First-Party Data Marketing

First-Party Data Marketing: 3 Powerful Use Cases

Effective marketing is dependent on data, when used as a marketing tool it helps businesses gain, retain, and ensure customers are satisfied. Each time a customer logs into digital platforms it helps us understand their behavior better. The plethora of data that is used can include some of the following, but keep in mind it is not a complete comprehensive list: 

  • Social Media
  • Email automation tools
  • Retargeting
  • SEO tools 
  • Tag manager
  • Web analytics
  • CRMs
  • Advertising campaigns
  • Paid Search

When we look at data the value comes in the type that is collected, not every piece of data is equal.  First-party data is by far the most useful and valuable with marketing goals in mind, so how do we know which piece is most effective for our goal?  Let’s break it down:

Data comes in three forms first-party, second-party, and third-party the following is a quick glance at the differences. 

First-party data is direct information from the customers/users, it is collected in a myriad of sources such as: 

  • web and mobile analytics sourced by the advertiser
  • CRM (customer relationship management systems)
  • transactional systems
  • newsletter and newsletter subscription
  • various other sources with similar goals and systems

Second-party data is simply first party-data collected by someone else. For example a large tourist attraction could purchase area hotel information to target who will be in the area to offer deals and incentives to spend their time at their attraction.

Third-party data is data obtained from various sources then sold to you by a third party. 

Third party data poses a predicament. It has its benefits, however there are serious concerns for both the sides of the equation. On one hand third-party data does an effective job when you look at how it is typically used.

  • Enhancing media buys: it allows advertisers to understand behavior and target using behavioral  and contextual information, think prospecting or brand awareness campaigns
  • Look-alike modeling- this allows a sort of piggy-back scenario so advertisers can find customers who are “similar”
  • Audience Extension- income can be generated by allowing publishers to reach far beyond any sort of limited web presence

The predicament arises when evaluating the negatives of using third party data: 

Low accuracy and no transparency: third-party data is a compilation of information from different sources and data sets. As the purchaser of this data you are not privy to how or sometimes even who collected the data. This means the data can be just wrong and or outdated so essentially useless in the fast paced world of marketing.  Also, it must be keep in mind that the data purchased does not constitute an exclusive contract so there is no way of telling if you aren’t targeting the same audiences as a competitor. 

Privacy concerns: The use of Intelligent Tracking Prevention is now an embedded feature in Webkit,  the open source web browser engine responsible for powering Apple’s Safari. This feature, released in Safari 11 and iOS 11, aims to protect their users’ privacy by changing the way Safari handles the cookies of first-party data. 

This feature essential is proof that internet users are more reluctant to share information about themselves with online advertisers.  Plugins like Ghostery allows these users to show them who is tracking them and block them.  Accompanied with ad-blocking software this shows a savviness developing by internet users to protect what they may feel is personal information. 

After the implementation of Intelligent Tracking Prevention in 2017, Citero, an ad-retargeting company, announced that ITP had cost them $1M in the third quarter with a projection of greater loss in the 4th.  This demonstrates a dynamic shift in the world of digital marketing, the balance of power is in question 

Legislating first-party data: GDPR or General Data Protection Regulation, is an EU law but the effects could not just affect any company doing business in the EU but could set a precedent that potentially could have far reaching effects. 

GDPR again shifts the power to the internet user, under this law a consumer has to consent to their data being used, including cookies and pixels.  The most effective method to achieve this is for the companies to use a pop-up where the consumer must click on the option to use data, and since there is no incentive to do so, the most likely outcome is to deny access.  

What’s more is that the effects of GDPR is retroactive.  So any data collected prior to consent of the consumer is unusable, even by a third party aggregated source.  Essentially any data obtained without the click of that consent pop-up is useless.  Now is the time to start revamping your marketing strategy to use first-party data primarily. 

Core Benefits of First Party Data:

It provides a better customer service experience: since first party data is obtained with a consumer that has a direct relationship with the brand either as a customer or potential customer the data then has greater accuracy and relevancy.  According to a report published by Signal customers had substantially better experience in many aspects, here are a few of their findings:

  • 74% said first-party data gives great insights into their customers
  • 64% pointed to first-party data as driving the greatest increase to their customer lifetime value
  • 62% found that first-party data causes the highest lift among their data sources
  • 68% selected first-party data as the easiest data investment to justify financially

Additionally first-party data is much more privacy friendly than any other source.  It is the gold mine for marketers because consumers are more likely to give you data if they understand how it is going to be used such as customizing content, thus gaining confidence from any consumer. 

With this information in mind how can it be utilized in the most effective and practical way? We will exam three different methods:

Personalized automation email marketing: As a small boutique owner, for example, without using first-party data you may base your email marketing campaigns for just new arrivals to reach out to your consumers.  However, if as an owner you marketed your business with the use of first-party data coupled with tools such as Customer Data Platform you would be able to hone your email notifications because you would know Customer A is only interested in childrens clothing, but Customer B is looking for shoes thus presenting opportunities for a more personalized and effective marketing method. 

Personalized Onsite Service: Many marketers need to personalize areas of their websites to identify specific niche groups to cater to.  Without the use of first-party data this is essentially impossible.  This is where with the proper web analytics a website dedicated to providing worksheets and activities for teachers could identify grade level and subject so that relevant content was personalized in customer contact.  The knowledge of Ms.Smith who downloaded 2nd grade activities could receive messages asking her to review the products and then suggesting additional resources.  It provides the sense that you know your customer on an individual basis, which is a more effective method. 

Dynamic contact: first-party data allows a marketer to see the specific foreseeable needs of their consumers and provide messages tailored to a foreseeable need.  

With the above examples of how first-party data is not only a more effective marketing tool but also having a full grasp on the predicament that third-party data usage presents, We hope it will enlighten your marketing plan and provide some change that benefits you. 

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