Is Third-Party Data on the Way Out?

By Madison Taylor
April 13, 2020
digital cloud all light up small figure shadowed out in front of it

Have you heard? Facebook can read your mind. Well, not really … but sometimes it sure seems that way. Its predictive abilities are so powerful that some people swear that Facebook is serving them ads based on conversations they’ve had near their phones, without even searching or browsing.

In fact, Facebook is just one of many ad providers that are tracking your behavior — the things you search for, the web pages you visit, the products you buy, the products you put in your cart and don’t buy, the places you drive in real life, the times you check your phone the most, and a thousand other data points that create a virtual picture of you.

Some companies collect all this data themselves, but the biggest source of data is third-party data, collected by a business that doesn’t have a direct link to either your business or your customers. Every time you place an ad on Facebook or Google and you specify whom it should appear in front of, you’re taking advantage of (and trusting) third-party data that knows which users fit the profile you’re looking for.

But third-party data is starting to fall by the wayside. In January, Google announced that it would soon be completely phasing out third-party cookies from its Chrome browser. This will be a seismic shift in the advertising world, given that these cookies are the primary means that advertisers use to track you — and the web runs on advertising. But there’s more change on the way. Here’s what you need to know.

Digital Tracking is Dwindling

Cookies used to be a staple of digital advertising, tracking customers as they moved from site to site and generating patterns that marketers could use for future campaigns. But according to a 2017 survey by Flashtalking, 64 percent of advertisers’ tracking cookies were being rejected or clocked by their browsers.

Besides blocking cookies, customers are getting harder to track. They’re starting an article on their phones, then picking it up on their work computers. They’re reading on a tablet while streaming video on a computer. And most of the time, when they’re using a tablet or mobile phone, they’re getting their content through an app — which is nearly impossible to track.

Even if you do have the data to serve well-targeted ads, they might not make it through at all. Between VPNs and ad blockers, it’s harder and harder to target your online audience with outbound ads. According to one survey, 40 percent of laptop and desktop users had an ad blocker enabled in the last month.

New Regulations Make Data Collection Harder

In the last few years, the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) have completely changed the type and extent of data that marketers and website owners can collect. Customers now have to opt in to have their data collected, something they’re (justifiably) reticent to do, given the number and scale of data breaches that have happened in recent years.

Is This a Bad Thing?

Maybe it isn’t. Third-party data has always been somewhat unreliable — in fact, one study found that a particular data vendor had identified 84 percent of their users as both male and female — so it’s not necessarily a huge loss to miss out on the databases that have been so popular until now. Data collection has always been a numbers game. Imagine you’re offered a choice of two lists of consumers.

  • List 1 contains 500,000 people, and you can be 95% confident that they’ve all be properly identified.
  • List 2 contains 5 million people, but you’re only 50% confident that they’ve been categorized correctly.

List 2 will contain more hits, even if it also contains far more misses, so the data collectors have been playing the odds. But if you’re trying to get away from the carpet-bombing approach to advertising, you can’t afford to reach out to 2.5 million misses. If the demographic info that these third-party data brokers are collecting isn’t accurate, your ads won’t be served correctly.

What to Do About It

There are a few things you can do to get around the dwindling usefulness of third-party data. First, you can collect your own data. A good CRM like HubSpot, properly managed, can help you keep track of the contact info, browsing habits, purchase history, and demographics of the people that frequent your site.

It’s always a good idea to explain why you’re collecting data. Customers value transparency, so if you tell them that you’re collecting their data in order to make more accurate purchase suggestions, they might be more likely to click “accept” on the cookie button. If you explain why you want their email address and job title when they fill out a form to download a whitepaper, they’ll be less put off by doing so.

A Strong Foundation of Content

The more obvious way to avoid the shifting sands of third-party data is to lean on inbound content marketing. Inbound marketing is focused on capturing people based on the way they navigate the web and the way they search for topics related to what you do. If you’re optimizing for the right searches and topics, you won’t need third-party data to reach your customers — they’ll find you.