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Death to Third-Party Cookies Indicates the Rise of CDPs
Twilio Segment is a customer data platform that collects information about customer interactions via all channels, including human, machine, digital, social, and others. API platform provider Twilio last month published its third annual Customer Data Platform (CDP) report for Segment. The Customer Data Platform Report 2022 takes an in-depth look into the decline of third-party cookies as an effective tool for data collection and how privacy and personalization are now within reach for businesses of all sizes and sectors. The report also asserts that the rise of customer data platforms is driving “the great stack reshuffle,” i.e., more data, with a greater emphasis on first-party data.
Katrina Wong, VP of Marketing at Twilio Segment, recently spoke with No Jitter about why first-party data is the only way to understand your customers and build relationships and why the use of third-party cookies is crumbling.
Responses have been edited for conciseness and clarity.
Why does the demise of cookies mean the rise of customer data platforms?
KW: Two main trends are happening right now in business: one is the rise of personalization—every brand now needs to deliver Amazon-like customer experiences—and the second trend is the prioritization of privacy.
For decades now, businesses have relied on third-party cookies as a way to understand their customers. With the upcoming phase-out of cookies in 2023 and evolving privacy legalization, this will no longer be a viable option.
Brands will have to collect, clean, synthesize and use first-party data to provide customers personalized experiences. This [personalization] is exactly what customer data platforms (CDPs) are built to do.
This shift is great for businesses and consumers, not just for privacy reasons. Think about the world’s most customer-first companies. They’re all powered by the same thing: first-party data. It’s much more accurate and the only way forward for any business today to deliver world-class customer experiences.
The average number of applications used by Twilio's Segment platform customers increased by more than 30%, from eight in 2019 to 11 in 2020. What caused this increase?
KW: In response to accelerated digitization brought on by COVID-19, we saw companies build out their tech stacks significantly. Based on data from the Twilio Segment platform, customer success, email marketing, and heatmaps/recording tools all saw increased adoption in the region of 18-25%, indicating that many companies are beginning to lean into digital engagement and transformation efforts, despite the uncertain economic circumstances.
What are some alternative ways for organizations to deliver solutions that help brands answer questions about their prospects and customers now that cookies are crumbling?
KW: The golden rule in business is to know thy customer. All the information about prospects and customers can be found in the interactions we have with them. The only way to understand your customers and build relationships is through first-party data.
What advice do you have for businesses that have not yet seized control of their data strategy?
KW: The time to develop a data strategy is now. Personalization is a requirement of today’s digital experiences, and companies can only do that successfully through first-party data. A CDP is an essential piece of infrastructure for any company to thrive in the digital age.
Blue-Sky Time: What will the future of online marketing look like as consumers have more control and visibility over their data?
KW: The future is first-party data. It’s the only way to strike the right balance between privacy and personalization. First, this is because brands inherently have control over their own data, which then gives consumers control as well. Second, it’s inherently good data – clean, accurate, and built on real interactions with customers.
Don’t forget to visit Twilio’s virtual booth at Enterprise Connect 2022.