First-Party Data: a paradigm shift

What is First-Party Data?

Also known as “First-Party Data”, First-Party Data refers to the data collected by the company about the customer. The information is comprehensive and can include everything from purchase history to the customer’s interaction with the company’s website or application. This process is done through its channels, without the involvement of a third party.

 

And there are benefits for both parties!

 

On the one hand, companies get valid information directly from the source. The data is collected through websites or social media surveys. On the other hand, customers get the goods and services they are looking for. 

What kind of information can we find in primary data?

– Demographic information (gender and age, for example);

– Customer behavior on the website or application;

– Customer comments on social networks;

– Data collected from questionnaires;

– Customer purchase history;

– Information recorded in the customer’s management software.

However, there are other sources of information.

Source: Digital Marketing Institute, 2022

Second-Party Data refers to data collected by companies in a partnership that share their customer information for their mutual benefit. This means that your data is collected by one company, which shares it with another. The latter will access the information without having your direct permission.

In addition to these, there is also Third-Party Data. Here, data is collected through various sources. Once aggregated, the data is sold as an information package. In many cases, the companies that sell the information are not always the ones that collect it.

Given that there are several sources of information, why is First-Party Data gaining ground

The growing popularity of primary data

According to a study conducted by Cisco, data handling is related to consumer trust.

Source: Cisco – Consumer Privacy Survey, 2022

81% of respondents said that data management is a reflection of how the company views its customers. Moreover, they consider that transparently presenting information is the best way for companies to build a relationship of trust with their customers.

Other studies show consumers’ discomfort with data processing. More than 80% of respondents feel they have no control over the data collected. In this sense, a study conducted in the United States revealed that 86% of consumers have already tried, in some way, to reduce their online footprint.

This data demonstrates the public’s apprehension, as well as one of the reasons for the growing popularity of First-Party Data.

Through First-Party Data, companies transparently present how they collect and use the information provided by consumers. In addition, they reduce the costs of this process and ensure compliance with current legislation. For consumers, it is a way to control the information they share.

For companies, this conjuncture demands creativity and the ability to adapt. According to a study conducted by Google, feelings of security, transparency, control, and usefulness are essential to building a relationship of trust.

In this sense, consumers value companies and brands that keep their data, without sharing it with third parties. In addition, they prefer entities that clearly explain how they will use this information. Thus, companies that comply with these requirements will be more likely to secure loyal customers.

Once a relationship of trust is established, consumers will be more comfortable sharing their data. And here is the golden key for marketers: create a personalized shopping experience! This way, you can reach interested customers and increase the likelihood of conversion.

The increasing use of First-Party Data goes far beyond its advantages. To understand how we got here, let’s look at the current context.

Cookies

Cookies are small files that a website downloads onto your computer or smartphone to track your online behavior and remember your preferences. While some cookies are essential to the website’s operation, others are only intended to collect information for commercial purposes.

Source: Vecteezy

Por este motivo, as cookies são vistas com apreensão. 

A study by Global Witness and YouGov revealed that 57% of respondents do not want their data used for personalized marketing campaigns. In addition, consumers are aware of the increase in security breaches related to data protection.

For many, the most disconcerting thing is that this activity is invisible to the user! 

Have you noticed that after researching your next vacation destination, in the following days, you are presented with suggestions for hotels and activities in that location? Yes, we are sorry to inform you, that your device has been flooded with cookies!

The indiscriminate use of cookies has put pressure on governments to ensure consumer privacy. Thus, laws such as the General Data Protection Regulation (GDPR) or the California Consumer Privacy Act (CCPA) have emerged.

These regulations have a global scope. That is, any company, regardless of its location, is required to comply with these regulations if it retains information about European or Californian customers.

The paradigm shift

Changes in data management policies have led companies, such as Apple and Google, to redefine their products and working methods.

Source: Vecteezy

Google has shocked the world by announcing the deletion of cookies from all of its browsers. This means that companies can no longer collect data without customers’ knowledge.

For 41% of marketers, the biggest challenge will be to collect information that accurately portrays their audience. Therefore, marketers who used to use cookies for retargeting campaigns are forced to find a new strategy.

However, Google later reported that not all cookies will be banned.

By only deleting Third-Party cookies, Google will give precedence to First-Party cookies. That is, browsers will no longer collect information for third parties and will only use cookies expressly authorized by users.

Breaking barriers

Privacy issues and the application of restrictive laws in data management have a colossal impact on digital marketing. So, faced with a hostile context, how to overcome these obstacles? 

There are several alternatives, and one of them is First-Party Data!

How to collect primary data?

This is the first step to a ruthless marketing strategy. Here are some examples of the most commonly used techniques.

• User registration and loyalty programs

Asking a customer to register on the website, or join a loyalty program, allows the company to collect detailed information in a few seconds. The challenge is to convince the customer to register. In many cases, offering a discount on a future purchase or newsletter subscription can be helpful.

• Questionnaires and forms

To get to know the customer better, the best strategy is to question him directly. By asking the right questions, you can get detailed information firsthand.

• Customer feedback

In addition to reflecting the customer’s satisfaction with the product or service, they are also a powerful source of information about the customer’s preferences.

• Content Sharing

The content we share on social networks reflects what we think. For businesses, sharing content is an opportunity to learn about their target audience and identify niche markets.

• Log in with Google or Facebook account

In addition to facilitating customer access to website content, companies have quick access to details such as name, interests, or location.

How to use First-Party Data?

First-Party Data provides detailed insight into the customer profile. This allows companies to segment their target audience, map the customer journey, and personalize the customer experience. However, what is the best way to achieve these goals?

• Optimize the focus of the strategy

When we try to get every customer, we end up getting none. That is a fact! Therefore, a marketing campaign must have a focus. A specific audience to whom it is aimed.  So it is essential to find a balance between directing campaigns to the target audience, without violating their privacy.

• Remind consumers

According to a study by the Baymard Institute, the online shopping cart abandonment rate is around 70%. Through primary data, companies have the opportunity to encourage their customers to return and complete the purchase. 

• Build a relationship of trust

Consumers evaluate a company’s integrity through comments from other customers. About 70% of consumers review other customers’ comments before completing a purchase. Therefore, it makes perfect sense to leverage this information to gain new customers.

• Personalize the customer experience

Primary data provides in-depth insight into customer behavior, preferences, interests, and location. Using these details allows you to design marketing strategies tailored to customers’ needs and desires.

• Define the customer journey

Through First-Party Data, companies can characterize the entire customer journey. Mainly to understand when and why they move away from the brand. All the information collected can be used to redefine the points of contact with the company or to contact the customer at the right moment in the journey.

• Create Customer Profiles

In each communication channel, a single customer presents several different profiles during contact with the company. Primary data allows you to aggregate all these profiles to achieve a global view. This makes it easier to understand customer motivation across different channels and devices.

How to measure the success of First-Party Data?

The last step in the First-Party Data strategy is to measure its effectiveness. This is a continuous process, to optimize the customer experience and the quality of the information obtained. Thus, to evaluate the success of the data collection strategy it is necessary to periodically review the tools used.

The Future of Data Management

For decades, the unregulated use of Second and Third-Party Data has caused consumers to transfer ownership of their personal information to companies. Fortunately, this trend seems to have its days counted.

Source: Vecteezy

In this sense, to protect their privacy and ensure data ownership, consumers can rely on blockchain technology. Similar to what already happens with cryptocurrencies, this technology allows tracking the route and use of personal data at any time.

The creation of data protection regulations has played an important role in this topic. 

According to a study developed by Gartner, it is predicted that by 2023, 65% of the world population will be guaranteed some form of privacy protection regulation. In this sense, it is expected the creation of legislation on data processing in other regions of the world, besides Europe and California.

Another major trend in data management is the use of Zero-Party Data. In essence, Zero-Party Data refers to data intentionally provided by the customer to a company. The main difference to First-Party Data is that the information collected is not deduced from the customer’s behavior on the website or application. It is self-reported information. 

In recent years, this method has become popular among marketers. In this way, they ensure compliance with data protection regulations and enable precise segmentation of the target audience.

From the consumer’s point of view, it has never been easier to access information held by companies. To facilitate this task, Google has developed the My Ad Center service. The goal is to give consumers more control over their advertising preferences. In addition to managing their privacy, consumers will be able to customize ads by topics or brands.

We all know that the future is unpredictable. However, one thing is certain: data management will keep pace with technological development. Whatever direction is taken, protecting consumers’ privacy will be the main focus for companies, governments, and consumers themselves.