In the past few years, first-party data has become popular with companies across industries, largely due to the push to end third-party cookies. While cookies are still an option, regulations like GDPR (General Data Protection Regulation) have caused massive changes in the way customer data is gathered and used. First-party data has opened the door to new ways of capturing and incorporating customer information for more sophisticated shopper-business relationships.
What Is First-Party Data?
First-party data is a company’s owned data, collected firsthand from users, prospects, and customers. First-party data includes:
- Demographics, like name, age, contact info, marital status, location, and employment.
- Browsing information, such as interactions on other apps and websites.
- Purchasing history, such as how often someone buys, what they buy, how long they’ve been a customer, which offers they’ve responded to, and more.
- Company data, like industry, revenue, employees, and more.
Businesses collect first-party data from a variety of direct interaction sources, including customer orders, subscriptions, surveys, social media interactions, and website visits.
Why Is First-Party Data Important in Digital Marketing?
As digital marketers have shifted away from cookies and third-party data, the importance of first-party data to digital marketing has grown. First-party data is very valuable: It’s accurate, up-to-date, and reliable.
Capturing and using first-party data opens up new tactics and strategies for marketers to understand and reach their audiences. You can more accurately retarget and nurture audiences when you have accurate, specific data about them that you’ve gathered yourself. You may also make adjustments to products, services, or processes if you’re seeing themes or trends based on first-party data.
Benefits of First-Party Data
Once you’ve gathered first-party data, you should put it to good use. This rich data, when analyzed and incorporated into your marketing processes, can offer lots of benefits.
Better ROI
First-party data drives better return on investment (ROI) than third-party data, due to its accuracy, and can cut out wasted efforts on the wrong audiences. First-party data means you can target your ads much more effectively, leading to higher conversion rates and ROI.
Realize leverages Taboola's extensive first-party data from powering publisher editorial and ad units, providing unmatched insights and targeting capabilities.
Improved Profiles and Segmentation
With recent, accurate first-party data, you can build better customer profiles and data-driven segmentation, then use those to predict and guide purchases. First-party data-based segmentation takes into account interests, budget, and more, so you can identify your most valuable, loyal customers. You might see that a certain type of customer, based on profiles, tends to spend more in a particular category, so you can suggest products in those categories to new, similar customers.
Personalization Opportunities
Creating personalized experiences for users and customers is now essential. With first-party data, you can personalize web, text, and email content for users based on what they’ve told you, not just guesswork. You may incorporate first-party data on previous purchases to personalize cross-selling recommendations, create buyers’ guides or brand emails based on categories of shoppers, or build several versions of your website to share with audience segments, based on their interests.
Better Service, Happier Customers
Personalization using first-party data can make a customer feel special and make their buying experience faster and easier. It can also help improve chat and other customer support experiences. Plus, you can use first-party data to place fulfillment centers closer to where customers are, so they get their orders quicker.
Challenges: What to Watch Out for With First- and Third-Party Data
Accurate, Consolidated Data Collection
The setup involved in first-party data collection can be onerous. You want to gather high-quality data and make sure you’re capturing it consistently, with a repository to store it all so you can remove siloes, perform analytics, and put all that information to good use. Some of the mechanisms to collect data include signup forms or other lead generation efforts, pixel installation on some or all of your web pages (ensuring they don’t slow download speed), and setting up analytics tools. With third-party data, the data can get quickly out of date and can easily be less accurate than first-party, particularly for B2B uses.
Robust Usage
Don’t put the time into gathering first-party data if you won’t be able to use it in your marketing strategy. It’s enough of an investment — time spent collecting and analyzing it, building reports, and incorporating it into your tactics — that you should plan how to use it, then refine that plan based on initial results. Gathering third-party data brings particular challenges, such as the cost and the lack of uniqueness, as others can buy those same lists. You also likely won’t get the specifics with third-party data that you do with first-party.
Trust and Test
However you use both first- and third-party data, customer trust is paramount. This is necessary to comply with regulations like GDPR, HIPAA, and CCPA, but customers won’t continue shopping or buying from brands they don’t trust. Consider at all times how you’re connecting with customers and how you’re building loyalty. Keep testing different creative and find out which ways they prefer to hear from you.
How Is First-Party Data Collected?
First-party data collection spans many sources and may require some tech setup, plus the ability and company buy-in to gather and centralize all this data for marketing use. Companies committed to data collection and usage may invest in a customer data platform (CDP) as the central repository.
Methods to collect first-party data include:
- Web, mobile app, and product behaviors and actions.
- Social media interactions.
- Survey response data.
- Subscriptions.
- Direct customer feedback, including chat conversations.
- Browsing and purchasing history.
- Email click-throughs.
- Point-of-sales (POS) systems.
How Do I Integrate First-Party Data With My Marketing Platforms?
This step can involve a lot of effort across teams, but the end result brings rewards. Choosing a CDP might be the first task, where you can then pull in all your first-party data sources, including a CRM. The CDP lets you see all the data together, offering a single customer view, which you can then incorporate into your marketing platform, or platforms, to personalize campaigns and generally better target your prospects.
The steps to integrating first-party data into your marketing platform may look like this:
- Implement the CDP.
- Choose data sources.
- Decide which data points to collect.
- Create audiences or segments.
- Create personalized content for each segment, including offers.
- Evaluate results, make tweaks, and continue testing.
How Do Brands Use First-Party Data to Improve Targeting and Personalization?
As the first-party data trend continues to mature, brands are experimenting with different ways to connect with customers. Some ways to use this data to improve targeting and personalization include:
Expand Or Invest More in Different Channels
When you can see which of your users clicked on an email versus spent time on your website, you can explore using the better channel more often or for certain segments of your users. First-party social media metrics can show how users are interacting with your accounts and which are more worth the time.
Take Time Zones Into Account
If most of your users, or a particular segment of users, are in the same time zone, then it makes sense to send messages or reminders to them at the right time — 9 a.m. versus 2 a.m., for example.
Build Loyalty
One report found that 56% of consumers are more likely to make a subsequent purchase after a personalized shopping experience. Using first-party data like purchase history can then turn into targeted, personalized messages to customers, or campaigns to win back churned or dormant customers. Incorporating data like birthdays or other special events can also personalize offers. This all adds up to strengthened brand recognition and long-term loyalty.
First-Party Data Best Practices for Transparent Data Collection and User Consent
The emerging area of first-party data collection has some essential guidelines and best practices to follow.
Follow the Law
The first rule of first-party data collection should always be compliance with regulators. GDPR (the General Data Protection Regulation enacted by the EU) and CCPA (the California Consumer Privacy Act) both lay out strong guidelines as to how companies can collect and use data. These include, among other rules, that consumers can ask to have data deleted, that only necessary data should be gathered, and that data should be gathered securely. Get to know both of these regulations before you dive deep into collecting data.
Communicate With Your Audience
Clear communication goes hand-in-hand in complying with these regulations. Transparency with your prospects and customers can go a long way: If you’re asking them to provide data, tell them why, and let them know how it will benefit them in the short or long term. You’ll build trust and avoid issues down the road, like drastic unsubscribe rates.
Consider Tools and Frameworks to Help
It’s really important to comply with regulations, or you risk heavy fines and other consequences. You may consider an audit of the data you already have for legality (plus, clean data will be much more useful for your marketing strategy). Data quality software can help ensure you’re collecting data lawfully and accurately. In addition, if data governance isn’t already a function of your organization, it should be. A data governance framework offers a way to organize your data, manage its use, and make sure everyone internally understands the overall strategy.
Understanding AI and First-Party Data
Using the powerhouse trend that is AI alongside first-party data can help you save a ton of marketing time and resources in creating more robust and personalized customer experiences. Data analysis, depending on the number of sources and individual data points, can be incredibly time-consuming for teams of humans. At the beginning of the data-gathering stage, AI can automate away much of the manual work of cleaning and integrating data.
With accurate first-party data, you can employ AI tools to analyze those reams of data, then ask the AI algorithm to find patterns indicating trends or takeaways and build customer segments accordingly, all in a much faster time window. AI can also personalize content and recommendations. If you’re already using AI chatbots, that data, aligned to a customer profile, can be fed into your centralized tool as well. See if you can apply AI to detect security threats, too, and generally ensure regulatory compliance.
Key Takeaways
First-party data collection is still a new trend, but organizations are quickly figuring out how to put it to good use to engage prospects and customers. First-party data is accurate, reliable, and up to date, so businesses can create better customer experiences, more targeted ads, and generally save a lot of guesswork in reaching prospects.
Frequently Asked Questions (FAQs)
What metrics should I track when using first-party data?
When you start gathering first-party data, consider why you’re doing it, what you’ll use it for, and what result you want from it. While you can incorporate many typical marketing metrics in tracking first-party data, such as increases in conversions or spending per customer, you can also consider evaluating RFM — recency, frequency, monetary — to measure customer value and engagement over a set period of time.
How is the shift to first-party data affecting digital advertising?
First-party data is accurate and reliable, and collecting it doesn’t directly use marketing budget, unlike other types of data. With rich first-party data, digital advertisers can understand exactly what a particular user, and groups of users, will respond to. That information leads to much better ad targeting, plus a better use of channels and improved personalization across all tactics.
How do I future-proof my data strategy with first-party data?
When you’re gathering data about your customers directly from your customers, it’s a lot easier to plan your business and marketing strategies, then adjust as needed as you go. Look for this offering in your vendors and partners, too: Platforms that capture and employ first-party data are already a lot more sophisticated, and allow you to take advantage of real trends and firsthand user experiences.
