First-party data: why is it important for marketers?
Brands and media have increasingly felt the need to collect first-party data over the years. In 2017, The Economist rightly wrote: “The world’s most valuable resource is no longer oil, but data.” In 2019, it became a need for advertisers and publishers as third-party cookies’ slow demise had started with Firefox disabling them on its browser.
On a consumer level, a study from Verizon Media and IPG stated that 87% of consumers were concerned about how their personal data is being used. Furthermore, and as we’ve seen during the pandemic, these concerns have been increased. Businesses and individuals have shifted their behaviours from offline to online in order to stay connected.
With the GDPR and ePrivacy Directive (soon to become a regulation), marketers have their interests in collecting data directly at its source: their audience. Opt-in and first-party data are playing a role to help marketers understand and connect with their consumers.
But what is first-party data? What are the differences between first, second or third-party data? Why is data so important? And why is it useful to marketers? In this article, we’ll answer all your questions about first-party data and beyond. Keep on reading.
What is first-party data?
First-party data is the data directly collected by businesses on their audience, customers and prospects. A simple form with opt-ins allows you to collect and process their data but not only! We’ll explain to you how later on in this article.
There are two types of first-party data:
- Declarative data, which is your audience’s self-reported data: information such as the name, first name, email address, country of origin, etc. Any information that the visitor will give you through a form or an interactive marketing campaign, for example.
- Behavioural data, collected on the actions and activities of a visitor on your website, for example. You can collect this type of data through a pixel or a cookie, installed on your website to track what the user is doing while browsing. The most common tool to analyse this type of data is Google Analytics.
The difference between first and second-party data
Second-party data is someone else’s first-party data. For instance, you may contract a partnership with a company that collects data on its own audience. Both your audience and theirs have common grounds, which means the data received from your partnered company will provide valuable information to the data you already possess.
Second-party data is similar to first-party data, but it comes from a different company and a different source.
Whether it is your first-party data or your partner’s, businesses have to comply with the GDPR. Make sure that you have the right consent for the right data usage. To know more about consent and GDPR in the context of data collection and transmission, please refer to our ebook.
The difference between first and third-party data
Third-party data is mostly aggregated data, cut into segments and anonymised, purchased from larger, specialised companies that are not the original collectors of that data. Marketers are usually using this type of data for advertising and retargeting purposes. However, third-party data isn’t collected on your usual or similar audience, and is also available to your competitors.
Third-party data is usually used to enhance your own first-party data in order to expand the reach of your messaging, discover new audiences or increase the precision of your targeting. But with the demise of the third-party cookies, used by aggregators to collect data on companies and media websites, it will be more and more difficult to use third-party data within your advertising strategy.
First-party data: why is it so important?
According to a study by Quantcast and Iligo, 65% of the respondents say first-party data is the most reliable data. The point of focusing on this type of data is pretty obvious:
- It’s directly collected from the source, which allows you to know it’s accurate, qualitative and relevant to your business;
- Privacy and data protection are easier to ensure;
- Marketers own the data they’re collecting directly from their audience;
- Money-saving, whereas purchasing databases from third companies can have a considerably higher cost;
- It allows marketers to get straight insights into their audience: getting to know them is then easier.
Given that the European Union has put a data protection regulation in place in May 2018 (GDPR), brands and media have understood the importance of first-party data. After Google announced the scheduled end of third-party cookies on Chrome by 2022, advertisers are looking for a solution to make up for its loss.
The digital advertising business is a highly competitive one: advertisers increase their search efforts to break out of the pack with more accurate and more qualitative data. They are often willing to pay the price if the media can offer them effective targeting. Little qualitative data will always be worth more than a lot of imprecise data.
According to a survey conducted by Campaignlive, 96% of advertisers say they are ready for a world without third-party cookies. However, most respondents report using less than half the potential of their first-party data.
How can you collect first-party data?
We have previously explained first-party data collection and processing, but let’s summarise it a little.
Behavioural data is the easiest to capture. When you’re setting up your analytics, you may have been asked to add a pixel or a cookie on your website. This pixel will then send data about your visitor’s activity on your website to your analytics platform. Depending on the tool you’re using, the most common ones being Google Analytics and Adobe Analytics, you will be able to collect:
- Demographic data;
- Geographic data;
- The device they’ve been using to browse your website;
- The time spend on average;
But marketers will have to be creative when it comes to collecting declarative data. As consumers have changed their behaviours regarding whom they’re giving their personal data to, they have to prove they can be trustworthy. There are many ways to motivate an audience to share their personal data:
- Give them compensation. For example, a Japanese channel offers students the opportunity to pay for their coffee by providing personal data. This data is then transmitted to partner companies. These “sponsor” companies pay for coffee in exchange for surveys or other solicitations.
- Include interactivity in your marketing strategy. Engaging and collecting data about your audience can work together by using gamification in your strategy. In exchange for a prize or entertainment, most consumers are more likely to share their data. It’s then up to the brand or media to add an opt-in to be able to send them personalised emails afterwards.
How interactivity can help you collect first-party data
Let’s take a closer look at how interactivity can help companies collect first-party data.
The objective was to promote the brand’s new product, Purina Dentalife, a chewing stick for dogs.
For twelve weeks, dog owners could enter the photo contest by posting a photo of their dog with one of the brand’s sticks and answering a short questionnaire. A question about the dog’s name was asked in the form, in which two opt-ins were also present to collect consents for future communication. One opt-in to receive Purina’s newsletter, and another opt-in to receive Dogofriends’ newsletter.
The gamification campaign was promoted through online (Facebook ads, newsletters, influencers,…) and offline (flyers, samples, internal promotions) channels, ensuring greater visibility with consumers.
The data collected in the photo contest were used to personalise the commercial messages. Each email sent to the participants was personalised with the name of the dog in the subject, previously collected via a form. The brand found that, thanks to this customisation, the opening rate increases by 10% on average… while being GDPR compliant.
To ensure the proper use of the data you collect through interactive marketing actions, we recommend that you integrate them into your data management tools, such as your CRM.
How can first-party data be useful to marketers?
First-party data is valuable because it has been collected directly on the users marketers want to reach. It’s qualitative and accurate, and businesses know it’s also relevant to them. More than that: businesses own first-party data. So what uses can marketers do with it once collected?
1. Get insights about your audience
Collecting first-party data helps you gather more knowledge on your audience. With a simple quiz or personality test, marketers can answer so many questions about their customers and prospects: what do they like or dislike? Which product would they like to purchase? And with a cookie dropped on their browser when they visit your website, you’ll also be able to know where they’re from, the time spent on your pages and where they go after leaving your website.
2. Comply with the GDPR
As marketers are the owners of the data they’re collecting, they can make sure to comply with the GDPR. By adding an opt-in to your forms, you will be able to collect all necessary consents. Don’t forget to consult your company’s DPO and follow your company’s guidelines on the topic.
→ Read more about how Qualifio can help you be GDPR compliant.
3. Improve your retargeting strategy in advertising
First-party data is used for retargeting, nurturing and during the sales process. Marketers can create new retargeting strategies based on their improved customer knowledge. They learn more about their ideal customer, are able to reach out to new audiences through different channels using their first-party data list.
4. Create personalised messaging
By collecting first-party data, marketers can segment their audience and send them personalised emails and promotions. They can use the gathered data to engage their audience with what really matters and interests them. Not only will they improve the open rate of their emails, but they will also convert more than if they’d sent a generic newsletter.
First-party data is the type of data that every marketer needs to improve and increase their marketing results in the long term. Not only they will own that data but it’s also accurate and relevant to their business. However, marketers should be reminded that consent is trickier than it seems and that there are still many questions to answer on the GDPR and how to collect first-party data in a compliant way. To know the answers, download our new ebook!