Potential Risks for SMBs: Examining Third-Party Data Loss Statistics
The privacy debate poses a threat to SMBs, as they may face challenges accessing valuable third-party data, impacting their ability to leverage big data for growth and success
With the decline in popularity of third-party cookies, advertisers are looking for new ways to target ads. This has led to the rise of retail media networks and other solutions that rely on shopper data and first-party data. However, small and medium-sized businesses (SMBs) may not have the same advantages with these new tools. UpCity's recent study found that almost 90% of SMBs are concerned about losing access to third-party data. Breaking it down further, 89% of businesses with 100 or more employees and 82% of businesses with fewer than 100 employees share these concerns. Google's plan to phase out cookies in January, along with increased legislative scrutiny of consumer data acquisition, is adding to the pressure and will be an important topic in 2024.
Small business, big data
A survey of 300 marketing analytics professionals in small and medium-sized businesses was carried out in October of this year using Pollfish. The respondents for the survey were selected based on their roles in managing analytics and data.
SMBs are increasingly embracing data collection and analysis for various reasons, as reported by UpCity. Among the survey respondents, 70% use data for more targeted campaigns, 59% for improved market forecasting, 57% for market segmentation, 36% for attribution modeling, and 34% for A/B testing.
The most important types of data for SMBs, according to the survey, are return-on-investment (ROI) at 47%, customer lifetime value at 36%, and customer acquisition cost at 34%. Additionally, 31% of respondents prioritize conversion rate, 29% focus on website traffic volume, and 28% consider engagement metrics essential.
Although data has its advantages, it also comes with significant expenses. According to reports, 13% of SMBs invest $901 or more in first-party data each month, while only 10% invest the same amount in third-party data.
In terms of return on investment, first-party data proves to be more lucrative compared to third-party data. A majority of SMBs, 60%, see an ROI of $30 or more for every dollar spent on first-party data, whereas only 50% achieve a similar return with third-party data. Additionally, 10% of respondents experienced an ROI of $0 or less with third-party data, compared to just 2% with first-party data.
Collection starts now
As the shift to first-party data continues, smaller companies may face challenges in accessing and collecting this valuable information due to the associated costs. Despite this, the UpCity report emphasizes that SMBs should not delay in investing in first-party data, which offers distinct advantages over third-party data.
In the coming years, digital marketing agencies could be essential for SMB marketers. According to a survey, 92% of respondents who use third-party data seek assistance from digital marketing agencies, with 56% already doing so and 36% planning to do so in the next year.
SMB marketers have a valuable opportunity in data sharing. While small businesses may not have the data resources of large corporations, sharing data can enhance their capabilities. According to a survey, 47% of SMBs currently share their data with other SMBs, and an additional 34% are planning to do so. Additionally, 61% of SMBs are already investing in software for data assistance, and another 32% plan to do so in the next year. Furthermore, over half (47%) of respondents have hired a freelance marketing agency or consultant, and 42% plan to do so in the next year.
