It’s no secret that the industry is focused on first-party data as a path forward into the “cookieless” future. As third-party cookies are fully sunsetting in 2024, global regulations require increasing permissions for the collection of data. Consumers will take a more active role in protecting their personal information, and advertisers will be left with little more than the first-party data collected from their websites and applications.
But while many are quick to say that “first-party data is the key to success”, executives are left without much guidance for what to focus on and how to be successful. Success with first-party data will confer a competitive advantage for organizations that collect and leverage it. To get the most value from first-party data, organizations can focus on a handful of core principles.
Principle 1: Optimize Collection of First-Party Data
To use first-party data to better understand consumers and optimize marketing activities, first, it must be collected. Optimizing collection begins with optimizing the privacy experience of consumers. According to a study published by Google and Ipsos in early 2023, 49 percent of consumers in the Americas stated they would switch from their preferred brand to their second-choice brand if the second-choice brand offered a better privacy experience.
What does it mean to provide a positive privacy experience? Seventy-nine percent of respondents in a recent Gartner survey indicated that they would like more control over the personal information they provide to businesses and how it is used. A positive privacy experience, therefore, provides the components which support that desire:
- Be clear and transparent about what information is being collected, how it is being used, and which platforms it is shared with.
- Provide the consumer with meaningful choice and control over what is collected and where it is sent.
- Provide the information and control in an understandable and easily executable format.
Beyond the privacy experience, optimizing the collection of first-party data also means improving the ability to collect more.
Principle 2: Control Collection and Distribution
Traditionally, data from digital properties has been collected via tags (or pixels) loading on a website. These pieces of code send data directly to third parties such as analytics and media platforms. While this is an efficient process, it allows for the third-party platform to collect information from the user and the page without the explicit knowledge or permission from the website in question. It also requires personal information (at minimum the user’s IP address) to be sent to the third party, introducing compliance considerations in many cases.
To minimize compliance risk and optimize the value able to be generated from first-party data, organizations should focus on asserting control over the data collection and distribution architecture via server-side tag management. Server-side tag management is an approach where data is sent from your digital assets to a location owned and controlled by the brand. At this location, information can be removed, tested, supplemented, and/or modified before the brand configures exactly what data is sent to what partner platform. The opportunities introduced as a result for things like ensuring data quality, reducing compliance risk, and sending more anonymous data while limiting user information sharing are significant.
Principle 3: Expand Your Conception of “First-Party” Data
Most organizations correctly understand their first-party data to be that which they collect or observe directly from their consumers—data generated from actions like site visits, app interactions, form submits, and purchases. What many brands miss, however, is the data generated from their marketing and advertising activities. This data is generated from your consumers, with your investment, and collected on platforms that you control. By expanding the definition to include such information, it unlocks a whole new realm of possibilities for better understanding consumers and optimizing the advertising activities.
The challenge is that this data lives within the various partner platforms brands employ to execute advertising campaigns. Further, it is often media agency partners that operate within these platforms for the brand. It is important to ensure that ownership of the data properly sits with the brand (it’s the brand’s investment after all) and that the data can be ingested back into the organization’s first-party marketing data warehouse.
Additional requirements for success include defining and enforcing common data taxonomies and structures to enable integration; the architecture in place to ingest the data from various platforms being worked with; as well as use cases for the data clearly defined and documented.
Principle 4: Extract Better Insights
Being the best at collecting first-party data does not confer a competitive advantage. Being the best at turning first-party data into actionable insights and then using those to power decisions does. To get more value, it is crucial to extract better insights.
This starts with organizing and structuring first-party data within an owned marketing data warehouse with inputs from sources such as behavioral analytics, advertising platforms, offline CRM, customer data platforms … anywhere that performance and user information used for marketing use cases lives. With an integrated and structured dataset, it is possible to run queries and understand what has happened in order to inform decisions for what should be done.
The next step in the journey to better insights is to begin to then apply machine learning and AI to the dataset to begin being able to predict what will happen and better understand the hidden patterns in the historical dataset. To take this further, utilize advanced modeling techniques and solutions such as Vertex AI from Google Cloud Platforms to automate the process of applying those insights to actions being taken.
Principle 5: Actively Use It
All the first-party data in the world, all the predictive insights, and all the consumer insights are useless unless they are actively applied and used in the business. Still, too many organizations are reliant upon “gut feeling” and “it worked before” when it comes to advertising and marketing actions. The opportunities for the application and use of first-party data are growing by the day.
Well-structured, integrated datasets can be leveraged via platforms such as data clean rooms to generate even more insight via the use of second-party data. First-party data can be collected and used with new technologies such as Conversion APIs to not only integrate more offline data into advertising optimization but also to collect more signals to mitigate risks related to the sunset of third-party cookies. Insights generated from first-party data can be used as a new lens via which to evaluate and optimize marketing strategies. All opportunities for advantage are only available to those that leverage that which they have collected and analyzed.
First-party data is a critical building block to successful marketing and advertising in the privacy-centric future. As third parties no longer have cross-domain identifiers such as third-party cookies, the power is returned to brands to best understand their consumers. Significant competitive advantage is available to those that extract the most value from the data they are entrusted with by their consumers. Follow the first principles above to outpace the competition.