Recent report from Twilio reveals that advertisers must embrace transparency, shift from third-party data to first-party data, and establish the right database
*By Katrina Wong
When it comes to customer data, brands have a tough job. They need to collect accurate, real-time data to target their customers with personalized campaigns. But at the same time, customers are increasingly — and justifiably — cautious about how this data is used. Marketers have always wanted to create non-intrusive, personalized experiences, but the systems and tools to do so haven’t existed. At least until now.
With the opportunities that artificial intelligence (AI) has opened up, customer data is even more critical for advertisers. According to the recent Growth Report from Twilio Segment, 83% of companies are already using some form of AI in their marketing efforts this year, and more than half (54%) expect to spend even more on AI-powered campaigns next year.
So what's an advertiser to do? To capitalize on the AI momentum sweeping across industries, advertisers can take three key steps: embrace transparency to build trust; switch from third-party data to first-party data; and establish the right database for AI-based campaigns.
A new opportunity to build trust with transparency
Companies know that trust is one of the most important things they sell. According to the report Status of Personalization By Twilio in 2023, only 51% of consumers trust brands to keep their personal data safe and use it responsibly. Over the past 12 months, nearly a quarter of consumers (23%) felt less comfortable with using their personal data for personalization.
In other words, half of consumers don't trust brands and a quarter are becoming more distrustful, not the other way around. This issue is especially important to address as AI becomes more ubiquitous and the nature of how data is used in its applications continues to shake consumer confidence.
The good news? Innovation in AI presents a new opportunity to strengthen customer trust through transparency. Solutions like customer data platforms enable marketers and advertisers to offer robust privacy controls and target customers precisely. But marketers also need visibility into exactly what personal information they are collecting, where and where it is being stored, and how it is being used. Armed with this information, marketers can set rules to proactively block data when necessary to comply with the company's published privacy policy or other regulatory requirements.
When necessary, these tools will also simplify responding to consumer requests to delete their data across the company's entire suite of applications and databases. Together, these tools provide better visibility into consumer data across every touchpoint with a brand – and allow companies to communicate what they are doing with that data to build trust.
This may seem abstract, but the real-world results are significant. A digital media publisher, recognizing the need to connect more directly with its readers, implemented a customer data platform (CDP) using Twilio Segment. It knew it needed to invest in a customer-centric data privacy strategy that differentiated its brand from the competition. By using a CDP, it was possible to capture customer and behavioral data from a variety of devices and sources and consolidate this data into a central repository. It has built privacy directly into its product, implementing tools that simplify consent management, privacy policy enforcement, personal data management according to user preferences, and regulatory compliance. Now, the publisher can easily create engaging and personalized experiences that use first-party data, respecting consumer privacy and standing out from the competition.
Make the switch to first-party data sooner rather than later
For several years, the consensus that has been building is that third-party data has outlived its usefulness. Own, or primary, data is customer data exclusive to the company, and describes their behavior in relation to the brand, and is the key to creating a lasting and differentiated relationship between these two parties. First-party data also includes data that customers intentionally and proactively share, for example by filling out a customer information form – sometimes called “third-party data.”
Third-party data and third-party cookies were never anyone's first choice, but they were the only option for a long time because search engines and social networks held the keys to the most valuable consumer data. No more. Companies that want to build long-term customer relationships that are not subject to third-party algorithms now have the power to do so. Using first-party data and powerful AI tools can help deliver the types of personalized experiences that used to be limited to the biggest technology companies.
This shift is an opportunity for companies to invest in understanding their customers, provide truly personalized experiences that only they can provide, and improve the ROI of their marketing campaigns. Most brands know this; According to the State of Personalization, 78% of companies consider first-party data to be the most valuable data source for personalization.
An example of a brand that got this right is clothing brand Veronica Beard, which leveraged Twilio Segment to build omnichannel marketing campaigns based on first-party data. By using first-party data to power their Facebook campaigns (instead of third-party cookies), they saw a 20% reduction in customer acquisition costs (CAC) and a 11% increase in return on ad spend (ROAS) from ads from Facebook.
Establish the right database for your campaigns
AI is reducing the cost of intelligence, and companies face a huge opportunity to apply this intelligence to their brand experiences at scale. However, there is a challenge: 40% of companies face difficulties with technological infrastructures or low-quality data, according to the Growth Report, and 71% of respondents say that their AI tools could be more useful with access to higher quality data.
The reality is that your AI-powered campaigns will only be as good as your data. To be successful, marketers must look for AI solutions that combine predictive and generative AI with real-time, first-party customer data. Backed by accurate, high-quality data, AI can truly unlock the value that is so often promised. This will allow a brand to respond to each customer as a true individual, based on past interactions and preferences. It can also help marketers predict a customer's likely next action and encourage their engagement with the interaction that is most likely to elicit a response, helping to improve retention and loyalty.
One element that will be critical in this effort is effective “identity resolution” (the technical term for combining customer identities across different internal data sets) so that you can connect a marketing campaign manager's customer data with your customer support platform, for example, to generate a cohesive profile of your customer. By connecting the dots in this way, you can base your AI campaigns on an accurate, real-time understanding of your customer for better results.
The rewards are real. According to the Growth Report, 53% of companies say some of their most successful campaigns over the past year have included AI.
Reap the rewards of growing customer LTV
Connecting all of these things won't be easy, but the payoff is a win-win for brands and consumers.
Advertisers who want to take advantage of the opportunities offered by this AI platform shift can do so by adopting privacy and transparency controls in how they handle consumer data, accelerating their shift toward first-party data and establishing the right database for AI-based campaigns.
Navigating this transition will require time, a willingness to experiment, and careful attention to detail. But if you get it right, your business will be well-positioned to strengthen the connection between your brand and customers and maximize the impact of your marketing spend.
*Katrina Wong is Vice President of Twilio Segment Marketing at Twilio
Notice: The opinion presented in this article is the responsibility of its author and not of ABES - Brazilian Association of Software Companies
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