A rising tide lifts all boats - and for the advertising industry, that tide has been the growth of first-party data. The hype around first-party data has been growing since 2018, with the introduction of GDPR and Apple’s Intelligent Tracking Prevention (ITP). In the face of a cookie apocalypse and ever-changing regulation, the advertising world has placed its hopes in first-party data.

At InfoSum, we’ve worked with organizations at various points in their first-party data journey and witnessed many discovering the best way to dip their toes in. From determining the breadth and depth of the water to the best approach to getting started with first-party data, not just in siloed tests but as a holistic part of their marketing strategy.

Before we dive into the details, let’s settle on some definitions so that we’re all on the same page. 

• What is first-party data? First-party data is information an organization collects directly about individuals interacting with their business. First-party data can be collected from online and offline sources, for example, behavioral data from an app or website, CRM data, point-of-sale data or subscription data.
• What is second-party data? Second-party data comes from using another company’s first-party data, usually made available through a data partnership. It’s the information that the data owner collects on people interacting directly with their company. For example, a retailer making their shopper data available to partner CPGs to generate insights to use for targeting or measurement.
• What is third-party data? Third-party data is first-party data aggregated across multiple sources collected by a company and then sold to other companies for marketing purposes. It comes in various forms, including demographic, geographic, and behavioral, and often includes insights generated by third-party cookies.

Why is first-party data so pivotal in the modern marketing strategy

We can track the rising tide of first-party data almost directly to the downfall of third-party identifiers, such as the infamous third-party cookie. The loss of reliable third-party data has led organizations to focus on the data they collect first-hand from consumers as they interact with their brands. Leveraging first-party data to fuel targeting is the natural progression as it is proprietary intelligence that an organization owns and can control with its governance and policies. 

There are some challenges that organizations must overcome to unlock the full potential of first-party data. 

1. Firstly, this customer data often lacks the scale organizations are used to. 
2. Secondly, it is usually a siloed view of customers, lacking holistic knowledge. 
3. Thirdly, the information is highly sensitive and must be protected and customer privacy prioritized. 

Build first-party data at scale

The customer experience has become increasingly digital-first, a trend accelerated by the pandemic that forced consumers to reconsider how they interact with their favorite brands. From how we shop and consume content to managing our finances and healthcare, a website or app is now more likely to be our first port of call than a physical location. The result is more opportunities for these companies to collect consented first-party data. 

The first and potentially most crucial step in this collection process is ensuring that the appropriate consent frameworks are in place, allowing consumers to opt in and out of their data being collected. Secondly, to ensure this data can be used to drive more tailored customer experiences, it's essential to tie the data to a piece of personal data (PII), for example, an email or phone number, that ensures the audience is authenticated. This ensures organizations can identify customers across multiple devices and channels and unlocks vital collaboration opportunities. 

For media companies, this may mean moving certain content behind a login screen or for brands requiring individuals to register to complete a purchase. But it is rarely as simple as installing a login, sitting back and riding the wave of first-party data. Consumers are now more aware of how their data is collected, stored and used, and therefore are more selective about who they share their data with. Brands and media owners must offer a fair value exchange to entice consumers to hand over their data. That value can range from exclusive content and formats to discounts and subscriptions. 

Of course, while it is important to build a critical mass of first-party data, it is important to keep in mind that this is just a starting point. Collaborating with strategic partners to access their first-party data insights will aid in scale, usefulness and value.

Tapping into the second-party data opportunity 

In the grand scheme of things, a single organization's first-party data is often just a drop in the bucket. Despite its power, first-party data often lacks a holistic customer view, representing only the information an organization can gather through direct interactions. Additionally, many companies, such as CPGs, don't have a direct relationship with their customers and therefore have limited-to-no first-party data. 

Second-party data provides an exciting solution to both challenges, providing additional dimensions to the customer view. As we have covered, second-party data is another organization's first-party data made available through a data partnership. This empowers organizations to unlock new intelligence it can use to inform media planning, activation and measurement. 

A prime example is a retailer that owns data on what products consumers purchase in-store and online making this available to CPGs. This insight will enable those organizations to better understand the customers buying their products, plan future media activity and, importantly, measure the success of previous marketing campaigns. 

Using first and second-party data with complete protection

As we have covered, first-party data is a company’s most precious resource and takes considerable effort to collect. To leverage it safely, organizations must ensure they choose privacy-by-design technology, ensuring protection from data leakage, misuse, or loss of competitive advantage.

Data clean rooms have arrived at the optimum time. These collaboration technologies provide a trusted environment where two or more companies can connect first, second and third-party data for enrichment, activation or analytics whilst ensuring each data owner maintains full control over their data. 

It is important to recognize that not all data clean rooms are created equal. Therefore organizations should carefully assess the data clean room technology they utilize to ensure:

1. Zero data movement between collaborating parties
2. Consumer privacy is always protected
3. Data owners retain complete control over who can use their data and to what extent

Get started with your own data clean room

Now may not be the time for organizations to dip their toe in the data waters, now is the time to jump in with both feet. 

The collection, growth and protection of first-party data should already be a central and significant element of all marketing strategies. It is through data collaboration that the full potential of that data can be truly unlocked. Today, data clean rooms are powering engaging data-driven experiences by enabling multiple datasets across multiple organizations to be used simultaneously.

To learn more about data clean rooms and how they unlock the full potential of first, second and third-party data, download our ultimate guide to data clean rooms.