Editor’s note: Maria Coleman is marketing content manager at Adtaxi, Denver.
First-party data – data companies collect and therefore have full control over the collection methods and security – has always been critical for brands. It is used to continue to communicate with customers and to reach users with similar traits. This can include e-mails that customers provide via form fill on your website, accounts created for purchases, data collected as consumers browse your site, information consumers share with you through surveys and so on. As consumer preference and regulation have turned definitively toward increased data privacy, thereby limiting access to third-party data for targeting purposes, collecting first-party data in an appropriate and transparent manner will be paramount for advertisers in order to be minimally impacted by the ongoing regulatory landscape.
Many companies are turning to first-party data as a primary building block for targeted marketing. As companies become more reliant on consent and transparency in data collection and usage, they must build trust with consumers and provide added value for those who choose to share their information. Finding the perceived value exchange for information could take a variety of forms and each brand will need to test what that threshold is for maximum effectiveness.
First-party data has the potential to fill the role previously played by third party, as long as companies have a clear understanding of how to use and collect it.
The value of first-party data
Data is what allows marketers to determine how shoppers feel about things – allowing them to put the right message in front of the right person at the right time. In sales it’s commonly said that 80% of your revenue comes from 20% of your clients. First-party data can help identify who those 80/20 clients are, and help marketers better understand how those clients prefer to transact and engage with your brand. In addition, robust first-party data lays the foundation for creating highly efficient lookalike audiences. These are other users who exhibit similar characteristics to your target customers. Dynamic retargeting campaigns, which show customized messaging or products in order to connect with audiences, can also be highly effective for moving shoppers down the funnel.
Depending on your product your best customer may not always be your most valuable. For example, if you sell mattresses an ideal customer might be a high-earning middle aged homeowner, but over time this customer will shift to being more financially responsible with a fixed income in retirement. First-party data can also help identify ideal customer profiles and set the stage for better targeting – particularly when matched up with second party data through Google, Facebook and TTD.
Collecting first-party data
You are likely already collecting some key first-party data, such as names, e-mail addresses and ages. But to create more detailed and targeted marketing, you’ll want to go deeper and access behavioral data such as past purchases, browsing history, time spent on your site and more.
In many cases, companies have access to more useful first-party data than they might initially think. Begin by taking a full inventory of the data you already have: look at your historical records and consider how this information can be used more extensively.
Then, dig deeper into this data to map out existing customers’ patterns and actions. Focus particularly on platforms that your customers are most likely to engage in, as opposed to what is most easily available.
Use this as an opportunity to design a comprehensive and user friendly database. Even if a field does not seem important at the outset, it may be useful in combination with other variables or valuable in itself down the line. In addition, the type of data you collect should be based on your business and may vary based on industry or product offerings. For example, a company that wants to target moms may want to expand to other fields such as household size, whether users have children, rent a home, own a home and more. You will have more success targeting specific messages to customers who are moms in the Midwest than trying to message to all women, all parents or all Midwesterners.
Once your existing data is collected, organized and examined, it’s time to refine your approach. It’s important to be calculated with what you collect and ensure you’re using it to provide value to consumers. The key to collecting first-party data is incentivizing website visitors and customers to tell you more about themselves.
This can be successfully done using a value exchange – for example, offering a discount in exchange for completing a survey. The first attempt may not be entirely successful – but it will provide learning opportunities for how customers prefer to interact, and will help optimize future data collection. By being transparent about why those details are necessary combined with enticing discounts, ongoing promotional codes or giving those users that comply first access to new products, you can quickly expand the amount of information you can utilize.
Another tried-and-true method for collecting first-party data is by implementing a loyalty program, which can be synced with the point of sale and provide a more detailed view of individual customers and their habits over time.
The biggest challenge for many companies at this stage will be having the actual mechanism to run these data collecting campaigns as well as monitor and analyze the results. If this is a challenge for your company, start small and work your way up – and keep your ear to the ground, as there are efforts being made to automate this kind of work.
The process and goals of first-party data collection will vary greatly depending on your industry, what you sell and your product portfolio. For example, a clothing e-commerce company will have a very different process if it sells just to women, versus one that sells to multiple shopper profiles including all genders and/or children.
As you go about collecting, analyzing and leveraging your first-party data, remember that this process is a necessary value exchange. People are more inclined to trust businesses as they become more privacy focused, but it’s up to each business to maintain and build that trust with consumers while balancing data collection needs.