Marketing strategy: the importance of first-party data

What are the consequences for brands?

• It is no longer possible to communicate with consumers who have not given their authorization;

• Explicit consent is required and must remain valid at all stages of the customer journey;

• The user must understand what data is processed, how, and why. In addition, they must only be collected for clear, precise, and legitimate purposes.

Internet users are also wary of the tracking strategies put in place by brands to track their actions online:

• 72% of them believe that advertisers stalk all their online actions;

• 81% of them believe that the risks associated with data collection outweigh their benefits.

Source: Pew Research Center, “Americans and Privacy: Concerned, Confused and Feeling Lack of Control Over Their Personal Information”

Following this lack of confidence and the gradual change in the behavior of Internet users, the major players in the sector also had to react, especially after scandals such as that of Facebook and Cambridge Analytica:

• Google announced the end of third-party cookies for 2022 (postponed to 2023);

• Apple narrowed its privacy policies for advertising with iOS 14.5 update;

• Technologies such as Microsoft PARAKEET (Private and Anonymized Requests for Ads that Keep Efficacy and Enhance Transparency) or Google FLoC (Federated Learning of Cohorts) are beginning to emerge.

What consequences?

• For consumers: more control over the data they share with advertisers;

• For advertisers: bigger limits in the scope of targeting tactics;

• For the media: the need to develop new strategies to monetize their audiences.

Source : Actito et Qualifio, Webinaire “Êtes-vous prêt pour le monde sans cookies ? Comment collecter des données first- et zero-party ?”

Thus, the challenge for brands is to adapt to move towards models that are more respectful of privacy while guaranteeing the performance of their campaigns. Therefore, first-party data collection strategies are emerging today to allow brands to break away from dependence on third-party cookies and create new forms of segmentation. It also offers companies a strong potential for personalization in communications and offers, the opportunity to create a more impactful brand experience and strengthen their relationship with their customers.

Third-party data

Third-party data is data that a company can buy from other external organizations. These organizations, commonly called aggregators, do not enter in a direct contact with consumers and are not the original collectors of the data they resell.

In fact, aggregators act as intermediaries by buying behavioral or declarative data that is associated with users using cookies and then reselling it to companies that want to carry out marketing campaigns.

While this data allows advertisers to target specific consumer segments, they should keep in mind that it is not exclusive. In other words, the third-party data purchased from aggregators can be accessed by several companies that will deploy their marketing efforts on the same consumer segments. Uniqueness is therefore not the strength of third-party data!

In addition, the laws and regulations of different countries are increasingly regulating the collection and use of third-party data, which forces companies and advertisers to turn more to the collection of first-party and second-party data.

Second-party data

Second-party data includes all first-party data purchased from an organization that owns it. Thus, second-party data is very similar to first-party data, but it comes from sources external to the company that acquires it. In other words, a company can buy the first-party data of another organization in order to feed its own behavioral analysis of its prospects.

For example, advertisers can buy first-party data from publishers. When the transaction is completed, the advertiser will have second-party data that will be used to expand its consumer target or to create even more niche segments. Indeed, combined with first-party data, secondary data can refine the consumer segments that a company seeks to reach through its marketing tactics.

First-party data

First-party data encompasses all the information that a company collects directly from its customers, both online and offline. This data is therefore considered an important asset for a company. Indeed, the company becomes the sole owner of the first-party data it collects through its owned media, its CRM, its website, its emailing platform, its point-of-sale system, its mobile application, its loyalty program, etc. In addition, first-party data is without a doubt the most reliable data a company can have.

Also, unlike second-party and third-party data that aims to reach prospects, first-party data is used on the customers already acquired by the company that collects them. First, it paints an exhaustive picture of the different behaviors of customers. Then, the collection of first-party data makes it possible to better target prospects who should, in reality, resemble the brand's already active customers.

Recent legislative changes aimed at further regulating the use of third-party data, in particular by reducing the use of third-party cookies, are forcing companies to reconsider their targeting and data collection practices. In particular, spending dedicated to third-party data acquisition is increasingly being redirected to secondary or first-party data collection, so as to lessen the dependence of companies on third-party data aggregators and to dissociate from the collection of data without prior consent.

As a result, privacy issues related to the collection of first-party data are more limited, because the nature of the data, as well as the consent related to its use, are obtained transparently directly from the brand's customers.

How to collect your own data?

Internet users' attitudes towards online privacy change depending on the perceived value of an advertisement. The most interesting advertisements are tailored to their interests, save them time or money, and are presented to them at the right time. When brands understand their customers, they can engage them with a marketing strategy that delivers value and drives performance. The use of first-party data is therefore essential. This is company-specific information that customers provide voluntarily. When used in the right way, they allow marketers to understand and anticipate the individual needs of their customers, reaching them with relevant and meaningful messages.

On the security side, first-party data is more reassuring for the Internet user since there is no intermediary between him and the company using his data. More and more companies are also focusing on hosting data in their country of operation.

How do you encourage customers to share this data?

Internet users surveyed by Ipsos who feel connected to a brand are more likely to give them permission to present them with offers based on more detailed data.

People consulted are three times more likely to respond positively to an advertisement when they feel they have more control over the use of their data.

Source : Google et Ipsos, “Privacy by design: exceeding customer expectations”, 2021

The collection of first-party data is a hot topic, at the heart of discussions in terms of information security.

Some recommendations for marketing teams:

• Build trusting relationships with consumers to get them to share data

• Use a preference center

• Respect the choices of users regarding the protection of their data

Loyalty strategy

One thing is certain, the imminent end of third-party cookies questions the strategies for acquiring customer information. As the foundation of customer acquisition strategy relies on third-party data, companies are seeing the urgency to adapt their growth strategy. Indeed, they are increasingly moving towards customer retention, which requires the collection of first-party data.

To do so, companies can rely on relationship marketing and loyalty strategies. Now more than ever, loyalty programs are very effective vehicles for collecting first-party data. They make it possible, among other things, to collect personal, transactional and behavioral data on each of the company's most loyal and committed customers, in a completely transparent manner. Moreover, companies are not the only ones to benefit from the advantages offered by loyalty programs. Indeed, members also reap benefits, including being offered exclusive rewards, points, and a personalized consumer experience.

That being said, the collection of first-party data remains a growing challenge for companies today.

The results of the Global Customer Loyalty Report 2022 reveal that data collection is the third most important challenge identified by respondents.

Source: Antavo, “Global Customer Loyalty Report 2022”, 2022

In other words, managers of companies that offer a loyalty program indicate that being able to collect and then use data to feed segmentation and personalization is a significant organizational challenge. This challenge will continue to influence the future of marketing and customer loyalty in view of recent changes in legislation.

To be able to collect, store, and then use first-party data wisely, companies must invest in technology, in particular in a CRM (Customer Relationship Management) platform. CRM software collects all customer information, saves it in a database, and manages it in a way that optimizes business objectives. Purchase history, customer interactions, point accumulation, use of rewards, contact information, customer profile, it's all there!

In short, loyalty programs allow companies to collect first-party data through an agreement whose terms and conditions reinforce the bond of consumer trust. In addition to offering them relevant rewards, companies that manage a loyalty program can more easily meet the needs of their most loyal customers by personalizing messages, offers, contact frequency, and communication channels.

Data activation strategy

Collecting first-party enables the creation of personalized scenarios to guide a customer through their journey.

Here is an example of a customer journey with Actito:

• The welcome scenario:

When creating a signup form, it's important to think about collecting the most relevant data about a customer. Beyond the surname, first name, and email address, this is the perfect time to also ask for the customer's age, family situation, the geographical area where they live, or even their purchasing preferences.

All this information then makes it possible to carry out personalized communications with relevant recommendations for the customer since it will now be possible to name the store closest to the customer's home, recommend products adapted to his age and his tastes, and offer promotions for his children if he has any.

Key figure: Welcome scenarios are the most popular ones for customers, with a 60% open rate on average.

• The transactional scenario:

The objective of this scenario is to make the transactional experience memorable and to encourage a new purchase.

In addition to purchase-related information, which allows recommendations to be made based on similar purchases of other customers, information collected about the customer upstream allows even more targeted recommendations on other aspects of their personality or leisure, thereby increasing the possibility of a new purchase.

Key figure: On Actito, the average opening rate of upsell or cross-sell campaigns, with personalized recommendations reaches up to 43%.

• The inactive reactivation scenario:

Inactive contacts are those who no longer respond to campaigns, have not made a purchase in a defined period of time, or no longer show any commitment to the brand.

Having first-party data makes it possible to send personalized communication that is more likely to arouse customer curiosity and rekindle their interest than mass communication sent to a large number of customers. A great example that attests to that is Colmar's experience with personalization through Actito and the benefits it now draws from it. Nothing prevents at this stage from creating a new satisfaction form intended to collect the impressions of an inactive customer who no longer feels challenged by the brand to be able to improve their marketing strategy.

Key numbers :

• Between 20 and 50% of the contacts in a database would be inactive.

• The conversion rate of an inactive contact is up to 10 times higher than a prospect's.

Actito and stratLX have collaborated to shed more light on the importance of first-party data collection in your marketing strategies.

Need advice on how to enhance your data activation strategy? Do not hesitate to contact us for all the tips and tricks on bringing automated yet highly personalized marketing campaigns to life.

Would you like to optimize the use of your data related to your loyalty marketing? stratLX offers support for companies wishing to implement or improve their loyalty strategy.