blog | 4 min read

The Time for First-party Customer Data Is Now

January 25, 2022

Illustration of a frosted badge with a large "1P" on it

“Why rent when you can own?” A familiar real-estate adage, it’s a question with increasing relevance to a shifting digital marketing landscape in which third-party customer data will soon be obsolete.   Simply translated:

“Why buy customer data points when you can make use of the verified customer data you own?”

The advantages of first-party data for marketers — as well as its customer engagement returns — are well-documented. As a consolidated, proprietary data set, it’s more accurate, flexible, relevant, reliable, personal, predictive, and privacy-preserving than its second-and third-party data counterparts. Bottom line: your brand has collected the data; now use it to deepen customer insights and improve the customer journey!

First-party data — Turning customer data points into unified customer profiles

Your customers are unique; shouldn’t your approach to digital marketing be too?

The data you’ve collected directly from your customers and users in real-time, on your brand websites and apps, provides a strategic marketing advantage over third-party data.

It’s based on actual interactions and individual data — customer purchases, website activity, email, and social media engagement, support calls, loyalty, and feedback programs, phone number — and uses machine learning to profile visitors, allowing your marketing teams to create meaningful personalized experiences without being intrusive or violating user privacy. 

Best of all, first-party data is free and not dependent on other entities, reducing the need for non-proprietary types of data and insulating your brand against future changes in the ad ecosystem. Let’s face it: Facebook and Google aren’t going anywhere; these platforms should still be included in your brand’s data strategies and ad campaigns. However, the most important data your company has is the unified data it owns and has stored in a Customer Data Platform.

First-party data > Third-party data

When it comes to customer data, one size doesn’t fit all

Although it can be argued that all customer data is helpful customer data, there are several important differences between first-party and third-party data.

  • Third-party data is non-exclusive and for sale

Third-party data benefits your competitors as much as it benefits you, providing a general idea of potential customers’ interests without delivering a complete understanding of specific customer browsing and purchase histories. First-party data is your exclusive customer data, collected with consent and not — necessarily — shared.

  • Third-party data provides disparate customer data points only

Whereas third-party data is aggregated from myriad (often unverified) sources, first-party customer data is individuated, verifiable, and tells a complete user story, using artificial intelligence and machine learning to make your marketers smarter and your data strategies more effective.

  • Third-party data can be collected and re-sold without customer consent 

While first-party data is generated as a result of a direct relationship with the customer, third-party data is often collected without full transparency. Customer data purchased from third-party sources/providers may not adhere to privacy regulations designed to safeguard your customers’ personal data.

By contrast, first-party data is 

  • Cross-browser acceptable

  • Exclusive

  • Privacy-preserving and GDPR and CCPA compliant

  • Proprietary

First-party data is customer data that is evolving. Its accuracy and relevance are powerful marketing assets that will allow your brand to combat the approaching loss of the third-party cookie.

Second-party data: Digital marketing’s middle child

Privacy-compliant data sharing to inform your brand’s strategies

Simply stated, second-party data is first-party data that is acquired or purchased from a trusted partner. For example: a hotel chain providing and/or selling customer loyalty program data to partners such as credit card or car rental companies.) 

Although it’s not generated on the basis of a direct brand-customer relationship, as it’s collected in the same manner and through many of the same channels as your brand’s first-party data, the quality and accuracy of second-party data is assumed to be similarly reliable.

Perhaps more importantly, as your brand’s selected partners and vendors also adhere to strict privacy regulations set forth by the GDPR, CCPA, and Data Protection Act, you can be confident that the second-party data they provide has been collected with the consent of the customers in the data set.

In combination with first-party data, second-party data can be used to develop powerful predictive models to inform your brand’s data strategies and to deliver relevant personalized experiences to your customers.

With third-party cookie deprecation fast approaching, look for second-party data to shed its middle child status and emerge as a secure, privacy-compliant tool to track customer data.

It’s not that third-party data is no longer enough; it’s that it’s going to be obsolete

Data collection in a post-cookie, privacy-centric digital marketing world

In early 2020, Google announced its “Privacy Sandbox”, an initiative to stop supporting third-party cookies by 2023 in order to “create a thriving digital ecosystem that is respectful of users and private by default.” This is partly in response to the growing customer expectation for privacy and protection of personal data and partly to meet evolving (and ever more stringent) global standards for data privacy set forth by global statutes such as the GDPR (European Union) and the CCPA (California). Although privacy-preserving safeguards are not new (Firefox, Safari, and Apple all block third-party cookies by default), as strict data protection measures continue to be implemented, brands must decrease reliance on third-party data to ensure that targeted marketing campaigns continue to reach customers and drive revenue. As first-party data is generated based on transparent, consensual relationships between customers and brands, it will not be affected by GDPR and CCPA privacy regulations.

Basically, when it comes to customer data sourcing, your brand has a choice: first-party, second-party, or third-party (or some combination thereof). It’s important to research and analyze the benefits and challenges associated with each type of data, and to determine which is/are best suited to your brand’s marketing needs in the coming digital marketing age.

Learn more on our blog about using first-party data to adapt and thrive.