First-party data is being referred to as the future of marketing; an imperative resource for brands to flourish. Especially with Firefox and other browser disabling third-party cookies on their browser, it has become essential for marketers to collect first-party data.
On a consumer level, 87% of users are concerned about the way their personal data is being used. And as more people move from offline to online due to the ongoing pandemic, these concerns have increased significantly. With the GDPR becoming a regulation, marketers are now turning towards collecting first-party data at the source that helps them connect with their customers and understand them
But what exactly does it mean by first-party data? Why is it so useful for marketers? How different is it from second or third-party data? In this blog, we will cover all about first-party data and its importance among change privacy laws. Keep on reading –
What is First-party Data?
First-party data is the data that brands and creators collect directly from their audience, customers, and prospective buyers. This data can be collected from sources like websites, CRMs, surveys, analytics tools, and customer feedback.
Broadly, the first-party data is divided into two categories –
Declarative data – This the information that comes directly from the customer, such as the name, age, date of birth, email address, phone number, etc. For example, filling a Google form to participate in a campaign.
Behavioural data – This is the data collected based on how a user behaves when interacting with your platform. For example, the data on the route taken by a visitor to reach a certain page on your website. This type of data can be collected through a pixel or tools such as Google Analytics.
First-party versus Second-party Data
Second-party data is the same as first-party data. However, this data is not directly collected by the company but is taken from someone else. For example, you can partner with a company that has a similar audience as yours so that you can benefit from the data that they already possess. So, a car rental company can buy an airline’s first-party data so that they can offer them relevant car rental offers.
First-party versus Third-party Data
Third-party data is mostly aggregated, anonymized data acquired from different sources by larger, specialized third-party companies. Such types of data are usually sold in segments and are used by marketers for bulk advertising and retargeting purposes. However, unlike first-party data, third-party data is not exclusive to you and your competitors can also purchase it from third-party sellers.
Privacy Laws and The Problem with Third-party Data
Until a few years ago, companies were able to collect data of their customer without them being fully aware of it. However, today’s internet users are much more aware of how their personal data is collected on a day-to-day basis and are more concerned about data privacy than ever. According to 2019 research, 69% of people are concerned about how their personal data is collected online.
Therefore the biggest obstacle in using third-party data is that internet users are now reluctant to share personal information and have started fighting back by blocking cookies, using ad-blocking software, or installing plugins like Ghostery that show who is tracking them and then manually blocking them. The PageFair’s 2017 Adblock Report states that nearly 11% of the global internet population now uses adblocker
What’s more? With Google announcing that it will stop third-party cookies in Google Chrome before 2022 and replace it with browser-based tools and techniques aimed at balancing personalization and privacy and Apple’s Safari web browser coming with new Intelligent Tracking Prevention in Webkit, there is going to be quite a shift in the way data is collected and distributed in the world of digital advertising.
GDPR and Why Third-party Data is Dead
The GDPR (General Data Protection Regulation) bill has changed many things about how companies can collect and use third-party data. Although it is an EU law, it has paved the way for similar laws in other countries (Personal Data Protection Bill, 2019 (“PDPB”) in India) and have started the conversation around data privacy
One of the crucial changes under GDPR is that now consumers are asked for consent regarding the use of their personal data, including cookies. This consent request is usually in the form of a pop-up which the user has to manually approve. The user can also go through the information on how exactly their data will be used before giving (or not) the consent.
Not only that, but the third-party data companies must also take consent with a message that sounds something like “ We want to use your data for third-party data usage and allow other companies to send you offers and track your online behavior.” Considering that most users want to stay away from sales emails or phone calls, it is rather unlikely that anyone would be ticking that kind of box.
All these have made gathering and using third-party data extremely difficult. So, it is not only beneficial but not vital for businesses to modify their marketing strategy to use primarily first-party data. The privacy concerns surrounding first-party data are minimal because the company outright owns it.
Collecting First-party Data
In order to collect behavioural data, you will need to add a pixel/cookie to your website when setting up your website’s analytics. It will send data about your website visitors’ activity to the analytics platform (Google Analytics, Adobe Analytics, etc), and you will be able to collect demographics data, geographic data, device used for browsing, time spent per page, the navigation journey, etc.
As consumers have become concerned about who they are giving their personal data to, marketers have to be creative to motivate an audience to share their personal data. Some of the ways to win audience trust are:
- Give them compensation. In exchange for a prize or gift, consumers are more likely to share their data. For example, an Edutech company offers student scholarship on providing their personal data. This data is then used by the company and partner companies to create marketing campaigns relevant to students.
- Get creative in your marketing strategy. Instead of asking for data, make it a process to achieve something. For example, ask for email ids to be able to download a whitepaper or ask users to fill a survey before they are able to access a particular video.
CDP for First-party Data Collection
The CDP is one of the latest and most advanced data platforms that collects and works on first-party data. It houses personal data of your customers and identifier s such as name, email, date of birth, postcode, address, etc. It is a powerful tool as it not only collects data but structures it, cleanses it, and derives meaningful insights from the data that helps in personalized targeting. In addition, it provides you a closer view of your customer by unifying previously disparate data sets to provide a single customer view.
The advantage of the data in CDP is that it can be shared amongst multiple tools that can use the data for different functionalities. A CDP is able to use static identifiers as well as other source data such as newsletter registrations, customer support tickets, social media data, and stitch all the information together under a single view.
First-party Data – Benefits
First-party data is very valuable for marketers because it is collected directly from customers or potential customers.
- It is qualitative, accurate, and most importantly relevant to your business.
- It helps you gather more insights and knowledge on your audience.
- Data privacy guidelines and GDPR compliance are easier to ensure.
- Marketers own the data and no one else will have the same data as yours.
- It facilitates cost-savings as buying third-party data can be really expensive
- First-time data using CDP can be updated in real-time and thus are really useful for time-sensitive campaigns.
- By using first-party data, marketers can segment their audience for personalized marketing activities.
Practical Use Cases of First-party Data
We all know about how first-party data is used by e-commerce companies to send you a personalized product email. Let us have a look at some practical use case of first-party data beyond personalization –
Tracking Customers Who Went Offline
You have a clothing brand that has both online and offline stores. A user clicks on your online store ad, browse through the products, but does not make any purchase online. However, the customer goes to the offline store and buys the product he liked online. This is indeed a conversion for your online ad. But how will you track this?
First-party data and CDP come into the picture here.
When making payment, the cashier will ask the customer for his email address/phone number. This data is then entered into the CDP platform which will connect data from various platforms to track the customer journey and link it back to the online ad. This gives a much better picture of the effectiveness and ROI of your marketing campaigns.
If you think the creatives for a particular show in your Netflix account are the same as your friend’s, you are in for a surprise. Netflix uses first-party data to create dynamic creative based on a range of different factors, including previous viewing history, viewing time, duration, location, and even intent, not just browser history.
So, if you have watched action movies in the past week, creatives highlighting action sequences will be visible in your movie recommendation section and so on.
First-party Data – Final words
We are sure that after reading the above blog, you are convinced that using first-party data is not only safer but way more effective for your marketing and advertising goals. Especially, with the impending cookie ban and increasing concerns about data security.
To know more about how Cadenz CDP can help you collect first-party data and use it for your business goals, contact our experts.