Enterprise

Retailers are hungry for your email address this holiday season. Here’s why.

After losing access to third-party customer data thanks to changes from Apple and Google, retailers are getting customer data in exchange for discounts and investing in more tech to use it.

An illustration of a website popup that reads "Receive 50% off!"

Exchanging discounts for emails helps retailers collect an important piece of first-party data, a category of information they attain through direct interactions with consumers.

Illustration: Christopher T. Fong/Protocol

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Holiday shoppers are up against rising prices amid supply chain clogs, but even before Black Friday sales started, all sorts of online retailers were putting up virtual discount signs as soon as shoppers arrived at their websites.

A pop-up message greeted LandsEnd.com visitors right away with a 50% off discount if they signed up to receive emails from the apparel seller. KnackShops.com, which sells gift boxes, immediately gave $10 off when people supplied their email address.

Sure, these discounts and deals help retailers attract bargain hunters, but there's another big reason so many ecommerce sites are gunning for email addresses: the pressing need to build their first-party data troves.

The immediate-discount-for-data trend is not the most sophisticated marketing tactic, said Lizzy Foo Kune, vice president and analyst at research firm Gartner. "It's like entry-level first-party data collection or like lowest common denominator first-party data collection," she said.

Exchanging discounts for emails helps retailers collect an important piece of first-party data, a category of information they attain through direct interactions with consumers. First-party data includes much more than emails, though. It encompasses contact information like physical addresses and cellphone numbers, website interaction data, information stored in point-of-sale systems showing online and in-store purchases and even voice data from call centers.

An email address is valuable because it allows retailers to tie the information they know about people to data in other systems used to target advertising and measure its effectiveness, across email marketing, loyalty programs and more.

Retailers and other firms were prompted to scramble for more first-party data to counteract the loss of third-party data signals after Google began its slow burn toward killing off third-party cookies in its Chrome web browser in 2020, and later when Apple implemented new privacy options for iPhone users this year. Now, an influx of site visitors during the holiday shopping season gives them even more incentive to offer discounts to grab email data.

In the past, those third-party data signals could be more easily detected and passed around by Facebook and other middlemen to make connections necessary to aim ads to specific people in the market for products and know if they visited a site or bought something as a result.

The Apple and Google changes, along with European and state privacy laws giving people more control over how data is collected and used, are now blocking access to the third-party cookies and other trackers companies relied on for the past two decades.

"Third-party data is a bit of a duct tape where everybody can stitch data industrywide," said Michael Neveu, director of data for North America at digital ad consultancy Media.Monks. Because it had been so plentiful and accessible, he said, "third-party data over the years, on one level, has been an equalizer," including for smaller online sellers competing with larger retailers.

The rush to new customer data tech

Until recently, marketers "have pushed [first-party data gathering] down in their priority [lists] because of the availability of third-party data," said Tom Strachan, senior vice president of sales and marketing for Lytics, which offers a platform for managing customer data that is integrated with Facebook, Shopify, Salesforce, Mailchimp and other systems.

Lytics, like other customer data platforms, lets companies show discount offers selectively, only to people whose email addresses they don't already have in their database. "Let's start converting anonymous website visitors into email subscribers," states an automated voice in a Lytics video. "Every visitor without a known email will now see this offer on your website."

As retailers unwrap more of those first-party presents, they are investing in tech to store it, unify it and put it to use. For some of them, that means partnering with a customer data platform (or CDP), though many may already have the right combination of tools in the marketing stacks they've assembled over the years, said Foo Kune. When it comes to the broad category of customer relationship management tech – a category Gartner has observed for around thirty years that includes CDPs -- the analyst firm forecasts that businesses will spend more than $80 billion on CRM applications this year and $100 billion by 2023.

"We're seeing increased interest in customer-data platforms and related technologies," she said, adding that there are at least thirteen other types of tech that plug into those CDPs. They include cloud data warehouses that centralize customer data, ID management systems that use emails to help identify people, personalization tools that tailor what people see on ecommerce sites based on their previous behavior and tools to create visualized reports.

Not only are retailers ingesting more first-party data in real time, some are hiring in-house data scientists to clean it, organize it according to a standard taxonomy and prepare it for distribution into marketing applications that often are already hooked up to cloud storage repositories or CDPs.

"What we're seeing is a lot of retailers investing in people -- data engineers and data scientists," said Neveu. "You need the people; you just can't get around that."

Avoiding hype and privacy assumptions

Gartner cautions against adopting a CDP without a data scientist on board. In fact, Foo Kune said companies thinking about getting one should take time to assess their genuine needs.

"I'm worried that organizations are jumping too fast because they're under pressure," she said, adding, "There's a risk of over-investing in technology solutions." Foo Kune said retailers evaluating new tech like CDPs should "examine the technology that you've already got around customer data and first-party behavioral data" to determine whether they can accomplish those goals with the tech they already have.

In practice, increased tech investment means sending customer data back and forth across different systems made by different vendors, which creates new data privacy questions and concerns. "As [businesses] start to understand privacy and the importance behind it, they don't want to be porting to other systems," said Strachan, who said companies including Lytics are using methods to ensure that only select or encrypted pieces of data are passed from system to system as necessary.

Despite the fact that the first-party data craze was predicated on the demand for more privacy control, Foo Kune said she is skeptical that marketers always have the appropriate consent from people to use it in all the ways they are currently, and argued that some uses in some jurisdictions might skirt privacy regulations.

"If [companies have] your email address, [they have] this assumption that, 'Now we've got it, let's use it,'" said Foo Kune. "I think that's naive."

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