More and more people are beginning to get all of their products and services through online transactions, especially since the beginning of the pandemic. Advertisers have long relied on data and cookies to identify valuable audiences for their brand in a bid to create a relevant online consumer experience. As technology advanced, identity solutions were adopted and applied as well, but privacy concerns arose over time and demands were made to make substantial changes to consumer control and consent. Nowadays, too many American consumers feel like they have no control over their data and how it is being used.
In order for businesses to win back the trust of their consumers, they must establish an equal and open exchange of value, maintain strict adherence to federal or state data laws and develop new strategies for gathering data that don’t breach consumer privacy or trust. The third-party cookie will become almost entirely extinct by the end of 2021, so first-party data is becoming even more important in the world of marketing and digital advertising.
What are the experts saying?
Sir Martin Sorrell, executive chairman of S4 Capital, explained the significance of first-party data in an interview with ThinkWithGoogle. Sorrell speaks about how the advertising and marketing industry became too comfortable and too lazy for a while by simply relying upon third-party cookies for all of their data. Then, in 2016, the cookie began to crumble, leading to companies scrambling for a new source of data collection while still maintaining the effectiveness of identifying people to that data. This is when first-party data collection really took off and companies realized it was actually more profitable for them to analyze and collect.
In Sorell’s words:“Today, brands are getting into retail, starting new companies, or implementing other forms of change; not merely to compete with someone else, but to collect information about their customers. This first-party data is driving the creation of digital advertising content being pumped out programmatically. You must have it, synthesise it, and control it.” Take a look at all of the major tech monopolies that exist today; Apple, Facebook, Google, and Amazon, among many others, have multiple products and services that all in some way contribute to their massive behind-the-scenes data collection.
Even Amazon, technically considered the largest e-market service available, makes a majority of their money off of selling and using the first-party data collected from people looking for or buying certain products, not the actual sale or distribution of the products themselves. Companies are scrambling to find any convenient entry or access into consumers’ privacy because, the more data collected, the more money they make.
MightyHive CEO Pete Kim laid out the fundamental principles to collecting first-party data and why it is important to make sure that, as your company transitions to more first-party data collection, you are still ensuring corporate responsibility for consumer data. Kim states: “First-party data brings us three things, starting with personalisation, or the ability to say something meaningful. Then there’s attribution; the ability to finally connect return on investment (ROI) to advertising. You need to know two things for this: who bought what, and who saw which ad. Only when you have those data sets can you start measuring if this is working or not. And lastly, there is agility. You must be able to react quickly.” Kim is essentially breaking down how companies need to engage and interact with first-party data to set themselves up for success in the future.
What should be clear is that first-party data is crucial to your business’s growth in every aspect. For companies to really ensure that they are a part of the new digital marketing transformation, they need to use first-party data to improve personalisation, link ROI (Return on Investment) to ads, and act quickly on the insights generated by the data. The world of data privacy and data collection is such a new and formative industry that, weekly, if not daily, there are major changes and regulations that companies have to stay on top of.