The marketing world is up in arms about changes in data collection. With Google Chrome banning third-party cookies, many advertising platforms, data services and analytics solutions are in trouble. My company builds artificial intelligence audience models using first-party data for brands, agencies and other solution platforms, so we pay close attention to things like this.
For many, the changes will cause an abrupt change and likely some cost and discomfort. The good news is that they’re long overdue and can be a great benefit to brands.
The benefit comes from how we see and value data. First off, in its raw form, data is not an asset; it’s a raw material input to be converted into information. The quality of that raw material is critical. When that information informs decision-making, generates new business opportunities and improves efficiencies, it has value.
With that in mind, it’s easier to understand why first-party data is such a valuable resource.
What’s the Difference Between First-Party and Third-Party Data?
Third-party data is collected without having a direct relationship to the audience. It can be collected from websites, social channels or platforms. It is often aggregated by data management platforms and provided as a service to brands.
There are three issues with third-party data:
- Origin: When you buy a data set or analytics based on third-party data, you don’t know how it was collected, from whom and for what purpose. It may be completely irrelevant to your needs.
- Relevance: Without knowing the origin or purpose, you can only guess as to the data’s relevance to your needs. Drawing conclusions could be dangerous.
- Quality: You don’t know anything about the quality of the data that was collected. It’s a black box, introducing a business risk or even potentially damaging your brand.
Using this data, brands are essentially marketing to anonymous consumers. The analytics derived may be faulty or unfit for purpose. The result? Mistargeted campaigns, wasted spending and managing issues as a result of unintended recipients.
First-party data is collected directly from your audience. It may be generated from interactions on websites or apps, or captured by customer relationship management systems, email marketing, social platforms and other channels. It’s based on a direct and intended interaction, meaning it’s not anonymous; it is knowingly provided by the audience and knowingly collected for a specific purpose.
First-party data delivers many benefits:
- Asset value: Your first-party data can be a valuable asset. This is data that is about your actual customers and potential customers. This is a unique resource for your brand. When you purchase third-party cookie data, you have not built an asset that is uniquely about your business and customers or potential customers.
- Relevance: Because your first-party data is about your audience and brand, it’s relevant to your purpose. You know where you collected that data, how you got it and why you targeted it. Critically, when you utilize the data, it is relevant for your purpose, and the audience is aware of, or even expecting, engagement.