Join the Party: Why You Should Consider First-Party Data

Brands and their agencies are finding out just how powerful first party data can be when building meaningful relationships with customers. In a world where everyone is a publisher, having access to data that is proprietary and not otherwise available is extremely powerful.

Despite having grown up with social media, it still surprises me to scroll past an ad on Instagram from a company whose website I had just browsed through. These ad banners feature deals on products that look very similar to the ones I had viewed, tempting me to take another look—and I often do. This is the work of first-party data at its best.

These experiences may no longer be possible in the near future, especially with efforts made by big tech companies to increase user privacy. With the impending decline of third-party data, marketers are considering investing in first-party data to reconnect with consumers.

What is considered first party data?

First-party data is the most important and relevant data for a company. It gives information about a brand’s own customers, users, and visitors, allowing valuable insight into how these individuals interact with a brand across any and all channels. Brands then use this data to understand consumer behavior and to act as a blueprint for intentional and effective marketing.

Compared to second-party data, which involves sharing data with another brand, and third-party data, which is aggregated and owned by a large organization and available to any paying person, first-party data is exclusive to a brand and often the least expensive option. While second- and third-party data should be used as a complement to first-party data, many companies rely largely on second- and third-party data for information—think of sellers on large marketplaces like Amazon, Wayfair, and Walmart. But with the rise in privacy concerns, especially following data scandals, there has been a move towards curbing third-party cookies, forcing marketers to find another way to connect with consumers.

Why should marketers care about first party data?

The Facebook-Cambridge Analytica scandal in early 2018, where more than 87 million Facebook users had their data sold to the political data-analytics firm Cambridge Analytica, was a tipping point for concerns over data privacy as it catalyzed the conversation about privacy rights. Previously, it had been normal for companies to collect their customers’ data without them knowing, which speaks to the issue of trust between companies and their consumers.

A survey of customers in several countries, including the U.S., found that 53% of people across markets distrusted “their connected devices to protect their privacy and handle their information in a respectful manner.” An overwhelming majority (75%) agreed that there is “reason for concern about their data being used by other organisations without their permission.”

Large tech companies, notably Google and Apple, have announced plans to better protect people’s data. Google revealed in January 2020 that they plan to end third-party cookies by 2022, while Apple’s next iOS14 update will “require apps to ask for user permission before tracking their data across apps and websites owned by other companies.” There have been concerns around and pushback against Apple’s updates; 56% of marketers expect to see a negative effect from these barriers to advertising.

Amazon, one of the world’s biggest marketplaces, has also raised barriers to brands receiving consumer information. The amount of data that sellers had access to previously was limited to a customer’s username and street address; starting in April, sellers will need to give an explicit reason for requesting this data. Wayfair and Walmart have also implemented similar restrictions, where access to valuable consumer information is a tradeoff for using the marketplaces.

How can brands utilize first party data?

What the impending end of third-party data means is that marketers have to find a better and more transparent way to connect with their customers. Privacy regulations also impel brands to earn their consumers’ trust and build a strong consumer base. The merits of first-party data are clear, but brands have struggled to tap into this gold mine because it’s “messy, disorganized, and spread across a bunch of disconnected systems that were never meant to integrate.” This is where tech solutions like Brij can help brands to leverage first-party data to reconnect with their consumers.

Can marketers still purchase data from outside sources?

Depending on your industry, you may have been integrating data from multiple sources to inform your media targeting, persona development, creative messaging, and a host of other important decisions. After all, is there a more overused phrase in the past 10 years than "data-driven?"

Those outside sources, however, qualify as third-party data, meaning marketers will be limited in how they can utilize them moving forward. That's not to say that third-party data will be completely irrelevant for some applications, but the constraints detailed above mean that smart marketers are rapidly finding ways to minimize their reliance on 3rd party data as soon as possible, or else they risk falling behind their competition on multiple fronts.