What Is First-Party Data?
First-party data is data customers provide directly to brands. This includes purchase behavior, email addresses, phone numbers, and preferences. Third-party data hails from a source outside the consumer, such as social media, websites, or surveys.
You can think of the distinction this way: First-party data is like meeting someone and having a conversation. You see their face, and you learn more about them, which you use to establish an overall impression of who that person is. Conversely, third-party data is like hearing about someone you haven’t met through a mutual acquaintance. That person might say something like, “My friend Carol, who lives in Chicago, has been looking for a new brand of coffee beans.”
From there, you learn more about Carol and make assumptions about her. You already know where she lives and that she likes to make coffee at home. Then, as you hear more about Carol, you slowly piece together a picture of who she is, including her likes and dislikes. You may even feel like you know her, even though you haven’t actually met. This eavesdropping of sorts is what brands have been doing online for years — all in an effort to better target ads.
If Carol searches “coffee beans in Chicago,” it’s easy to understand why she might feel uncomfortable seeing personalized ads. She may wonder what data she’s been providing without her consent, leading her to want more control over what she shares and with whom — and how her data overall is being used.
What’s Changing Now?
The good news for consumers like Carol is we’re seeing a push for greater privacy and transparency in online advertising. This includes legislation such as the General Data Protection Regulation in Europe and the California Consumer Privacy Act in the States, as well as sweeping actions against third-party tracking by brands like Apple and Google.
Why Is First-Party Data Critical to a Privacy-Centric Future?
While each brand and piece of legislation is tackling the problem in a slightly different way — and envisioning a slightly different future — one concept is certain: First-party data will become more important than ever before in marketing strategy. That’s because consumers choose to share first-party data with brands and can opt out at any time, making it a privacy-friendly alternative. In addition, first-party data can be connected to consumer profiles to help brands better understand consumers and satisfy their needs.
That’s why savvy companies are building up troves of first-party data well in advance of the 2023 deadline — a recent survey found 52% of respondents have prioritized strategies to collect more first-party data. What’s more, marketers ranked collecting and storing first-party data as a high (58%) or the highest (30%) priority in 2021.
If you’re in that cohort, you’ve come to the right place. In this article, we’ll give you an overview of how to collect and start using first-party data.
Start With Customer Emails
The best place to begin your first-party data strategy is simply to collect emails.
One natural way to do this — especially for ecommerce brands and publishers — is to ask users to register on their websites. Some ecommerce platforms, like Wayfair, encourage email registrations by offering discounts, but they also allow visitors to shop without registering. In the latter scenario, Wayfair asks for an email address again when shoppers save items in their carts. And if that doesn’t work, they ask for an email address once more during checkout.
Other opportunities to capture emails include brand newsletters and shareable content.
Map Out Other Sources of Customer Data
There are numerous sources of first-party data at virtually every customer interaction point. Take, for example, your call center. When customers dial in for support, you can gather information like phone number or location while also solving their problems. This once again helps build a more robust profile of who a particular customer is without relying on third-party sources.
In our digital-first world, it’s easy to forget offline sources of data like in-person transactions. Where possible, don’t forget to supplement online purchase data with in-store sales to give a more accurate profile of a customer’s overall purchase history. Brands with physical stores can consider tapping into the power of beacons, which are wireless transmitters that send signals to nearby smart devices via Bluetooth technology. Beacons can pull information about customer location and in-store browsing behavior and can also be used to push notifications or offers to shoppers.
And thinking outside the box is always on the table. Apps are a wonderful source of first-party data — if you have the resources to build one. If that’s too big of an ask, you can create relevant, valuable content for your audience, such as how-to videos, and post them to your site. By creating content users want to engage with, you increase the chances of gathering more first-party data.
Google recommends offering “something useful or valuable to the customer” in exchange for data, such as premium content or a special offer. This ultimately creates what the search giant describes as “an ongoing value exchange” as both brand and consumer benefit from each other in a perpetual cycle.
Determine How to Store Data
After mapping out the customer interaction points where you will collect data, you’ll have to figure out how to store it.
This is important because safely stored data ensures the ongoing value exchange cited above. It also helps guarantee your brand is in compliance with regulations. This will likely translate into developing internal guidelines, dictating how your brand collects, manages, and uses first-party data. You may even consider using a data management tool to help with standardization and storage.
For its part, Google recommends “defining an explicit data strategy and hiring the right people to manage it,” such as a chief data officer. The search engine also suggests internal teams meet regularly to discuss how they’re using and sharing customer data.
And, per Google, other best-in-class data management practices include using centralized data warehouses, improving the match rate across data sources, and developing in-house measurement algorithms.
Start Using Customer Data to Your Advantage
You can think of collecting first-party data like dating. Consumers may be quickly turned off by a brand that wants a lot of personal information right away. Instead, you want to collect data slowly and purposefully as your relationship develops, much like a human relationship would. This is what is known as progressive profiling.
There are benefits to patience. As your customer data profile builds, for example, you can do more personalized outreach.
Take email. Once you have a customer email and begin messaging them, those emails offer even more data, such as open rates, click rates, and bounce rates. This helps marketers segment their audiences — say, who is regularly opening emails and who is not — and then target those customers accordingly.
Websites are also a great source of behavior, such as where visitors hover over content like text or images, which you can then use to enhance your retargeting efforts.
The same is true of cart abandonment strategies. Use your newly robust customer data profiles to create powerful cart and browse abandonment email campaigns, which actually reflect on-site behavior to encourage recipients to return to the website in question to complete their orders.
First-Party Data 101
Many brands already have some sort of strategy in place to collect first-party data through an ecommerce platform, an email marketing platform, or some combination. (If you don’t, we have some recommendations to help you get started.)
No matter what kind of strategy you’re looking to tap, these ideas will help prepare you to make the shift from third-party to first-party data. As with all significant changes, it may require some work. But in the end, you’ll be better prepared to connect more closely with customers, increase overall conversion rates, decrease customer acquisition costs, and increase customer lifetime value. As always, if you need help along the way, reach out to us here at AdRoll.