Chaos looms in the online advertising industry. Chrome, the web’s biggest browser with a 65% market share, plans to eliminate support for third-party cookies by the end of 2024. Other browsers, notably Firefox, Safari and DuckDuckGo, already block third-party cookies by default. But Chrome’s massive market share is making the earth move under advertising’s feet.
Third-party cookies are a cornerstone of the $478 billion dollar digital advertising and marketing industry. The technological disruption that will happen when information disappears for 65% of users is an earth-rattling prospect.
Third-party cookies are not inherently evil. They have helped the industry grow by making it easier for systems to interact.
The once-ubiquitous Facebook “Like” button relied on third-party cookies from Facebook. Similarly, the unsettling tactic known as remarketing relies heavily on third-party cookies. Remarketing is when you look at a pair of shoes on Zappos and ads for the very shoes you were looking at appear on other sites. It’s easy to see how this form of marketing could be effective. And it relies on third-party cookies to happen.
But third-party cookies are also used to harvest user information. Advertising networks like DoubleClick, acquired by Google in 2008, plant third-party cookies with unique identifiers across sites to help them amass information about people. They use this data to sell and deliver advertising programmatically.
Third-party cookies from two different sites show the same unique user ID.
So what are marketers to do in a world where this significant arrow has been removed from their quiver?
A relatively new concept in enterprise data software, the customer data platform (CDP), might be the right solution to help marketers transform their efforts and build value.
What Is a CDP?
A CDP is packaged software that gives the marketing team broad control over customer data collection. It also integrates existing data that usually lies in silos (sometimes desk drawers!) around a company. Data from analytics programs, CRM data, real-world transactional information, even licensed third-party data and data from social networks are combined into the CDP.
With a CDP in place, companies can edge toward what many marketers think of as a holy grail: a single unified customer view.
An important point that has skirted through the cracks of all the hand-wringing over the demise of third-party cookies is that first-party cookies are not going away. Remember, these are cookies that a site sets under its own domain. The demise of third-party cookies opens up the opportunity for smart companies that own websites to collect first-party data, that is, data about the users of their own sites.
And a CDP is the perfect place for that data to go.
Companies already collect a startling amount of first-party data. Most sites have an analytics program that tracks user activity. Similarly, most companies have a CRM system, which tracks every time you reply to one of their direct mail programs. Dropped your card in a fishbowl at a conference? You can be sure that information is being held somewhere in the company.
With a CDP’s unified customer view, the story goes, companies will be able to have deep, rich, authentic knowledge about their markets. This will help in the following ways:
Build audience profiles to help find ways to sell more products
Better targeting of direct mail efforts
Customized delivery of content marketing materials
Companies like Adobe plan to offer data enrichment services that will enable users of their Real-Time CDP to augment the data companies collect. “The time to move away from third-party cookies is now,” said Adobe Experience Cloud Senior VP Anjul Bhambhri, “and brands need to adopt a first-party strategy to stay relevant.”
With a CDP in place, marketers can create profiles and activate audiences, which in turn will help improve media buys, send personalized messaging and boost the performance of ad campaigns and even their own sites.
Related Article: Understanding the Key Components of a Customer Data Platform
How Do CDPs Help Manage Consent?
If CDPs have a killer app, it’s in a red-hot area called consent management.
Consumers worldwide are demanding action on privacy and governments are responding with a patchwork quilt of localized regulations to which companies must adhere.
Privacy laws like Europe’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) contain provisions that require a company to be able to delete all information they store about an individual.
Compliance with these so-called “Right to be Forgotten” provisions would be nearly impossible when data is stored here and there. A well-managed CDP makes compliance not just possible but actually practical. Simply demonstrating that this capability exists helps satisfy these laws.
Failing to track a user’s consent could end up costing companies huge sums in hefty fines. Amazon ran afoul of GDPR and was fined $877 million in 2021. A CDP helps businesses keep compliant and prove they can meet and actively manage and document that data.
Chris Jones, chief product officer at CDP provider Amperity, added that, “The unified customer view makes it easy for a brand to follow the specific regulations in each location where they do business.”
Is a CDP the Same Thing as a CRM?
While there are many similarities between a CRM and a CDP, neither is a replacement for the other. CRMs are best used to help manage and document engagements with customers and prospects. A CDP, on the other hand, has the broader remit of connecting that CRM data with other data stored around the company and beyond.
Kathryn Murphy, vice president of product, data and growth for Twilio, which offers a CDP, put it bluntly: “CDPs are built around the reality that customer data is everywhere and constantly moving,” she said. “CRMs are more for the conversation between sales and prospects.”
There are certainly overlapping components between the two pieces of software. As part of the planning and strategy stage, marketers will need to identify those and decide how, and if, they need to be migrated to the CDP.
For instance, it’s probable that your CRM is capable of sending emails. Allowing sales reps to generate one-off emails in service to their clients and prospects might be good to leave with the CRM. But a connection from the CRM to a mass-email provider would live a better life as part of the CDP.
Related Article: How to Filter the Right CDP Short List
How to Get Started With a CDP
A good place to start is the CMSWire Market Guide to Customer Data Platforms (registration required), which details how to deploy a CDP as well as how to work through the planning.
Amperity’s Chris Jones has some advice: “Brands need to first understand what their use cases are. As it stands, many brands are focused on a single use case rather than a holistic understanding of where customer data is flowing in and out across the organization.”
There are three major components that go into deploying a CDP.
1. Planning and Strategy: As with any data project, it’s important to start with solid planning and strategy. Planning includes an audit of all places where a company is collecting data to help figure out what’s available and what needs to be integrated. Strategy is important because a company needs to have a perspective of what they want this unified data source to accomplish.
It's also a really good time to think about processes. For any given marketing effort, there is some sort of process that is executed to make it happen. This will help to identify weak points that a CDP could solve.
2. Buying the software. One of the precepts of CDP is that it is packaged software. The Customer Data Platform Institute, a vendor-neutral organization, shows more than 160 CDP vendors in its July 2022 report (registration required).
Choosing the right vendor is why planning is so vital. It’s important to map the needs and plans of the organization against vendor capabilities to ensure that the right software is in play. Some considerations:
– User interface: Enterprise software packages are notorious for their horrible user interfaces. Focus on software providers who can deliver a usable interface. This especially includes their analytics.
– Modular: CDPs can be expensive and a company could plan to deploy it over several years. A truly modular CDP will help make that possible.
– Connectivity: A CDP will need to have a read/write relationship with other programs, both within the company’s walls and out in the greater world. Make sure the vendor provides a broad range of connection capabilities and, specifically, connections with other components of the marketing stack.
Literally the last thing a company wants after deploying a CDP is to have to download a list to a spreadsheet and then import that list somewhere else.
3. Hard work. As magical as vendors will say their software is, a CDP can only be as valuable as the data that goes into it. Data rarely flows seamlessly from one platform to another and making sure the data is normalized (for example, making sure field names match across-the-board) is a critical step.
This is a great time to bring in a data professional who can help build the bridges (technical and political) that will make sure the data is optimized and can be shared across internal and external sources. For more on the topic of data ingestion, check out How to Prepare Data for Ingestion and Integration by my colleague Brian Carlson.
Remember, a CDP is gathering data on an ongoing basis so ongoing admin from smart administrators will help keep the data pure and ensure you get the most out of it.
How Does a Marketer Use a CDP?
Once a CDP is ready, marketers can tap into the analytics reports provided with the vendor software to create audiences that will help the company sell more. For example, a CDP could be used to associate existing customers with products they haven’t yet bought. Integrated with your website, when these users arrive, they can be more quickly directed to these add-on products.
Even though third-party cookies won’t exist to power remarketing campaigns, it’s a sure thing that social media sites and other high-traffic sites will develop integrations that will give marketers a new version of this function. And, even better, it’s a fair bet that marketers will have even more control over who sees their ads on other people’s sites.
How Much Does a CDP Cost?
CDPs are not cheap and they have ongoing costs. While the actual cost of a CDP system depends completely on its features and functions, Gartner estimates that a CDP could cost from $100,000 to $300,000 per year. Other sources put the costs a bit lower.
Related Article: 3 Things to Consider Before Buying a Customer Data Platform
Final Word on CDPs
To be sure, marketing via CDP doesn’t directly replace the marketing benefits brought by third-party cookies. Third-party cookies were simple to deploy, so simple that most sites probably don’t know what third-party cookies they are hosting. And they made it simple and cost-effective for reaching market segments across the web through advertising.
A CDP, on the other hand, provides marketing organizations with the ability to understand more about their customers and prospects and create rich, authentic connections with them.