Google has announced that it will not support third-party cookies in Chrome after 2024. Indeed, the ever-evolving digital landscape is altering how businesses identify and target audiences depending on third-party cookies. This conventional strategy is being phased out, and for all good reasons.
Companies today are prioritizing quality customer data collection. An estimated 85% of organizations consider data as a major asset. This, along with the shift away from third-party data, will push the use of first-party data, which is more reliable. As such, both B2B and B2C brands must reorganize their digital roadmap to adopt this radical change. But with more than 83% of worldwide marketers and 51% of American marketers using third-party cookies, this change will take some time to catch on.
However, given the viability of first-party data, not only is the pivot necessary, but it is also a strategic move that will grant brands an edge in the highly competitive industry. Let’s take a look at what first-party data means for US brand strategies and how the benefits of using this type of data will ultimately give organizations a leg up in their respective markets.
Understanding First-Party Data
First-party data remains unique to a business. It is owned and collected directly from customers through digital interaction. As a result, it is the most relevant and reliable data that depicts customers’ needs.
The data collection process does not involve third-party channels. Instead, data is collected through owned channels like apps, websites, emails, social media, surveys, subscriptions, and other digital sources. This also makes it fuss-free as it only involves customers who consented to be contacted and engaged with through their data.
When utilized correctly, first-party data assists brands in engaging with customers and building relationships that add value while boosting advertising performances.
A Boston Consulting Group study shows how brands thrive with first-party data tactics. Companies that leveraged first-party data for marketing functions accomplished 2.9 times higher revenue growth and saved costs by 1.5 times.
Before we get into the benefits of first-party data, let’s understand how it compares to second and third-party data.
First, Second & Third-Party Data Comparison
As elucidated above, first-party data is collected from owned digital channels; it provides trustworthy and reliable information. It is also unique and valuable for building effective marketing campaigns.
On the contrary, second-party data is acquired from business partners. Although there is a partner involved, it is still considered reliable, and first-party information (as data) is directly derived from clients. Hence, it is deemed appropriate and accurate.
Finally, third-party data is bought from external sources (like academic institutions, governmental bodies, etc.). You don’t exactly know the source of data. Hence, there is no certainty of customer consent or reliability. It may or may not comply with basic privacy regulations.
Benefits of First-Party Data
85% of companies agree that increased use of first-party data is significant for success. Here are some of the major benefits:
Cost Reduction
First-party data collection does not involve a middleman. So, you need not purchase data from other parties, which instantly saves money. Although it takes more time to process, the results are worthwhile. It gives you individual engagement data with detailed insights.
Consistency, Precision, & Relevance
If you are looking for precise and relevant data, it should be first-party. A direct connection between the business and the source of information reduces the risks of errors. Moreover, connecting with the audience directly gives a lead over counterparts. Besides, tracking customer behavior and preferences is easier, and so is the opportunity to improve the overall customer experience.
Data Protection & User Privacy
In 2018, the GDPR introduced a privacy law that made businesses realize the significance of owning customers’ data with their consent. The GDPR highlights that if a firm wants to collect personal data, it should take the customers’ consent and ensure the security of their information. In the USA, the CCPA has laid down similarly stringent provisions. When first-party data is the primary source, it reduces privacy issues because the source of data is known.
Customers’ Trust
When you request customers for personal information with consent, you are fostering a stronger relationship. They take this as a genuine gesture and perceive the business as reliable and loyal. This promotes brand awareness and increases sales opportunities.
Better Data Control
Purchasing data from other sources may compromise quality. Sometimes, the purchased data may not be relevant or true to the interest of the customer or the brand. When you collect first-party data personally, you are in full control of the accuracy and quality of information. That being so, you can manage data distribution across multiple channels from a centralized location.
Audience Segmentation
First-party data enables profound audience segmentation. When customers are segmented into groups based on geography, demographics, interests, and similar qualities, it helps realize desired outcomes quickly. Therefore, businesses must create personalized campaigns based on the segments to achieve higher results.
Potential B2B Marketing
Determining the performance of segmented groups allows companies to create separate campaigns for B2B marketing. Leveraging cross-selling and upselling opportunities using this data and targeting customer groups based on characteristics and preferences becomes a reality.
Personalized Experiences
Personalized customer experience is the key business goal. Organizations today are aware of the fact that delivering a personalized experience is a potential game changer. With accurate first-party data, it is possible to make connections and engage with the target audience to understand their concerns and deliver tailored solutions.
Looking Ahead
The first-party data ecosystem is the gateway to business success. It offers better opportunities to reinforce client relationships through owned media. Handling customer identities accurately and developing trust enables businesses to make meaningful customer connections on a personal level. This elevates their experience and enhances interaction.
At Aroscop, digital commerce experts can help you achieve strategic objectives by leveraging first-party data. Partner with us to stay ahead of market changes and capitalize on the advantages of first-party data.
