Why It’s Time to Shift to a First-Party Data Strategy
December 6, 2023
December 6, 2023
Third-party data has long been used to drive sales and marketing insights. But the days of relying on it to fuel campaigns and customer experience strategies are coming to a close.
In part, this is due to the phasing out of third-party cookies as platforms make changes to stay compliant with new privacy regulations. But rising costs are also playing a role—and with both the outcomes and margins of third-party data-driven campaigns on the decline, it’s time for a new approach to data strategy.
Unlike third-party data—which is generated by external entities who have no relationship with your customers—first-party data is drawn directly from their experiences with your brand.
Third-party data can complement your first-party data, providing broader context and larger datasets than you can generate on your own. However, it can’t be relied on for long-term results due to its potential for long-term degradation. On the other hand, first-party data can continue providing tangible insights in the long run, even getting better as your data strategy matures.
To understand the full value of first-party data, consider its benefits.
First-party data collection is not subject to web browser changes.
Google’s decision to phase third-party cookies out of its Chrome browser beginning in 2024 has the potential to leave the marketers who relied on them in a lurch, without the steady stream of data to which they’ve become accustomed. Alternatively, collecting first-party data is limited not by the whims of a third party, but by your ability to build and execute a compliant data strategy.
First-party data enables you to provide personalised experiences beyond what’s possible with third-party data.
First-party data includes data points such as purchase history, website interactions, and email or SMS message interactions. When combined with the appropriate data strategy and tech stack, these types of data allow you to create fully customisable customer experiences that transcend platform and device.
First-party data collection aligns more closely with new data privacy laws.
Yes, you still need to get customers’ consent to collect their first-party data. But when you link consent to their customer profiles using a tool like AdFixus, you can easily track their preferences and manage data according to them—rather than trying to do so across the web of interactions that produce third-party data.
As a result, it’s easier to stay compliant with first-party data than to meet your legal privacy obligations with third-party data.
First-party data facilitates personalised advertising.
Third-party data represents an aggregate understanding of your target customers; first-party data shows their activities. Think about it this way—when you can see which site pages your customers have visited, which products they’ve purchased in the past, and which promotional messages have triggered them to click a link, you’re in a much better position to tailor advertisements to them.
First-party data makes scalable customer acquisition possible.
In a related fashion, first-party data can be collected from prospects before you convert them into customers. For example, imagine you run a social media campaign that captures users’ email addresses (as well as their consent to receive marketing messages).
If you’ve brought your data sources together into a central customer data platform, you may be able to analyse each prospect’s activities across multiple channels. From there, you can deliver targeted marketing messaging to them in real-time, improving your ability to scale your customer acquisition efforts.
First-party data helps you create lookalike audiences.
As your audience insights deepen through the expansion of your first-party data collection efforts, you can refine your target customer personas to create lookalike audiences on top advertising platforms. By identifying high-value customer profiles and behaviours that suggest a high intent to purchase, you won’t only improve your customer conversion rates—you’ll also save money on underperforming ads.
First-party data speeds your time-to-insight.
Simply put, better data drives better insights. With access to a robust first-party dataset and advanced analytics tools, you can instantly identify trends in your data that could inform everything from your marketing strategy to new product R&D and beyond. Even better, you can be confident that the insights you’re deriving from your data come from your actual customers—not from the anonymous entities that make up third-party data.
First-party data collection compliance helps you build customer trust.
When properly implemented, a first-party data collection program with all the necessary compliance procedures has the potential to build tremendous trust with your customers. Amidst today’s growing number of high-profile breaches, consumers are increasingly prioritising working with companies that take the privacy of their personal data seriously.
To be clear, you don’t have to get rid of third-party data as you begin ramping up your first-party data efforts. Instead, think of utilising both in a complementary approach that can be strategically aligned to your business’s priorities.
Investing in a first-party data strategy takes time, but the rewards you’ll gain in the form of a robust, yet flexible customer data supply are well worth the effort. Once you have the right technology and processes in place, you’ll unlock the potential for everything from scalable customer acquisition and improved time-to-insight to full digital transformation initiatives.