What is First Party Data and How To Harness It For Your Business - AdMarketing Titan

On January 4, 2024, Google Chrome started a new feature called Tracking Protection that will restrict third-party cookies by default in the browser. 

This is huge news, especially since third-party cookies have been a fundamental part of advertising for nearly 3 decades. Now, with Privacy Sandbox, Google has decided to phase out third-party cookies. 


Fun fact, Apple Safari started to reduce third-party cookie capabilities before Chrome. 


first-party-data

What is First, Second, and Third-Party Data? 

What is First-Party Data? 

First-party data is the data collected by businesses from their customers and audiences. It included data like demographics (age, income, location), Social Media Engagement (likes, shares, comments), website and app behavior, and so on. 

 

 

What is Third Party Data? 

Third-party data is information that is not gathered directly from the company but instead taken from third-party data sources. Then businesses use the data to get the wider picture of our interests, habits, and behaviors, often for targeted advertising or marketing. 

 

 

What is Second Party Data. 

Data that belongs to someone else is sometimes referred to as first-party data. Any data collected by your prospective business partner and shared with you will become your second-party data, which you can use to target audiences or enhance your database. 

 

 

Why did companies use more third-party data? 

The companies have traditionally relied heavily on third-party data for marketing and to find new and potential customers. But increasingly due to companies like Google and Apple focusing more on the privacy of the customer/people, the use of third-party data is increasingly being restricted due to privacy concerns and regulations. 

 

 

Granular Targeting and Segmentation 

As third-party data provided detailed information about the consumers on the internet, such as demographics, interests, and consumer behavior, it became easier for companies to target specific consumers at a granular level. They could reach those consumers who they could figure really would be interested in the products and services that the company offered. 

 

 

Cost Efficiency and Improved Efficiency 

Every company might not have the resources to gather and maintain its data infrastructure. In that case, third-party data can be purchased from a variety of sources, which can be more cost-effective than collecting and maintaining data by themselves. 

 

 

Access To New Data Sources 

Companies were able to purchase consumer data from data merchants/brokers/providers at a fraction of the cost of what the data might be valuable. This data was then studied and then used by companies to create strategies for segmenting and targeting the consumer.  

 

 

Competitive Advantage 

Companies that were able to effectively use third-party data were effectively ahead in the race of targeting the consumer than those who didn't use third-party data.  

 

 

This is because they can target the audience more effectively and make more personalized experiences and services sometimes, without the consumer giving out prior information. This also helps companies with the pricing of the product and product development. 

 

 

 

The Problem with Third-Party Data 

According to the Pew Research Center, 81% of consumers are concerned about their data being kept private by online entities.


PI-2019-11-14-privacy-0-02-1

 Credits: Pew Research Center


Often, there is personal/health information that the consumer might be comfortable sharing with other third-party organizations. 

 

The use of third-party data is becoming increasingly restricted due to privacy concerns and regulations such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in the United States. 

 

First Party Data 

First-party data, as said, is the data that is requested from the consumers directly and is essential to get a wide picture of an individual customer.  

 

Why is the first party data important to companies: 

 

More Reliable: As businesses collect their data, they can be sure that it is more reliable than the data they purchased through a third-party vendor. Third-party data, on the other hand, can be outdated and unreliable. 

More Relevant: First-party data is specific to a business's customers and audience, so it's more likely to be relevant to their marketing and advertising efforts. 

Gives Businesses More Control: When businesses can collect their data, they have more control over how it's used.  

Personalization: First-party data can help companies create more personalized advertising experiences for consumers. 


For example: The business can use the first-party data to send personalized and targeted emails and recommend products to a specific consumer as they know their interests. 


Implementing a First-Party Data Collection Strategy 

First part data is important for businesses to provide personalized experiences for their audience, but how would the businesses implement a first-party collection strategy: 

 

  1. Defining Your Goals and Objectives: 

Every strategy starts with a research phase. 

 

What do you want to achieve with your first-party data?

  

Do you want to improve customer retention, drive sales, personalize marketing campaigns, or gain deeper audience insights? 

 

Customer Retention: Increasing the customer’s preferences by understanding their preferences and behavior. 

Drive Sales: Utilizing data to optimize sales processes, identify upsell opportunities, and enhance the overall customer experience. 

Personalize Marketing Campaigns: Tailor marketing efforts based on individual customer data to improve relevance and engagement. 

Gain Deeper Audience Insights: Enhance your understanding of your target audience for better product development and marketing strategies. 

 

While these are some of the common goals, some may not align with your goals. 

 

  1. Identifying the Already Existing and New Data Sources 

Refining and understanding what you have. 

 

You might already have a social media following or an email list. 

 

Existing Data Sources: This data may include CRM systems, transaction records, customer support interaction, and so on. Also examining social media interactions and email interactions to gather customer data. 

New Data Sources: Implementing new consumer surveys according to the goals set to gather direct feedback. Utilizing web analytics tools for monitoring online behavior. 

 

 

  1. Setting Up Data Privacy and Security Measures 

Setting Up Data Privacy: Security is a big concern both for consumers and for organizations. 

 

Ensuring that the data collection tactics comply with the GDPR and CCPA.  

 

It's also important to communicate the privacy policies to the users for better transparency. 

 

Data Encryption: Implementing robust encryption methods to protect data during storage and transmission. 

 

 

  1. Choosing the Right Data Collection Tools 

Selecting a CRM system aligned with the business needs that integrates well with other tools. Opting for analytics platforms that effectively interpret and visualize data, ensuring compatibility with the existing infrastructure and ease of use for the team. 

 

 

  1. Developing Engaging Data Collection Strategies 

Designing transparent opt-in processes, clearly communicating the value of data sharing to users.  

 

Incentivizing participation by offering discounts, exclusive content, or loyalty rewards, and making the data collection experience seamless and enjoyable for users. 

 

 

  1. Analyzing the Collected Data 

Segmenting data into meaningful categories for targeted analysis. Identifying patterns and trends within specific customer groups, and conducting behavioral analysis to understand preferences, pain points, and engagement patterns.  

 

Data can be used to predict future behavior and tailor strategies accordingly. 

 

 

  1. Refining the Strategy 

Continuously monitor the effectiveness of your data collection strategy, keeping track of changes in customer behavior and industry trends.  

 

Establishing feedback loops with customers to gather insights on the data collection process and iterate on the strategy based on feedback and evolving business goals. 

 

How Companies Implemented First-Party Data Strategy 

Netflix 

Netflix utilizes viewing history and search data to recommend personalized content, ensuring viewers discover shows and movies they're likely to enjoy. 


Spotify 

It's safe to say the Spotify understands what song you would like the most is spot on. This recommendation system works by using the data (including listening habits, playlist additions, or removals) they collect from the app to train the algorithm about possible songs.  


Nike 

Nike, even for a massive brand like them, used their app Nike Run Club to collect valuable customer insights and decide which designs would be adopted more and what items to stock in which stores. 


Tools For Collecting Data 

Even for collecting first-party data, there are various tools for collecting the data. 

 

Web Analytics 

Web Analytics online tools like Google Analytics (free) are widely used by almost all websites as their primary source of understanding and collecting valuable feedback on the best-performing pages on their website, as well as their user's/readers' demographics and other information. 

 

Another tool to mention is Hotjar. 


Customer Relationship Management (CRM) 

Famous CRM software that helps are HubSpot and Salesforce help in automation, managing data, and predicting future actions. 


Lead Capture and Forms 

Tools like OptinMonster and Unbounce help in capturing leads, gathering information, and collecting customer feedback about your business or certain products, which is super useful. 


Live Chat 

Tools like Intercom and Drift can capture user information and preferences during conversations. 


Social Media Management Tools 

Hootsuite and Sprout Social can track audience demographics, engagement, and brand sentiment on social platforms. 


Loyalty Programs 

Reward customers for data sharing and gain valuable insights into their purchase habits and preferences like Starbucks Rewards and Uber Rewards. 


Conclusion 

Moving forward, the first party, with advancements in AI and data processing, is surely going to be a primary source of information for small businesses as well as large corporations.  

 

It helps create personalized marketing campaigns and create personalized customer experiences.  

 

Creating more meaningful connections with customers only helps get more conversions and revenue for the business. 

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