For years, companies relied on first-, second-, and third-party data for their marketing campaigns.
But the landscape is changing.
Governments have introduced stricter data privacy regulations. And technology companies like Google are phasing out third-party cookies.
So, what should marketers do?
During a 2022 survey of data marketers, 41% of respondents said they expected that they would be increasing their spending and use of first-party data because of the planned phase-out of third-party cookies by browser developers:
Image: Effects of phasing out third-party cookies on marketing data use in North America as of January 2022 (Source)
In short, they already have a wealth of first-party data – they just need to optimize it better.
Furthermore, the Persado eBook, Forget Cookies, reveals that more than 60% of brands plan to increase their spend on first-party data over the next year.
So, in this guide, we’ll examine the benefits of first-party data and explain how you can activate it for a more personalized experience.
What is first-party data?
First-party data (also known as 1P data) is information a company collects directly from its audience via its own online and offline channels, including website visitors, social media followers, email subscribers, and customers.
First-party data includes information, including:
- Visited websites
- Website activity
- Digital interactions
- Purchase history
…and many more.
A company can use this valuable information to create highly-targeted ads, relevant content, and personalized experiences.
And best of all, as it’s collected for free, it’s cost-effective:
Google found that those brands using first-party data for key marketing functions achieved up to a 2.9X revenue uplift and a 1.5X increase in cost savings. However, despite its clear benefits, most brands aren’t yet harnessing first-party data’s full potential.
First vs. second vs. third-party data
Let’s look at the differences between first-, second-, and third-party data to see which is best for your business.
What it is:
First-party data is information you collect directly from your audience via online and offline channels.
“First-party” refers to the entity that collected the data first-hand for retargeting purposes.
How it’s collected:
You can collect first-party data in various ways, including:
- Web Pixels: You can add a pixel to your website, product, or social media profiles to collect information about behaviors and actions. For example, you can track whenever a visitor lands on your website, engages with your social media posts, clicks on your products and services, or fills out a survey.
- CRM: You can add contact information (name, email, title), purchase history, and lead source to your CRM manually or automatically following interactions by email, phone, social media, website, or in-person.
How it’s used:
You can use first-party data to:
- Predict purchasing behavior
- Gain audience insights
- Personalize content and ads
- Comply with data privacy regulations
What it is:
Second-party data is information you get from a trusted partner. Think of it as second-hand first-party data. You can use this information to extend your first-party dataset.
Second-party data is not sold openly like third-party data, so it has greater value.
How it’s collected:
You could partner with another business and agree to exchange data. For example, a software company might partner with a marketing agency and agree to exchange first-party data.
Another option is to purchase it. But this can be risky as you don’t know how valid the data will be. So it’s essential to specify precisely what you want and don’t want in your second-party data.
How it’s used:
You can use second-party data in much the same way as your first-party data. The main difference is that you’re extending your reach past your initial first-party audience. As a result, you can spot new behaviors, interests, and preferences.
What it is:
Third-party data is any information collected by an outside source that has no direct relationship to your audience.
It’s often gathered, aggregated, segmented, and sold to companies for advertising and retargeting campaigns.
However, third-party data is available to everyone, including your competitors, so it has less value than first- and second-party data.
How it’s collected:
Third-party data is collected and distributed in the same manner as first- and second-party data. Researchers gather information using surveys, interviews, and feedback forms and then sell it to other organizations.
The downside to third-party data is that it’s collected from a random audience rather than a targeted audience, so it’s hit and miss how effective it is.
How it’s used:
You can use third-party data to complement your first-party data. Analyze and compare the dataset to see if behavior trends and patterns are the same or different.
Examples of first-party data
Now that you know what first-party data is, let’s look at some examples:
- Behavioral data: You can automatically collect data about how people interact with your website through clicks, views, purchases, and more using website tags.
- Social data: You can analyze your social media followers to see how they interact with your posts through likes, shares, and comments. Plus, you can discover your audience’s interests, behaviors, and preferences via built-in analytics dashboards.
- Purchase data: By combining in-store and ecommerce sales data, you can get a comprehensive view of your customers’ purchase behaviors. For example, you can see which products are the most popular and which types of customers prefer which products.
- Survey data: You can collect customer feedback, such as opinions on a product or service, content preferences, or demographics, via emails, online forms, offline (paper) survey forms, and other channels.
- CRM data: You can use the customer information and demographics in your CRM, such as the number of website visits, the number of purchases, family details, career and education details, and much more.
How is first-party data used in marketing?
Marketers can use valuable first-party data in various ways. Here are some of the most popular uses.
Gain audience intelligence
By studying your first-party data and looking at your customers’ profiles, you can better understand your audience. For instance:
- What do they like and dislike?
- Which pages do they interact with the most?
- What products do they want to purchase?
- What’s in their shopping cart but not yet purchased?
Predict buyer behaviors
Because first-party data is relevant and accurate, you can confidently predict buyer behaviors.
For example, if you notice that one of your website visitors has browsed bike pages and placed one in their shopping cart, you can predict they’re likely to buy a bike. Based on that first-party data, you can target personalized ads for the bike and related products to this visitor and encourage them to buy it.
You can use your first-party data to segment users into specific groups based on interests and needs. Then, you can create and send highly personalized content to each group.
Target the right audience
First-party data lets you target the right audience with advertising messages and content recommendations at a more granular level. For instance, Amazon shows you “recommended products” based on what you’ve browsed or purchased. And Spotify “suggests songs” based on your listening choices.
Having first-party data under your control and being responsible for obtaining consent from all users before collecting it, you can rest assured that it complies with all the new privacy regulations, such as GDPR, CCPA, and IDFA.
Benefits of first-party data
Here are the most important benefits of using first-party data:
First-party data is more accurate since it comes straight from the source – the less distance between your company and the data source, the less chance for errors or obfuscations.
First-party data comes directly from your audience and customers, making it authentic and reliable. On the other hand, third-party data gets consolidated into a larger dataset from multiple sources, so it’s low-grade and unreliable.
First-party data is highly relevant and valuable since it comes directly from your audience. You can see and understand precisely how prospects and customers behave on your site, allowing you to better understand their preferences and needs.
First-party data complies with the latest data privacy regulations. You know the data source and that it was collected with consent, so there’s minimal risk in using it.
How to create a first-party data strategy
Here is a five-step process to create your first-party data strategy:
Gather existing first-party data
The first step is gathering and organizing all of your existing first-party data across different platforms. You could use a data management platform (DMP) to help create an inventory of your various data sources. Combining these data points gives you a holistic view and a deeper understanding of your audience.
Identify your data gaps
Having created an inventory of your existing first-party data, you can identify gaps where you could collect more or refine your data. For example, you could map the customer journey to your existing data and figure out what data you need to improve each step.
Collect and aggregate data
Now you know what data you have and require, you can start collecting and aggregating data. However, don’t over-face visitors by asking for too much information at once. Build a complete picture by collecting demographics, preferences, and behavior over time.
For example, you can collect behavioral data and click attributes via event-based tracking. And you can use a customer data platform (CDP) to collect and aggregate first-party data in one place for further analysis.
Activate your first-party data
Having collected your first-party data in a CDP, you can activate that data to improve how you engage with your customers.
For example, you could use Persado’s AI content generation and decisioning platform to activate the data in your CDP. Using the software, you can target individuals and segments with the language and messages that resonate with them.
Persado messages produce an average 41% uplift in engagement above a brand’s average performance for every message delivered.
Test and optimize
Finally, test and optimize your audiences and messaging to make sure your campaign is successful. Over time, you can adjust and refine your messaging based on results.
Are you prepared for a cookieless future?
First-party data is information you collect directly from your audience via online and offline channels. It’s the most cost-effective and valuable data source for marketers to use as it’s collected first-hand.
While second-party data can be helpful, third-party data is becoming more diluted and unreliable.
First-party data is accurate, reliable, relevant, and compliant as it’s collected with user consent. But you still need to activate your first-party data to create personalized messaging and experiences.
Persado’s CDP integration enables marketing teams to harness the power of a new type of language-based first party data called “Language Profiles”. These profiles are not based on demographics or psychographics, but are instead based on the messaging and creative that inspire customers to take action.
Download our latest eBook, Forget Cookies, to see how you can activate your first-party data and use personalized language to reach your audience.