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Are you sitting on a (second-party) data goldmine?
December 16, 2021
Let’s look ahead to the day when Covid-19 no longer casts its long shadow and curtails many of the things that we previously took for granted.
Now let’s consider travel and, more specifically, the complete travel ecosystem in terms of the data it generates.
First of all, the consumer chooses the holiday – where they want to go, with whom, how they will travel, how long they’ll stay, what they will do when they get there, etc. This involves several suppliers, but assuming the transport is booked first, sitting at the top of the chain is the airline, or train company, or ferry operator, or car hire service.
The information they hold on destination, dates and the people traveling could be hugely valuable to enterprises further downstream in the customer journey. Someone going to Barcelona with their partner and staying for a week is already a warm lead for hotels, restaurants and shops in the city, as well as local activity providers. In other words, if these suppliers had access to this audience group (i.e. non-personalized) information, they could undertake targeted and relevant promotion of what they had to offer the holiday-makers once they arrived.
And that is the crux of second-party data partnerships, defined by Forrester as, "when a retailer, brand, publisher or marketer gains transparent access to the website audience data of another retailer, brand, publisher or marketer for marketing purposes – to their mutual benefit." Put another way, privacy safe, consented first-party data is sold (or exchanged) between the different parties in the supply chain; instead of using less efficient intent signals or pure prospecting activities to reach the right audience, suppliers have a ready-made shortcut – and a fast and efficient way to deliver marketing ROI.
The value of data - and from there, how to monetize it - is much-discussed, but it’s a holy grail yet to be achieved by many organizations. Second-party data partnerships offer a way to tackle the challenge, and are of particular interest in the context of the soon-to-be-culled third-party cookie.
So how should a company go about setting up these commercial relationships? Our experience of all things data at Artefact has informed the following guidelines:
1.) Define the business objectives
As with any business partnership, before entering into an agreement with a third party to share valuable privacy safe, consented first-party data, it’s important to be clear about why it’s important and what it needs to deliver. This requires understanding the goals of the use cases; the more specifics included on what data is required and how it will be deployed, the better.
2.) Avoid being ‘data hungry’
With all the data on offer, it’s tempting to want to capture all the second-party data available via the partner, rather than focusing on what is needed (as outlined above). However, over-expanding the scope of the data sharing potentially breaches GDPR, as it’s not critical from a business perspective; it might also create problems further down the road if the user changes their consent preferences, so providing time bound access to certain audience groups can ensure the necessary safeguards are in place.
3.) Don’t overcharge
Setting an initially high price for data is a false economy, and may result in turning down potential business. The strategic route is to prove the value of the data in order to establish long-term partnerships built on mutual trust and merit. To that end it’s worth considering the provision of data for free initially or for another mutually beneficial agreement; this offers breathing space to learn how to value it.
4.) Be realistic
The only way to prove the value of data to a partner is to test it, and that means starting off with small projects. This also provides the opportunity to understand the value of the data and how that varies with each partnership (covered in point 3 above). It also means any internal data quality and governance issues can be ironed out. Advanced steps include improving the data, and packaging it appropriately, depending on the needs of the partner.
Creating any new income stream always contains an element of trial and error. Enterprises undertaking this route need to be prepared to devote time and expertise to getting it right.
Although success is not necessarily as simple as the flick of a switch, as the value of data is increasingly recognised, second-party data partnerships have the potential to unlock new revenues, as well as power faster and more efficient marketing.