As a marketer, it’s obvious that data is “in” right now. It’s all the rage.
Everyone’s talking about it right up there with virtual reality (VR) and video ads. But what exactly is first-party data?
I work for a data company, and it even took me a while to truly understand first-party data. Then I was in a meeting with a room full of senior executives in the industry who were debating and discussing the definition of first-party data.
Apparently, I wasn’t alone.
First-party data is information that a company collects themselves and owns. The information comes directly from the source (i.e. the customer) and goes straight to the company. It can be anything from names and addresses to website behaviors and transactional data or any data produced within a company’s products or services. The point is that the company collected the data themselves, and therefore they own it.
Third-party data is information created on other platforms, and there are vendors that aggregate and sell this data. Recently, second-party data has entered into the mix, and that’s essentially when a company gets access to another company’s first-party data.
Now that we’re all on the same page, why do marketers need to pay close attention to first-party data?
1.) First party data is gold.
We’ve all heard that first-party data is important and valuable. But why is first-party data so great? A recent study by Econsultancy and Signal reported that “respondents found their first-party data to deliver the highest return on investment compared to other types of data, and at least two-thirds of the 300+ senior marketers surveyed believe first-party data is the best path to better customer understanding and business performance.”
It’s valuable because of its quality.
Since the information is coming straight from the source, it’s more likely to be accurate and it should be easier to keep up to date. It’s also directly relevant to your business because it’s the only kind of data that shows your exact relationships with your customers. It can tell you how your customers have interacted with your brand in the past and what actions have led them to purchase, and it can help to direct your communication with them moving forward.
2.) First-party data needs a little help from time to time.
While marketers agree that first-party data is the most valuable type of information that you can have about your customers, first-party data shouldn’t stand alone.
Capturing enough first-party data to have a comprehensive understanding of your customer can be challenging, so having second-party and third-party can help fill in the gaps.
Plus, there might be data that only another source can collect. For example, it’s unlikely that you’d be able to gather the rich brand affinity data that Facebook does, but it’s a still a valuable source of second-party data.
The best marketers use a combination of all three types of data while putting the emphasis on first-party data. To do this, it’s important to have platform where all of this data can be united to give you a holistic view of each of your customers.
3.) First-party data requires strict security and an ethical code.
We all remember the infamous data breach scandals of Target and Ashley Madison, but the truth is that if you’re collecting first-party data, you have a responsibility to your customers to collect it ethically and securely.
This is especially true when you’re dealing with personally identifiable information (PII) data.
PII data includes any information that can identify a specific individual. If you’re collecting first-party data, you’ll need a place to store it – in a database or CRM, and it’s worth your brand reputation and customer satisfaction to invest in a secure system.
In summary, first-party data is important because of its accuracy and its ability to give you insights into the personal relationships that your customers have with your brand. The more detailed first-party data that you can collect including transactional data and brand interactions, the more you’ll understand your customers and can personalize your marketing campaigns.