5 keys to create value with 1st party data
Digital advertising is shifting from third-party identifiers, like 3rd party cookies, toward a privacy-driven approach. This is due to rising user expectations and has continued to result in additional privacy regulations and restrictions on cookies and device identifiers. Investing in first-party data is a strategy that can help marketers adapt to this fast changing environment.
So what is 1st party data actually? Well, it’s data that you own and collect with direct consent from consumers, gathered through interactions on apps and websites or in response to marketing initiatives (like email and loyalty programs).
Unlike third-party data, which is often available to many different companies, first-party data is unique to your business. When used responsibly and in a transparent way, first-party data helps brands build direct relationships with their customers, create additional value, and boost their advertising performance. Despite its clear benefits, most brands aren’t yet harnessing first-party data’s full potential.
Here are they 5 key to create value with 1st party data:
1. Tailor your strategy to customer objectives
2. Offer customers value in exchange for data
3. Invest in tech and organizational enablers
4. Test and learn to determine activation
5. Refine and validate with measurement
1. Tailor your strategy to customer objectives
What holds most brands back from using data effectively is the lack of a coordinated plan to guide choosing which data to collect, and how to analyze and activate it efficiently. Simply collecting more data does not yield an advantage. Collecting data is only a competitive advantage if you do have a clear strategy for what to do with it.
Brands can overcome these challenges by establishing clear customer goals and aligning them to their own business objectives. These goals can then help you to differentiate between data that is required and data that is nice to have. It is important to create a plan with measurable goals to guide which data you collect and invest in. But it is also important to calculate the cost of acquiring that data (there is no free lunch) as well as related complexities, such as compliance with privacy laws (DSGVO), risks of data breach (hacking), and impact on consumer trust (to close targeting). This should give you a good overview to identify which data to prioritize.
Example:
You aim to drive loyalty and retain your most valuable customers. With that strategy in mind, the next step would be to invest in your loyalty program by making it your primary first-party data source. You could then use the program to provide discounts, exclusives, redeemable points, and personalized offers for loyalty members to increase engagement with your brand and products.
2. Offer customers value in exchange for data
As people want more transparency into how their data is being collected and used online, they are demanding more and more control over their experiences with digital advertising (where have I been/tracked to see this ad?). However, observation tells that when brands show that they are responsible with data and only use it to deliver value through exclusive offers and loyalty programs, then customers are more willing to share their information.
Therefore when you look at your 1st party data strategy, ask yourself if you would give up your own information to receive the advantages of e.g. a loyalty program. Also check if the benefits of a sign up have been easy and clearly communicated to the consumer. Furthermore consent management is a key consideration. If customers experience your brand through a website or app, make sure that consent forms are incorporated into the user experience. Create a strong data governance, manage data properly and ensure your processes guarantee data accuracy and integrity.
3. Invest in tech and organizational enablers
A great starting point for this is assessing your digital marketing maturity and identifying opportunities on how to to increase your maturity further.
Strategic partnerships can also help you uncover the benefits of first-party data. Technology providers and platform partners bring external expertise and a deep understanding of data to better guide your strategy. Often the ideal organizational model is a hybrid approach. Typically this is when a brand takes responsibility for data ownership and develops key capabilities related to data analysis and activation internally. The next step is to determine where capability and knowledge gaps are. Here you can work with a trusted partner to fill these expertise gaps. Keep in mind that adding new technology won’t help you, if you haven’t been able to connect your existing technology and data platforms (silos don't exchange information).
4. Test and learn to determine activation
Once you’ve determined which first-party data is most meaningful for you to collect, and how you’ll collect and manage it, you can focus on how you’ll use first-party data to improve customer experiences.
While many brands aim for one-to-one personalization (high efficiency and performance), the time and investment required to pull it off can be significant (brands also need to consider the factors that affect the degree to which consumers feel comfortable with the level of personalization.).
Therefore, a test-and-learn approach to assess the level of personalization needed for specific audience segments is an effective alternative way to assess which activation type helps you achieve your marketing objectives. The idea is to prove value quickly with narrow use cases.
5. Refine and validate with measurement
The final key to a successful first-party data strategy is measurement. While measuring the effectiveness of the channel where you apply data can help with media optimization, measuring the effectiveness of your data strategy can help you optimize your overall marketing strategy.
Example:
You can use measurement to refine your approach to data collection and management. If you for example optimize towards leads generated on a fair, you might realise with your measurement that the number of leads is high but they are not actionable (been there). As a result you could focus on a more actionable approach like driving customers to microsites online, which allows you to spend your advertising money more efficiently.