Achieving Business and Market growth with first-party data

Achieving Business and Market growth with first-party data

29 Nov 2021

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This informal CPD article on Achieving Business and Market growth with first-party data was provided by Terragon, a global marketing and data technology firm focused on driving intelligent connections to consumers in Africa.

Now more than ever a good understanding of customers is critical to business growth and survival, because customer engagement determines how your Brand is received and how efficiently you are able to acquire and retain customers. This entails how relevant the content or messaging you send and the channels you use; in other words, customers expect a “personalised” experience when you engage with them; and in order to achieve this, “first-party data” is invaluable.

What is first-party data?

First-party data refers to information Brands collect directly from their customers or audience, from various touch points - CRM, actions or interests demonstrated across websites or apps, customer feedback, completed customer surveys, forms etc. First-party data is usually consented and so privacy concerns surrounding it are minimal. Third-party data on the other hand is collected from other parties that do not have a direct relationship with consumers and as the name implies is collected by a third-party entity, typically for advertising purposes.

Differences between first and third-party data

One of the main differences between first and third-party data is the trade-off between quality and reach - while first-party data is more accurate, the veracity of third-party data cannot be ascertained; on the flip side for customer acquisition purposes, third party data is what offers businesses a richer pool of potential customers. Third party data can also be useful for enrichment when unified with first party data, though inaccurate data would certainly result in wrong insights.

For many years, third-party data has been helping marketers deliver personalized ads and improved user experience to customers through a tool called third-party cookies which collect user information and track behaviours from website visitors for online advertising purposes; helping to create a $500Bn digital industry.

An example of a customer experience courtesy of third-party cookies goes as follows - a customer visits an eCommerce website and searches for a particular footwear. He leaves the website and scrolls through other websites and social media platforms and begins to see Ads on that particular footwear and other footwear recommendations, constantly reminding and nudging him to convert. This tactic has helped Brands to boost revenue through personalization and insight-driven product recommendations which drives customer conversions. According to Infosys, 90% of marketers say that eCommerce personalization has boosted revenues.

However, though third-party cookies help with better user experience, the fact that customers are mostly unaware when their data is being collected or know exactly what it's being used for, raises major data privacy concerns. A 2019 research from the Internet Society and Consumers International found that 69% of consumers were concerned about how personal data is collected in mobile apps.

These concerns are what have led web browsers such as Safari and Firefox to block support for third-party cookies by default to protect users’ privacy. Google, which has over 67% market share for its Chrome Browser, has announced it will follow suit by 2023, leaving advertisers (Brands) and digital agencies scrambling for an alternative solution to enable effective advertising.

Big changes for digital advertising

Basically, the death of third-party cookies means that advertisers will no longer be able to track customers around and serve personalized ads to them, in the same way they currently are able to. The industry is yet to develop a single alternative protocol acceptable by all web browsers and operating systems. So, until a universally acceptable solution is developed what can Brands do to ensure they are able to target and engage customers as effectively?

There needs to be a mental shift in how marketers use data to reach their customers. Rather than relying on third-party data that does not completely align with customers' increasing expectations for privacy, now is the time for marketers to unlock the potential of first-party data for business growth.

When someone visits your website and specific pages, they offer you real and tangible data such as interest (based on pages visited), the details entered to receive your offers or newsletter (name, email, location, reason for visit etc), items added to the cart, items purchased and returned, their complaints, their browsing details which lets you know if they are using a mobile phone or desktop and lots more.

A better understanding of consumer profile and behaviour

These are all valuable data lots of businesses are not tracking, which could deliver a better understanding of consumer profile and behavior. It also helps to deliver more tailored and meaningful messaging to customers and to measure effectiveness at multiple touchpoints along the customer purchase journey. Adobe reports that 87% of marketers admit that data is their company’s most under-utilized asset, even though businesses that apply data-driven strategies deliver five to eight times as much ROI as businesses without.

BCG’s global digital marketing maturity survey in 2020 has shown that companies who utilize first-party data generate double the incremental revenue from a single ad placement, communication, or outreach and 1.5 times the improvement in cost efficiency over companies with limited data integration.

How can Businesses set themselves up to benefit from first-party data?

1. Awareness of the data sets needed to achieve business objectives.

Clarity on the type of data required to meet specific business goals or cater to a particular customer segment is important. For instance, to reduce churn and increase share of wallet Businesses may up-sell or cross-sell complimentary products to existing customers based on a specific product uptake e.g., recommending a pair; thereby “wowing” the customer with a tailored experience.

2. Gather, cleanse, and unify consumer data from multiple sources.

Data unification entails - data gathering from multiple sources (CRM, customer portal, online store, billing system, etc.), cleansing (removing duplicated or incorrect data) and regularly updating profiles with new data to have what is called a 360-degree view of the customer - the cornerstone of data-driven marketing. A 360-degree customer view offers Businesses in-depth knowledge of their customers, insights and enables personalized interactions with customers, for a more meaningful experience.

3. Activation.

Put the data to work for marketing activities at all stages of the consumer's conversion journey. Simply collecting data does not unlock its potential. It is only when enriched data and insights are linked to marketing activation that businesses realize the potential of their data and gain increased ROI. With customers having access to multiple digital touchpoints, multichannel activation is key, both online (WhatsApp, social, email, web) and offline (SMS and USSD). Brands can gain more value from the use of a single solution with multiple channel access for activation as against using multiple solution providers. 

Conclusion

The imminent phase out of third-party cookies by 2023 has also heightened the need for first-party data collection in order for brands to continue to deliver personalised experiences and gain more value from their Ad Spend. Now more than ever, the need for businesses to own and manage first-party data could be the difference between staying in business or going under.

We hope this article was helpful. For more information from Terragon, please visit their CPD Member Directory page. Alternatively please visit the CPD Industry Hubs for more CPD articles, courses and events relevant to your Continuing Professional Development requirements.

Terragon

Terragon

For more information from Terragon, please visit their CPD Member Directory page. Alternatively please visit the CPD Industry Hubs for more CPD articles, courses and events relevant to your Continuing Professional Development requirements.

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