompted the death of the cookie. First-party cookies, or the “good cookies”, are created, published, and stored by the website (or domain) you visit. These cookies are often used to enhance the user experience and are responsible for remembering passwords, language preferences, and other basic data about visitors. These cookies won’t be impacted by the recent data privacy regulations.
End of third-party cookies and a consent-based environment
Third-party cookies, on the other hand, are another story. These cookies aren’t created by the domains or websites that consumers are visiting—they are usually created by a third-party adtech server. They are typically used for personalization and ad targeting cross-site based on user data like demographics, location, and interests.
Additionally, while first-party cookies are accepted automatically, visitors must be informed that they are accepting third-party cookies because of data privacy regulations. Web browsers like Firefox and Safari have blocked third-party cookies for a few years now, and Google Chrome will discontinue the use of third-party cookies by 2022.
Google was charged for placing certain advertising cookies on the computers of Safari users who visited sites within Google’s DoubleClick advertising network, even though Google had previously told these users they would automatically be opted out of such tracking, as a result of the default settings of the Safari browser used in Macs, iPhones, and iPads. According to the FTC’s complaint, Google specifically told Safari users that because the Safari browser is set by default to block third-party cookies, as long as users do not change their browser settings, this setting “effectively accomplishes the same thing as [opting out of this particular Google advertising tracking cookie].”
All of this being said, as third-party cookies have been phasing out over the last few years, marketers have had to consider alternative first-party strategies.
Privacy implications are also impacting real-time bidding (RTB)
Finally, real-time bidding, or the delivery of programmatic advertising by a real-time auction, raises a lot of concerns relating to the protection of consumer data privacy rights. Of primary concern is the fact that RTB’s methods for gaining consent aren’t transparent. Consumers aren’t aware that the processing of their data within adtech even takes place and are either not told, or are not informed, which is an important reason why they have lost trust with companies over time, especially with marketers.
Another concern around real-time bidding is that some special category data requires explicit consent for processing, not just implicit consent. For example, throughout the RTB process, a bid request could include information regarding a user’s political views, ethnicity, and religion, and these types of data the user must give explicit consent, which currently isn’t happening in the automated bidding process.
Data privacy regulations will also impact mobile advertising
Regulations around data privacy are also going to influence the mobile advertising industry, as can be seen by Apple’s iOS 14 updates. These updates are mostly related to its data-sharing policies, or Apple’s App Tracking Transparency Framework (ATTF) and will take a privacy option that was previously buried in users’ phones and put it front and center when they open an app.
Moving forward, iPhone users will see a pop-up window in each app, which warns users that an app is tracking their data for advertising purposes and gives them the option to block the app from doing so.
Marketers, especially ones that run an abundance of social media advertising campaigns, are concerned that when consumers are asked this question, they will likely say no to being tracked across the internet.
Social media platforms, like Facebook, are also unsettled by these changes because they need behavioral data to be able to effectively target audience segments. Facebook also believes that, due to the physical restrictions resulting from COVID-19, many small businesses have shifted to more digital marketing, but are now struggling with these new Apple iOS updates. As a result, Facebook created a website for small businesses to share how Apple’s updates will affect them and their business, as well as the hashtag #StandUpforSmallBusinesses.
Apple’s updates were supposed to launch in 2020, but due to the pandemic, and after many complaints from advertisers on Apple not giving them clear guidance and communication along the way, Apple has delayed enforcement of these changes to later this year.
The customer data platform (CDP) market continues to grow as marketers seek to unify data
With all of these changes over the past few years, marketers have needed to adapt and come up with new ways to reach consumers and collect and store customer data. One way marketers are adjusting is by using a tactic that was once popular—contextual targeting. Since third-party cookies are being phased out, it’s limiting the ability for marketers to use behavioral targeting, and contextual targeting is, once again, growing in popularity.
What is Contextual Targeting?
Contextual targeting is quite a straightforward strategy marketers previously used. It is essentially placing the most appropriate ads within the right context. This method of targeting is privacy friendly because the only information the adtech performing contextual targeting uses is the content of the webpage, and this is to find the most appropriate banner ad for the page.
Marketers previously stopped using contextual targeting because they were worried about brand safety—they didn’t want their ads showing up alongside inappropriate content. However, with technology advancements, like AI, contextual targeting can go beyond just keywords and can use sentiment analysis on a webpage to determine relevancy and provide a brand-safe environment for ads.
As data privacy regulations have become more prevalent, marketers realized (as you can see in the data below) that they need to improve their consent management and data privacy efforts.
Marketers originally turned to consent management platforms (CMPs), which collect and store customers’ consent data, enabling marketers to keep track of peoples’ privacy preferences and permissions.
However, as marketers invested in CMPs, they quickly realized that they had to sync or integrate this CMP with all of their marketing channels and martech stack (email marketing platforms, advertising tech platforms, etc.) to keep their consumer’s privacy and consent preferences up to date.
Because of this, marketers began to explore other options, like customer data platforms (CDPs). CDPs help marketers pull fragmented data from multiple sources, into one organized central location. They also help ensure that privacy preferences are met throughout all channels by becoming a repository of all customer data, as well as manage the enrichment and activation of this customer data.
Over the last few years, we’ve seen companies like Oracle, SAP, Salesforce, and Adobe either launch their own CDPs, or acquire CDPs to include them in their martech offerings. These points highlight even the recent ways marketers have had to adapt to privacy regulations quickly with CDPs, to now evaluating the use and benefits of customer data platforms.
At G2, we’ve also seen traffic to the Customer Data Platform (CDP) category increase exponentially over the past few years. From January 2018 to January 2021 alone, we saw a 100.4% increase in monthly unique page views to the category and even a 44% increase from January 2020 to January 2021. Additionally, we’ve also seen significant review growth for the CDP category—in 2018, customers left 168 reviews for CDP products, in 2019, they left 314 reviews, and in 2020, they left 559 reviews.
Another solution marketers can review is Google’s privacy sandbox. As mentioned earlier, Google Chrome is going to be phasing out its third-party cookies by 2022. Because of this, they have started looking into privacy-first alternatives. Google’s privacy sandbox will power their web products post-third-party cookies, and take an interest-based advertising approach.
What Google is calling the Federated Learning of Cohorts (FLoC), proposes a new way for businesses to reach people with relevant content and ads by clustering large groups of people with similar interests. This approach effectively hides individuals “in the crowd” and uses on-device processing to keep a person’s web history private on the browser. Users are assigned into new cohorts weekly, based on their previous week’s browsing data.
Google expects to begin testing FLoC-based cohorts with advertisers in Google Ads this year, however not all marketers are as optimistic about this solution. Google isn’t testing FLoCs in Europe yet because the Electronic Frontier Foundation (EFF) has warned that the system may “amplify problems like discrimination and predatory targeting” as they can exploit vulnerable people (i.e., those with a gambling addiction).
Only time will tell which solutions will reign supreme, but we do know, either way, marketers will not only be evaluating their data collection practices, but also technology that will help solve data privacy concerns.
Emily is Director, Market Research at G2. She earned her Bachelor of Science in business administration and Master's of Business Administration degree with a concentration in marketing and business analytics from the Georgia Institute of Technology. She's worked in various industries, including media consulting, information technology, employee wellness, and finance and accounting. She enjoys coaching and volunteering for Girls on the Run, attending concerts and music festivals, running half marathons, and hiking.
G2’s CDP Category Grows as Importance for Data Transparency IncreasesData privacy regulations are increasing the need for marketers to be more transparent around their data collection and storing practices.
Emily Malis GreathouseEmily is Director, Market Research at G2. She earned her Bachelor of Science in business administration and Master's of Business Administration degree with a concentration in marketing and business analytics from the Georgia Institute of Technology. She's worked in various industries, including media consulting, information technology, employee wellness, and finance and accounting. She enjoys coaching and volunteering for Girls on the Run, attending concerts and music festivals, running half marathons, and hiking.https://research.g2.com/insights/author/emily-malishttps://learn.g2.com/hubfs/_Logos/Emily%20MalisUpdated.jpeghttps://www.linkedin.com/in/emily-malis/