Managing Rising Acquisition Costs in the Face of Increased Privacy Concerns

The world of digital marketing is transforming, and brands need to manage this period of change or risk seeing costs spiral – especially those associated with acquiring new customers.

The wild west days of the internet are coming to a close and civilization is coming for it at last. With increasingly tight regulations around the world governing how and when companies can gather, store, and use customer data the business of targeting advertising campaigns to specific demographics is getting more challenging by the day.

Compounding this issue is the fact Google has put a plan into action to cease all support for third party cookies over the next couple of years. With the world’s most popular search engine brand no longer facilitating this kind of data, ecommerce brands are going to need to get creative to attract new customers and control costs.

Increasing Costs.

Google is not the only one taking a stance on issues of data privacy however, with changes to Apple’s iOS 14 also causing headaches for brands relying on third party data.

"One of the biggest issues is the increasing privacy restrictions for consumers that limit how and where people can be tracked on the internet," reports PYMNTS. "Snapchat last week said the changes made in Apple’s iOS 14 severely impacted the social media company’s advertising business as the measurement tool provided by the tech giant did not scale as we had expected."

The rising costs associated with these new rules and policies couldn’t have come at a worse time for retail brands, occurring during a period where labor shortages and COVID related supply chain issues are already causing significant stresses.

Fresh Solutions for a New Era

Despite the new landscape around data collection and online tracking, customers still want advertising which is personalized to them, meaning ecommerce brands need to find alternative sources of data to meet that need.

First party data is, of course a gold standard in this new world. Many larger brands are able to gather data on their customers through loyalty cards or other schemes. The only problem is this does nothing to solve the problem of customer acquisition as it relies on them already being one.

Second party data is the first party data of another organization. This could be a market research brand, or some other company which gathers market information and gains the permission of the data subject to pass it on to relevant businesses. The little checkbox during every checkout process which asks if you are happy to be contacted by other brands – that’s where a great deal of second party data comes from.

Mobile Ad ID is going to become another reliable source of data in this new world. Strings of data assigned to mobile devices assigned by Android or Apple help apps show users content which is relevant to them and can also be deployed to target personalized advertising.

Lookalike modelling is a process that identifies people who look and act just like your target audiences. This tool analyses your seed audience, identifies some key characteristics, and uses artificial intelligence to locate users who are similar to your target. Think about the buyer personas marketers create to get an idea of their target demographic – lookalike modelling is essentially a supercharged version of the same process.

Search engine optimization is going to find renewed relevance in this environment as well. Google is still the world’s most popular search engine and Google Chrome its most used internet browser – on mobile and on computers – which means ecommerce brands are going to need to make sure they can be easily discovered though organic search. Internet users rarely search beyond the first two pages of Google results, so making sure your brand appears in that top 20 is going to be of critical importance moving forwards.

Final Thoughts

In a nutshell, advertising through many of the usual channels is getting far more difficult and yielding a far less competitive return on investment. Facebook, once an easy choice for advertising, without access to third-party data is essentially guessing when it comes to targeting users with advertising.

Apple requiring users to opt-in to tracking from third party apps such as Facebook and Instagram, with early data suggesting that only a meagre 5-15% have done so. As a result, external brands can no longer track the data required to deliver personalized advertising with any precision. And with advertising data no longer accessible by apps and websites, clicks are only remembered for seven days.

However, brands which are able to pivot and adapt and deploy new/old methods of gathering data on their markets and optimize their ecommerce platforms for search engine rankings are going to have a much easier time of it – both in terms of engagement and costs – than those which insist on throwing good money after bad.

Rising acquisition costs are certain to be part of the conversation at eTail Boston 2022, taking place in August at The Sheraton, Boston.

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