Five Customer Data Predictions for 2021
Believe it or not, 2020 is coming to a close. Given that this year packed in a decade's worth of change, you might think that next year’s trends will be hard to predict. But we actually have a good idea of what’s to come, because certain trends that started before 2020 have only accelerated as businesses and consumers deepen their commitment to digital channels. Here are some customer data trends to look out for in 2021 and beyond:
"We have seen two years’ worth of digital transformation in two months."— CEO Satya Nadella during microsoft's q3 2020 earnings call
1. Data Will Become More Regulated
You may have heard of the privacy regulations GDPR and CCPA, but are you familiar with Brazil's LGPD or Japan's APPI which will both become enforceable in the next two years? Consumer data privacy laws are appearing all over the globe and there's no reason to believe this trend will slow down. While it might take a lawyer to interpret each of these laws, it doesn't take a lawyer to recognize that data-driven systems should be designed with privacy and governance in mind. This has emerged as a strong pitch for CDP vendors such as Segment, who recognize that their position at the center of customer data pipelines makes them well-suited to handle data suppression and deletion requests.
2. First-Party Data Will Start Replacing Third-Party Data
Third-party data is defined as data bought from sources outside of your organization and it's been in the sights of consumer privacy advocates, browser vendors, and regulators for years now. In March, Apple started blocking third-party cookies entirely, effectively putting blinders on vendors like Google and Facebook who depended on the technology for ad targeting purposes. California's Consumer Privacy Act (CCPA) is also largely focused on reigning in the uninhibited sales of consumer data between organizations (unlike the EU's GDPR which focuses primarily on the rights of citizens).
Marketers see the writing on the wall and are making every attempt possible to ensure that their marketing automation, personalization, analytics, and machine learning models are built on top of reliable first-party data.
3. Marketers Will Seek Out More Ways to Access Raw Data
If you've ever used the free version of Google's Universal Analytics, you're familiar with aggregated data. These are reports that roll-up data across dimensions to provide a snapshot of high-level performance. A related technology is the OLAP Cube which pre-aggregates data to improve query-time performance. These types of reports are suitable in certain situations but fall apart when the use cases involve data mining or predictive models which require access to the underlying raw data.
To support these use cases, marketers will rely on their vendors to supply raw, unaggregated data. They will also require technologies that can query larger data sets without issue. One example of a vendor responding to this demand is Google's recent update to Google Analytics, GA4, which provides access to raw data in Google's data warehouse solution, BigQuery. Another is Google's in-memory BI service, BI Engine, which improves query-time performance and negates the need to pre-aggregate data into OLAP cubes. Other vendors such as Amazon and Snowflake provide similar provisions for working with raw data at scale.
Given the market penetration of Google Analytics, you can expect to see a surge in creativity as marketers find new and interesting use cases for raw data.
4. Server-Side Technologies Will Become More Appealing Than Client-Side Technologies
Additionally, marketers may have misplaced trust that these tags are working as expected when, by definition, the execution of client-side code is handled by systems outside of their control such as network proxies, browsers, DNS servers, and browser plug-ins. The reality is that marketers have no control over code executed in a client's browser which brings us to the value of server-side technologies.
Whether it's server-side analytics solutions such as Sitecore Analytics or Google's server-side tag management solution, there are clear advantages to bringing tracking closer to the server. Velir has written about this topic previously. First, client-side performance issues disappear because the business logic and requests are handled by the server, not the client. Second, marketers can be confident that their tracking is working as expected because they own the entire pipeline. What's the downside? Server-side implementations tend to be more complicated and require more coordination with your IT department.
5. Best-in-Class Platforms Will Outrank Monoliths
Selecting marketing technology is no easy task given the 8,000+ vendors to choose from. After many years of watching the number of martech vendors increase, many made predictions that consolidation was imminent. That prediction has flopped as the number of providers has continued to increase. This is likely due to two reasons: 1) the cost of spinning up a new SaaS solution has dropped substantially and 2) the incentive for marketers to gain an edge over their competition has remained constant.
Given this trend, marketers resist locking themselves into a single vendor fearing that such vendor lock-in will cause them to miss out on the next greatest advancement. This has resulted in a 'best-in-breed' approach where marketers select the best per-category vendor off the shelf and integrate it into their stack. This preference has been studied by Merkle who found that 67% of marketers surveyed preferred a best-in-breed approach. You can witness the results of these preferences every year through the Stackie Awards.
"More and more businesses will be “digital natives,” 100% powered by a kaleidoscopic tapestry of apps built, bought, or rented, all interconnected through APIs in public and private clouds. "— Marketing Technology Media LLC
Even Sitecore, a company that suggests with its platform "own the experience", has given ground through their strategic partnership with Salesforce. They realized that in many cases marketers weren't willing to give up their highly customized Salesforce implementations. In response, Sitecore created a partnership that takes advantage of each company's respective strengths. Where won't Sitecore give up ground? We can assume it’s with "owning the content" based on their big bets on Content Hub.
While we’re not certified fortune-tellers, our predictions are largely self-reinforcing and based on trends that we’ve been seeing since before 2020. We have five more predictions relating to customer data in 2021 that we’ll be sharing next week, but if these predictions seem relevant to you and your organization, be sure to reach out to Velir and inquire about our Data Integration and Activation services. Learn more about our Data Activation and Integration services or read more of our thoughts on data.
You can also watch this video from our Public Interface series, where we talk about Data Integration and Activation.