What is First-Party Data and How To Use It

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A few weeks ago we wrote about the iOS14 update and how it has affected CFD’s customers. While the effects have been minimal, and at CFD we’re doing what we can to further minimize disruption, moments like this update always bring up wider discussions around strategy and approach. At CFD, we’re pushing our clients to think through their collection and use of first-party data as a possible solution to issues raised by iOS14, and other events that will further direct how companies can use second-and third-party data. 

If you’re still wondering what data your company is using, or what to do with it, read on.

First, second, third: what are all these data types?

First-party data 

This is data that is collected firsthand, meaning data that you collect about your audiences or customers. This can be data that is collected online, for example from your social media profiles, subscription-based emails or products, your CRM or your analytics tools (such as Google Analytics), as well as data from real-life events, like an email list. 

While this data may be processed by another tool (such as Mailchimp for email data, Facebook for social media data, or Google Analytics for what’s happening on your website or app), you own the data.

Second-party data 

This is data you don’t collect yourself, but is likely related to or about your customers or target market. For example, if you purchase an email list from another company, that would be second-party data. 

Oftentimes second-party data you obtain is another organization’s first-party data – you’re buying data collected by another organization. Please be aware that this practice isn’t legal in many places, so be sure to check your local laws before acquiring this type of data.

Third-party data 

This is typically data from a variety of sources that is then aggregated and collated. It’s typically collected by an entity that has no relationship with the user about which the data is collected. For instance, Facebook advertising uses a variety of targeting categories, such as people who love dogs, live in Philadelphia or enjoy watching Netflix. Facebook uses these various sources to aggregate and collate this data. It is then used to show relevant ads based on the interests of users. 

Remember that third-party data is available to anyone with the same access to the tool from which you’re pulling the data set, so your competitors could have access to this information, too.

Updates such as the iOS14 update showcase the fragility of relying on third-party data, as the update somewhat restricts third-party data collection. Overall, because of regulations in data collection and management, digital marketing is moving further toward using first-party data as the most relevant and reliable data source companies have.

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How to use first-party data

First-party data is currently used for many digital marketing efforts, such as retargeting. If you’ve ever looked at a product online, and then continued to see ads for the product follow you around in banner and social media ads, that’s an example of first-party data being used for retargeting. Marketers also use it to learn more about what an ideal customer looks like, using that information to then plan strategies for outreach to new audiences.

Other ways that first-party data is used include:

  • Mapping customer journeys
  • Connecting data across channels to enhance omnichannel measurement and data attribution
  • Increasing relevancy of messaging and offers

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Why first-party data is so important

In the past, third-party data has been preferred by marketers. While third-party data is great when prospecting to new clients with an aim to expand reach and brand awareness, with the aforementioned changes in regulations and customer behavior, third-party data is becoming less and less reliable.  

Since most of us know that it’s less expensive to retain customers rather than attract new ones, think of first-party data in this way; you are marketing to those who already know about your products and services. That’s why first-party data has consistently generated the highest return on investment of any of the three data types. So why don’t more people utilize first-party data? Most companies don’t have the tools or technology available to collect and analyze first-party data, which is why third-party data, which is gathered and analyzed by others, is so attractive.

Since brand loyalty and retention are so key – repeat customers spend 33% more than new customers, on average – investing in first-party data tools (and using them) should be a key component of your marketing strategy and goals.

Questions about how to start, or get better, at utilizing your data? Get in touch, we can help!