The Rise of First-Party Data: Why Quality Matters Over Quantity

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For years, digital marketers have paid hand over fist in the digital gold rush for data. Instead of a tangible product, tech companies earn millions in revenue from the data they collect on previous, current, and future digital consumers. But digital marketers seeking to gobble up as much data as they can for their campaigns — while not stopping to consider the source of or methods used to collect it — are taking the wrong approach. The age-old mantra of “quality over quantity” has never been more relevant in online advertising, and marketers must quickly and fully embrace first-party data or risk their digital campaigns (and bottom lines) falling flat.

The primary reason to use first-party data over third party data from data marketplace platforms is simple: It’s better. Publishers, apps, and ad platforms alike can gather first-party data directly from their audiences and customers, whether that data be purchases, app downloads, in-app actions, social media interactions, or subscriptions. This data comes directly from the source, making it as precise and accurate as possible. This is in stark contrast to third-party data, which is aggregated from multiple platforms and combined into a larger data set where buyers generally do not know the exact sources of their data.

For example: Instead of using a third-party list of “shoppers in cold regions” patched together from a variety of sources, an online clothing retailer can see which browsing customers are searching and/or purchasing winter clothing — on their own site. This way, they avoid using third-party data that is available for purchase to willing buyers, including their competitors. They gather their own audience intelligence instead of having to share it.

The owners of first-party data not only have the most usable data at their fingertips but are also continuously adding and refining their data as their users continue to engage on the owners’ platforms. Once the processes to collect first-party data are set up and launched, it becomes the gift that keeps on giving.

Another way that access to first-party data gives brands and companies an advantage is recency. First-party data can immediately be synthesized and incorporated into marketers’ campaigns. If an online shopper purchases a brand-new winter coat online, that piece of data can instantly be incorporated to make sure that customer no longer sees advertisements for winter coats across social media and app platforms. Or at least until next year. On the other hand, third-party data is often weeks old, if not older. Outdated data can lose its value quickly, especially in crunch periods like the holiday season for e-commerce retailers.

First-party data also reduces the concern over an extremely important issue for digital marketers and consumers alike in 2019: data privacy. The GDPR and CCPA are preventing data collection at scale without consent, which is a way many third-party data providers have previously collected their data. Facebook stopped allowing third-party data to be used by advertisers last year, and Twitter followed suit this past summer. Many companies have stopped incorporating third-party data into their digital advertising strategies, especially in Europe, where the GDPR requires explicit opt-ins for data to be used in marketing. In affected regions, first-party data’s quality advantage can also be applied directly to its actual ability to be legally used in campaigns.

First-party data also gives publishers the distinct advantage of being able to create their own advertising infrastructure, a so-called “walled garden.” These walled gardens allow publishers to utilize their first-party data and services, vetting and allowing small- and medium-sized businesses to advertise on the publishers’ platform. These allows publishers to monetize their app/website/platform with advertising dollars, while also giving them control of their data to ensure it does not fall into the hands of advertisers with unsafe practices or inappropriate content.

The ways marketers acquire and use data change constantly. But as accuracy and privacy concerns linger for digital advertisers, the integration of first-party data into any successful digital marketing campaign will become an increasingly vital best practice.

Joanne Joynson-Hewlet is CEO of Pocketmath.