The End of Third Party Data for Advertisers

There’s been a lot of conversation about restrictions on third party data and how it is used by advertisers. But what exactly is the issue, and what does it mean for us?

At the core of the third-party data issue is the fact that this data and how it is collected are coming under criticism and increased scrutiny. Third-party data is data that is used by brands to locate and market to consumers but that is collected by other companies, such as Google and Facebook. However, recently these data-collecting companies have come under fire for the extent to which they collect data on their users and how secretive their data-collection methods often are. In other words, consumers and authorities alike feel that companies are collecting - and brands are using - too much third-party data that is collected in too unclear and borderline duplicitous ways. As a result, many consumers are either pushing for increased regulations for their privacy on these data-collecting sites, or abandoning these sites altogether. Regulation of third-party data is already starting as companies like Facebook begin paring down how much data they collect on their users - for example, striking their facial recognition software from their site - and brands like Apple introduce greater privacy protections for their users. All of this has amounted to a movement, which is quickly gaining momentum, to decrease or stop altogether the collection of third-party data. 

This trend has serious implications for advertising agencies, who often rely strongly on this data to identify the most likely consumers for their brands and then market to these consumers in the most applicable ways. Third-party data has revolutionized the digital advertising game, but without it, brands will either have to collect this data themselves - first-party data, which will likely be harder to obtain and not as detailed - or return to marketing to consumers without knowing as many details about them. As it stands, many advertising agencies have gotten a bit too comfortable with third-party data, taking it for granted to the point of not even using all of the data they have at their fingertips. Without this data, agencies will have to seriously readjust their expectations and usages of data and learn both how to collect their own data and how to work off of a potentially less in-depth yield of data on consumers.

As students planning to go into advertising, the loss of third party data will also impact how we do our jobs. No longer can we expect to rely on cookies to tell us exactly what consumers use and how they use, or to identify what the best channels and messages are to attract consumers. Instead, we will have to find a way to get this data from consumers voluntarily; that is, to create a value proposition that will motivate consumers to give brands more information about themselves. Whether through special deals or other perks, getting this data is vital to continuing to create relevant and targeted advertising. In addition, we will have to get used to creating advertisements without having as complete a picture of our target audience as we may expect. This will likely make the creative aspect of advertising more difficult, as there will be less certainty about what messaging will work the best, or what avenue to put it through.

Overall, increased privacy protections around third party data are not necessarily a bad thing; in fact, it’s good news that there are more efforts being taken to protect our data from being taken and used without our knowledge. However, this shift does mean there will be serious changes in the advertising industry in the coming years - and as students about to enter the world of advertising, we will have to be prepared to adapt.