Understanding Data Depreciation: The Changing Landscape of Marketing

Do you want to gain a deeper understanding of your customers and outshine your competitors? If the answer is yes, then data collection and analysis should be integral parts of your marketing strategy. Having the right data empowers you to uncover your customers' preferences and dislikes, make informed decisions, enhance processes, and predict future trends. However, the way we collect data, particularly through third-party cookies, is undergoing significant changes.

Data depreciation looms on the horizon, not only altering the types of data marketers collect but also revolutionizing the methods employed for data gathering. Curious to learn more about data depreciation and how to prepare for it? Grab yourself a cup of coffee and delve into the details.

What Is Data Depreciation?

Data depreciation refers to the diminishing value and effectiveness of certain data types over time. Various factors influence data depreciation, including:

• Privacy expectations: People are increasingly concerned about how their data is utilized and desire more control over its usage. In fact, according to Cisco, one out of three individuals have terminated business relationships due to concerns about data usage.

• Mobile usage: With the widespread adoption of mobile phones and apps, technologies like third-party cookies have lost their significance. For example, Apple's 14.5 update in 2021 enabled iPhone users to exercise greater control over online tracking, making it easier to opt out of cookies.

• Laws and regulations: Governments have implemented stringent rules to safeguard user data. Examples include the General Data Protection Regulation (GDPR) in the EU and UK, the California Consumer Privacy Act (CCPA), and the Digital Charter Implementation Act in Canada.

• Technological advancements: Advancements in technology enable us to gather information more efficiently without relying on specific data types. Machine learning, for instance, can identify patterns and trends even from a limited existing dataset.

Preparing for the Loss of Third-Party Cookies

Currently, the most pressing concern regarding data depreciation revolves around third-party cookies. Third-party cookies are snippets of code created by one domain to track data on another domain. For instance, social sharing buttons on your blog posts utilize these cookies to identify which buttons visitors have clicked. However, third-party cookies are gradually being phased out due to privacy and security concerns. Firefox and Safari have already default-blocked third-party cookies, and Chrome plans to discontinue their usage by the end of 2024.

Considering that Chrome commands nearly two-thirds of the market in 2023, many marketers are grappling with the potential implications of losing third-party cookies. According to Adobe, three out of four marketers still heavily rely on these cookies, with 66 percent of leaders anticipating a negative impact on their businesses.

The Impact of Data Depreciation on Your Marketing Strategy

Data depreciation necessitates a reassessment of how we collect and utilize customer data. Let's take targeting and personalization as an example. In the past, businesses used third-party cookie data to identify users and deliver tailored advertisements. However, targeting and personalization can be achieved through first-party cookies and cookieless marketing, necessitating a shift in data collection methods.

Moreover, data depreciation highlights the importance of nurturing customer relationships and being transparent about the use of personal data. By fostering trust and honesty with website visitors, you are more likely to gain their consent for data utilization.

Strategies to Adapt to Data Depreciation

Fortunately, organizations such as Google are taking steps to ensure marketers can continue accessing a steady flow of data. Google Analytics 4 (GA4), for instance, relies on first-party cookies instead of third-party ones. Additionally, GA4 utilizes artificial intelligence to predict future user behavior, such as the likelihood of a customer converting on your website.

To prepare for the loss of third-party cookies, businesses should review and audit their current usage. Two viable alternatives to third-party cookies are first-party cookies and cookieless marketing. Let's explore both options.

1. First-Party Cookies

First-party cookies are directly created by the website being visited. For example, an e-commerce store would employ first-party cookies to save visitors' shopping carts and enable automatic sign-in. Unlike third-party cookies, first-party cookies remain unaffected by data depreciation. By transitioning to this type of cookie, you can continue tracking, monitoring, and leveraging customer data to your advantage. The advantages of utilizing first-party cookies include:

Providing personalized website experiences that increase the likelihood of successful conversions. Studies indicate that 69 percent of customers are comfortable with website personalization when they have consented to share information. Linking customer profiles across different platforms (websites and mobile apps) to offer a seamless omnichannel experience. Creating customer segments using first-party data, such as building lists of customers who visited specific sections of your website or abandoned shopping carts. This enables targeted advertising, including remarketing or retargeting.

2. Cookieless Marketing

While cookies have their uses, they are not essential for advertising. This is where cookieless marketing comes into play. Cookieless marketing captures only the user data voluntarily provided by customers, reducing your workload and ensuring compliance. One effective avenue for cookieless marketing is email marketing. If customers willingly provide their email addresses, you gain a low-cost and efficient marketing channel for targeted advertising.

Another example is contextual advertising, which involves displaying the most relevant ads in suitable contexts. This ensures that the audience most likely to make a purchase encounters the advertisement. Whether it's through websites, YouTube channels, or social media accounts popular with your target audience, contextual advertising maximizes the chance of a successful sale.

Cohort audiences, falling under the umbrella of cookieless marketing, leverage artificial intelligence and machine learning to identify potential customers who haven't purchased from you but closely match the demographics, interests, and behaviors of existing customers. This enables you to advertise to these prospects across various platforms. Cookieless marketing is particularly valuable when employing paid social tracking without relying on cookies.

The Role of Agencies in Dealing with Data Depreciation

As data depreciation looms, it becomes crucial for organizations to make the necessary adjustments to their data collection and targeting strategies. If your business heavily relies on third-party cookies, seeking assistance from a digital marketing agency can be a wise move to navigate the imminent overhaul. Agencies possess experience across various industries, enabling them to swiftly develop a data depreciation strategy tailored to your organization's needs. A reliable agency partner will:

• Assess the first-party data you require, identify alternative data sources, and determine suitable systems for data gathering and storage. For instance, they can help optimize your existing CRM platform for more effective customer segmentation.

• Keep you updated on regulations to ensure compliance and guide you in adopting privacy-centric guidelines and standards that build trust with your website users.

• While it's possible to handle data depreciation internally, especially if you have an experienced marketing team, a proficient digital marketing agency will save you time, ensure compliance, and help you reach a broader customer base.

Conclusion

Cookies are not just delicious treats but also a significant consideration for businesses. This article aimed to clarify the concept of data depreciation and provide guidance on how to continue gathering valuable customer data while future-proofing your business. By reviewing your current use of third-party cookies, you can make a smooth transition with minimal impact on your existing marketing strategy. Engaging a reliable and experienced digital marketing agency, such as NP Digital, can be one of the easiest and most cost-effective ways to prepare for the upcoming changes, ensuring the promotion of your products and services to your customers without sacrificing potential ad revenue.