First-Party Versus Third-Party Data: What You Should Know
We know that more and more marketers are using data to provide insights and steer their marketing strategies. In fact, nearly two-thirds of marketing leaders state that their use of online customer data has increased over the past two years. Seventy percent of them also said that they were planning to make use of more customer data in the coming years, according to the 2018 CMO Survey conducted by Duke University’s Fuqua School of Business.
There is no doubt that data is king and has become an essential part of formulating successful marketing campaigns. While there may be several options available for such data, in the form of first-party and third-party data, the important thing is to choose the one that can be trusted and works well.
Why First-Party Data Drives Results
Both first- and third-party data can be used to create an advertising strategy, but the main thing is to ensure that the data can be verified. Since first-party data comes directly from your target customer base, its accuracy and authenticity are more trustworthy. In fact, relying on third-party data to create targeted ads has see an increased level of mistrust among marketers.
As noted in eMarketer, advertisers should also consider that consumers believe brands ask them for too much information, and they’re growing weary of invasive data practices. Even advertisers who use first-party data must be clearer about the value exchange between their brand and the end user.
Bottomline: Using first-party data is a win-win. As marketers, you are fostering an ongoing relationship with your customers and prospects by better communicating and serving them. But there needs to be a strategy and long-term commitment. In a survey of US digital marketers by Advertiser Perceptions and programmatic agency MightyHive, respondents said they were, on average, tapping into just 47% of their company’s first-party data potential. It takes the right strategy and technological infrastructure in place to activate first-party data at scale.
For marketers with a local strategy, hyper-targeting audiences on a 1:1 basis is critical. If you’re able to convey the right message directly to the targeted base, there is a greater chance of getting a positive response. Besides driving conversions, a more authentic approach builds rapport, trust, and local connections with the community. That alone can be priceless.
Why is the Use of Third-Party Data Declining?
Researchers from Deloitte and Duke University polled 324 US marketers in August 2018 and found that there was a wide range in how worried marketers were about their third-party data usage and privacy. This cloud of uncertainty hovering over third-party data, combined with increasingly stringent regulations regarding the use of such data, such as the General Data Protection Regulation (GDPR), have led to a massive paradigm shift.
Many internet browsers, such as Firefox and Safari, have tweaked their technology to make it more difficult for companies to track consumer activity on the Internet. Social networking giant Facebook has followed suit by removing the third-party data targeting feature from its ad manager.
Due to these drastic measures, third-party data is no longer as easy to collect or access, and if you can do so at all, it will not serve your purpose as well as first-party data. Because third-party data comes from an external source, it can be challenging for marketers to pair the information with the right person. Why take the risk?
How Media Vendors Use First Party Data
We can now call it People-Based Marketing, and it relies on first-party deterministic data. Think about it. You can optimize campaign success with humanized data and focus on the individual rather than the channel. This process eliminates uncertainty and drives your ROI.
When considering using first-party data, select vendors that can aggregate the data, narrow the target, and then overlay over programmatic media, including display, video, social, email, OTT, and more.
Jackie Graziano is a marketing strategist with experience at media companies such as Time Inc., American Express Publishing, The Economist Group, and AARP Media. She currently works at MediaMax, the leading provider of integrated local advertising solutions. MediaMax Network provides geo-targeted print, data, and digital advertising solutions in hundreds of local markets throughout the U.S. and Canada. As the exclusive local advertising partner of Condé Nast, MediaMax has more than 1,000 clients, including national brands, regional marketers, and local companies. She is on Twitter @jsgraziano