Read on to find out how digital marketers are using first-party data to improve ad targeting.
Historically, digital marketers relied on 3rd party data – data aggregated from a company that purchased it from the data owner. It was less expensive to collect and easier to achieve scale than with 1st party data – the data that marketers collect directly from their customers.
First-party data can include customer purchase history, customer addresses, customer interests, customer activities through a loyalty program.
But in the last few years, governments invoked privacy legislation, most notably GDPR. Apple terminated IDFA app tracking and Google is proceeding with similar initiatives for Android. Through this period, people became more aware of and insistent on safeguarding their privacy.
For marketers, the aforementioned developments make it nearly impossible to use 3rd party data to optimize their marketing. This means that mobile marketing solutions will need to be rethought with performance marketing and user acquisition campaigns changing. Forever.
But as Albert Einstein once said, “In the midst of every crisis, lies great opportunity.”
According to data from the Boston Consulting Group (BCG), the most sophisticated marketers can deliver relevant experiences to customers at multiple points along the purchase journey. These relevant and engaging customer experiences, powered by 1st party data, enable marketers to achieve cost savings of 30%, which increase revenue by up to 20%.
A survey of sophisticated marketers conducted by BCG found the following benefits of 1st party data:
To start, marketers must make their customers feel comfortable giving their 1st party data, whether it’s personal information like name, address, birth date, or interests. They must make their users understand that it’s a value exchange. By providing 1st party data, users will receive a better and more relevant product experience, perhaps even product upgrades or other discounts.
According to BCG, these are the best practices marketers should follow when asking customers to track their data:
Marketers with direct relationships with their customers, like Direct-To-Consumer (DTC) products, will be able to secure 1st party data more easily through loyalty programs or membership-specific content offerings.
Marketers with indirect relationships with their customers because they sell through affiliates, distributors, or other channels, will need to provide customers with auxiliary offerings. Examples of this include an app downloaded for product usage tips or a newsletter sign-up form for a newsletter that provides users with ‘members-only’ product information.
The era of buying and selling customer data is over. Marketers must understand that managing customer data is a privilege that must be earned and re-earned by securely and ethically managing the data. And marketers must uphold all relevant privacy laws regarding user data.
To most effectively manage 1st party data, marketers should review the following technology solutions:
First-party data will enable marketers to significantly improve their marketing performance once the data has been attained and integrated. Two main marketing activities that will benefit from 1st party data are retention and personalization.
One of the activities that were hurt by Apple’s termination of IDFA is retention. This is because most users have not given apps the ability to access their data. According to research from management consulting firm Bain, increasing customer retention by 5% can increase profits by 25%. This makes retention more profitable than user acquisition.
To make up for this, marketers can query new users for their data. From this, they’ll gain a better understanding of each customer’s preferences based on their product engagement. This enables improving future customer acquisition as well as user acquisition.
Personalization has long been the driver for successful mobile marketing solutions, increasing absolute lifetime user value. Insights gained from 1st party data can make marketing more relevant and personal to customers, improving campaign effectiveness over time.
An example of effective use of personalization is Burger King’s Whopper Detour campaign. Burger King targeted app users who were inside or near a McDonald’s location (based on geo-targeting data). They received a Whopper for one cent if they left McDonald’s and went to Burger King within one hour.
Not every personalized campaign needs to rely on geo-targeting data. Personalized marketing campaigns based on the kinds of products customers have queried about also improve campaign performance.
Do you have questions or need help with your 1st party data acquisition strategy? CC has extensive experience onboarding 1st party data, and we’re happy to answer any questions you have.