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Saturday, July 08, 2023

How New AI tools can Transform Customer Engagement and Retention

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How new AI tools can transform customer engagement and retention

Ryohei Fujimaki, dotData, July 8, 2023 8:20 AM   in Venturebeat.

As the cookieless future continues to gain momentum, the global digital advertising sector is experiencing a tectonic shift. Companies are being forced to reimagine the way they reach out to customers.

Online marketing has been dominated by third-party cookies — tracking codes posted on websites to extract users’ information — and data brokers who sell the information in bulk. 

However, this multibillion-dollar business, perpetuated for decades, is now in checkmate by a perfect trifecta: new privacy laws, big tech restrictions, and global consumer privacy trends.

While the end of cookies is inevitable, businesses still struggle to find new advertising techniques. Statista’s January report reveals that 83% of marketers still depend on third-party cookies, spending $22 billion on this outdated technique in 2021. 

In this report, we’ll dive into the complexities of digital advertising transformation and reveal how new technologies, machine learning (ML), and AI present new opportunities for the industry.

The challenges, risks and new trends of digital marketing

Using third-party data has become a high-stakes risk strategy. Companies that do not observe data privacy laws can face millions in fines for data breaches or misuse. For example, defying the General Data Protection Regulation (GDPR) can cost up to €20 million (about $21.7 million) or 4% of a company’s annual global turnover in 2023. 

And the legal data landscape goes well beyond the GDPR; it is diverse, constantly evolving, and growing. From state laws like the California Consumer Privacy Act (CCPA) to federal laws like the Health Insurance Portability and Accountability Act (HIPAA), businesses must identify which laws apply to their operation and know the risks. 

The dangers of running third-party data campaigns do not end with courts. Brands that do not align with consumer expectations risk losing clients and business opportunities. A 2022 MediaMath survey revealed that 84% of consumers are more likely to trust brands that prioritize using personal information with a privacy-safe approach.

The issue is not new — privacy concerns have been growing for years. In 2019, Pew Research reported that 79% of Americans were “concerned about how companies use their data.” In 2023, privacy has become a top priority, and customers expect companies to protect their data. Failing to do so brings devaluation of brand perception and potential loss of customers and business partners. 

The most significant barrier to third-party data is coming from online giants themselves. Companies like Apple, Google and Microsoft are leading the way towards ending cookies. Increasing restrictions make it harder for marketers to obtain consumers’ data daily.

First-party data — obtained under consent in a direct relationship with the user, for example, when making a payment transaction or agreeing to the terms when signing up — is trending and expected to replace third-party data. First-party data is also better-quality, as it goes beyond limited information based on age, location and gender. Furthermore, companies can use first-party data to create modern data marts. ... ' 

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