Why Community Building Needs To Be A Priority Amidst Privacy Changes
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In our last article, we briefly touched upon the challenges digital marketers are facing with personalized user (re)targeting brought upon by privacy changes. These manifest in the form of third-party cookies deprecation, stricter privacy regulations, and increased user control over data. The cumulative impact of these changes makes it harder than ever for brands to understand their customers.
It has thus become essential for brands to build direct and strong relationships with their audience to enable zero and first party data ownership. A key strategy in that is to foster community.
Third-party cookies are going away
A cookie is a piece of data delivered by a server to a user’s browser when they visit a website. The cookie is stored locally on the user’s device and serves as a unique identifier whenever the user return to the website.
Cookies generated by the website being browsed, called first-party cookies, track session on that website and help to create more personalized experiences — such as recalling items left in a user’s checkout cart.
Third-party cookies on the other hand are generated by websites different from the current website a user is on and may track browsing history across the web on any site. These typically are used for ad purposes. Recall when you visited the site of your favourite shoe brand, and were served an ad on shoes when you navigated away to read the news?
Tracking via third-party cookies happen without a user’s consent and can lead to breaches of privacy. In response to consumer’s growing demand for privacy, major web browser vendors, such as Mozilla and Apple, have taken steps to block third-party cookies, Google has also committed to disable third-party cookies in Chrome by 2024.
Cross-site tracking, personalized ad serving (ads based on user profile assembled from collected information) and retargeting (ads based on products a user has shown interest in) enabled by third-party cookies are about to change dramatically.
Privacy regulation is becoming more stringent
Since 2018, when the European Union’s General Data Protection Regulation (GDPR) came into effect, there has been a slew of similar regulations implemented around the world. Other prominent examples include the California Consumer Privacy Act (CCPA) in the United States and the Personal Data Protection Act (PDPA) in Singapore.
These regulations typically require companies to inform users about what information is being collected about them and why. Certain frameworks such as CCPA further require brands to meet certain data protection guidelines when transferring data.
Closer to home, Indonesia published a new set of data protection regulations in Oct 2022. The impact of these rules are already being felt by brands. For example, brands that sell through popular marketplaces, such as Tokopedia and Shoppee, will no longer be able to get basic customer information including the customer’s name and address once a sale has been completed.
The need for companies to get explicit customer consent to collect and use user information means brands will need to reduce their dependencies on third-party data sources.
Who owns the data anyway
At the heart of these changes is a growing user consciousness on how their data is being consumed by companies.
For the past decade, users have been hooked on free internet services on the premise that they were actually the product. With social media platforms for example, behavioural data and relationship graphs mapped from user interactions on these platforms have powered lucrative advertising businesses.
Over-exposure to advertisements and email messaging is leading users to question the current value exchange: my data in return for your service. Particularly given the significant cash flows generated by these platforms, while the value users perceive to derive from them dip.
Consequently, users are increasingly advocating for individual ownership of the data that they generate.
Why brands need to foster community
We think the impact of these changes on brands can be summarized as follows:
· User acquisition and activation via digital ads is going to get harder and more expensive
· Surface areas to obtain information on users are shrinking
· Direct relationship with users are essential for any data collection
In other words, brands need to shift their focus to developing strategies to grow their first-party data assets — i.e., information collected directly from their audience or customers.
Building and fostering community needs to be an important component of that strategy. As we’ve seen in the previous article, successful communities can create tangible value for members. This spans enabling achievement of personal goals to creating unique experiences.
By sponsoring and participating in these communities, brands can build trusted relationships with members. In this equation, members benefit from these communities and in return consent to sharing information about themselves.
Through members’ organic participation in these communities, brands are also able to gain unique insights into their preferences and behaviours. For example, in beauty communities, members regularly review and rate products they use. In the process, they share vital information about themselves such as their skin type or favourite make-up colour. Community can be a rich repository of information that brands can use to inform their product roadmap and marketing.
Conclusion
Amidst a sea change in data privacy, we think brands will need to search for new ways to cultivate proprietary information on their customers and audience. We believe a focus on community can be a compelling way for brands to create trusted member relationships that allow them to better understand their audience.
