As third-party cookies fall out of favor, advertisers have been seeking alternative methods of ad targeting. Such efforts have resulted in the emergence of retail media networks that rely on troves of shopper data, along with other solutions oriented around first-party data. However, while larger brands can leverage these emerging tools to their advantage, the same isn’t always true for small and medium-sized businesses (SMBs). A recent study by UpCity found that nearly 90% of SMBs are worried about losing access to third-party data.
Breaking out the numbers further, 89% of businesses with 100 or more employees and 82% of businesses with fewer than 100 employees hold such concerns. With Google’s plan to phase out cookies kicking off in January and increased legislative scrutiny surrounding consumer data acquisition in general, the sense of pressure is amplifying quickly and will be a key discussion point in 2024.
The survey of 300 SMB marketing analytics professionals was conducted using Pollfish in October of this year. Survey respondents were screened according to their role in overseeing analytics and data management.
Small business, big data
There are many reasons why SMBs have turned to data collection and analysis, according to UpCity. Seventy percent of survey respondents reported using data for more targeted campaigns and 59% reported using data to improve market forecasting. Over half of participants (57%) use data for more defined market segmentation while 36% do so for improved attribution modeling and 34% for better A/B testing.
Return-on-investment (ROI) was ranked at the top of the most important types of data for SMBs, with 47% of survey respondents indicating this is the case. In second place was customer lifetime value at 36%, followed by customer acquisition cost at 34%. Conversion rate was of importance to 31% of respondents, website traffic volume to 29% and engagement metrics to 28%, according to the report.
While data brings benefits, it also brings heavy costs. Thirteen percent of SMBs report investing $901 or more in first-party data per month, compared to just 10% of SMBs who invested that amount in third-party data.
First-party data is more likely to yield a higher return when compared to third-party data. Sixty percent of SMBs see an ROI of $30 or more per dollar spent with first-party data, compared to 50% getting a similar return for third-party data. Third-party data was also more likely to deliver an ROI per dollar spent of $0 or less, with 10% of respondents seeing this with third-party data compared to just 2% for first-party data.
Collection starts now
While first-party data has a clear advantage over third-party data, its use and collection can be costly. Smaller companies may have a harder time accessing consumers as the shift to first-party data continues. However, SMBs cannot wait to invest in first-party data, according to the UpCity report.
Digital marketing agencies may prove a lifeline for SMB marketers in the coming years. Ninety-two percent of respondents who utilize third-party data report looking to digital marketing agencies for support, with 56% already doing so and 36% planning on doing so in the next year.
Data sharing also provides a valuable opportunity for SMB marketers. While on their own SMBs cannot match the data power of massive corporations, data sharing can help amplify their abilities. Forty-seven percent of SMBs already share their data with other SMBs and an additional 34% plan on doing so.
Software and consultants remain another option for data help, with 61% of SMBs already investing in software and another 32% planning on doing so in the next year. Over half (47%) of respondents have already hired a freelance marketing agency or consultant and 42% plan on doing so in the next year.