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Why Meta’s Stock Decline Matters to Loyalty Marketers

February 9, 2022

In this article you will learn:

By Christian Selchau-Hansen, Founder and CEO

The topic of privacy in the advertising and media industries has been going on for years, but Meta’s large earnings miss is a clear indication of the rising financial impact new privacy changes will have for companies that have relied mainly on mining consumer data. With Apple’s elimination of IDFA, Facebook is no longer able to specifically target consumers to the same degree they used to.

Moreover, privacy legislation continues to advance, which will likely eliminate the use of 3rd party data - the mainstay of today’s industry. This not only impacts Facebook’s revenue, but is the beginning of a massive shift in the near trillion dollar advertising industry. We all heard (and maybe told) jokes about the upcoming cookie-pocalypse when Google and Apple began announcing stronger privacy controls for consumer data, but Meta’s earnings miss is a clear sign that this significant shift is no longer on the horizon, it’s already here and it’s just beginning.

The New York Times
Source: The New York Times

What does this mean for advertisers?

Meta already knows it must spend billions of dollars and invest in new privacy-centric technology. As Sheryl Sandberg said in the Q4 earnings call, “over the longer term, we need to develop privacy-enhancing tech to help minimize the amount of personal information we learn and we use. [We will] use more aggregate, more anonymized data while still allowing us to show relevant ads and that’s going to take us time.”

Meta also knows the real data – zero- and first-party data – is in the control of retailers, brands, and publishers who directly engage with their customers. This is going to shift the power dynamic that has traditionally been led by third-party data aggregators.

What exactly is zero- and first-party data?

The data that customers intentionally and proactively share with a brand is called zero-party data. The term, coined by Forrester, refers to data that includes information like:

  • How customers would like you to communicate with them;
  • Why they are interested in your products;
  • What specific types of products they want to learn more about and purchase; and
  • Other preferences that help increase your understanding of who they are, what they want, and how they will be most likely to engage with your company.

First-party data is also very personal to consumers but is not directly shared by the customer. It is gleaned from user behaviors, analytics and other tools that provide insight into customer journeys and actions. For example, if a shopper often puts products in a shopping cart on her mobile device but only completes those transactions from her desktop, that is a highly personalized piece of data that she has not volunteered but can nonetheless be tied back to her.

Why do these changes matter to marketers?

For brands and their loyalty marketing teams, the rising expense of digital advertising and the reduction in ROI from broader targeting must be a call-to-action. If you want to acquire new customers profitably in an era of higher costs, own your relationship with your customer, and drive deeper brand loyalty, it is imperative to do three things:

  1. Invest in zero- and first-party data relationships with your customers by building an opt-in loyalty program. It does not need to be earn-and-burn program, but rather a program where customers can opt into a longer-term, more valuable relationship based on trust, where they share data because it leads to better service, more relevant communications and offers, and a better experience

  2. Invest in modern data infrastructure where data can be made available to applications which enable personal experiences across the customer lifecycle

  3. Invest in modern applications which enable your marketing team to create and field personalized and dynamic offers and experiences at scale.

It is critical that retailers and brands make these investments now - the upside is massive and due to the privacy changes that Google, Apple and governments are putting in place, status quo is no longer an option. According to a recent study by BCG, transitioning from mass to personal offers will generate more than $70B of impact for retailers who make this shift. In order to create personal offers, brands must collect and activate zero- and first-party data. Removing a reliance on third-party data will create stronger customer relationships with a brand and lead to long-term revenue growth.

Boston Consulting Group
Source: Boston Consulting Group

Real-world application of zero- and first-party data

Let me give you a real-world example of how a brand used their zero- and first-party data to improve a loyalty program. A major airline leveraged their data within Formation’s Dynamic Offer Platform to quickly build and deploy individual loyalty offers that rewarded customers for engaging more deeply with their brand, through additional purchases, ancillary services or engaging with the partner ecosystem.

Though this airline had a large data science and analytics team in place, with a traditional offer management platform, they were unable to respond quickly to changes in customer behavior, as it took 10 weeks to develop and launch offers. By implementing Formation’s platform and leveraging that zero- and first-party data they were already collecting, they were able to create and deliver offers much faster – 10 days rather than 10 weeks – and they were able to more effectively leverage their data science capabilities to respond to insights as they came in.

This resulted in far more relevant offers to their loyalty members. Those offers outperformed the registration rate of other targeted promotions by 2x, and the airline increased their margin per offer by 7x.

The Formation Dynamic Offer Platform

Get started today

Every brand out there, not just Meta, is going to have to revisit their digital advertising strategies now. Brands that are able to increase customers’ lifetime value are better positioned to acquire new customers and grow revenue even as acquisition costs rise. Loyalty marketers are a critical part of that process. Invest in first- and zero-party data and infrastructure, as well as investing in applications like Dynamic Offer platforms to ensure your team is positioned to succeed in a world that is rightfully placing more emphasis on consumers’ privacy.

As the digital world continues to change traditional marketing practices and techniques, learn more about modernizing your loyalty offers with our free Guide: Modernizing Loyalty Offers.