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First party data: why marketers should care about building customer trust

March 23, 2021

I’ve discussed at length the upcoming changes marketers are facing as we embrace cookieless advertising. However, with the topic being so expansive and technical it’s easy to miss what the cookieless future means at its very core – namely, first party data and the acquisition strategies surrounding it.

Fundamentally, cookieless advertising is putting control firmly in the users’ hands when it comes to how their data is used. The days of the one-stop-shop for sharing cookies across networks through third party data are numbered and users will have complete power of who has their information, without exception.

Even among an established customer base, advertisers can simply not take for granted their users will hand over their first party data. Being able to gain users’ trust will be as essential as gaining their initial interest in your products. Advertisers will need to learn how to excel at demonstrating the value of our products and services, along with proving the benefit of consenting to personalised advertising.

The value exchange – data for services

Simply put, first party data is defined as the data that is collected by companies directly from the consumer. This includes information such as intent to purchase, browsing behaviour, transaction history, loyalty, and preferences such as from surveys, and competitions. When used for advertising purposes, users need to trust that you will not be invasive or aggressive when serving your ads.

But where will that trust come from?

When the customer sees your ads in search engine results, experiences your storefront on Amazon, your display banners on their favourite websites this builds your brand and values in their minds and, consequently, their confidence that your brand is trustworthy. This inspires them to share their information with you by signing up to your newsletter or to receive a brochure. This exchange is very powerful because they are sharing their personal information with you by choice.

For example, Salesforce.com’s 2019 “State of the Connected Customer” survey found that 83% of consumers are concerned about sharing personal data online and 72% would stop buying from a company or using a service because of privacy concerns. This is a significant stat, proving that to get what you need from customers, you have to reassure them their data is safe with you.

Understanding your customers

As much as advertisers will be looking for the magic strategy that helps them appeal to every user of their site, the variations in customer profiles across each and every company make this impossible. Fortunately, for companies who have already put in place a digital maturity framework, you will already have this customer understanding in place.

First party data is one of the biggest drivers of digital maturity. Many marketers use it two-fold; one for digital marketing tasks like customer segmentation, and secondly for personalisation to serve customers better. BCG’s global digital marketing maturity survey showed that companies who integrate first-party data sources into their digital marketing generate on average double the incremental revenue from a single ad placement, communication, or outreach. Investment into a digital maturity framework is therefore intrinsic into nurturing customer relationships and maximising ROI.

The matter is even more complicated for advertisers who work on an international level as cultural approaches to sharing data will need to be considered. When my colleague Alison embarked on her own research into how to gain first party data internationally, the stats emphasised the importance of understanding your local market and knowing how willing your international consumers are to hand over their data.

How do we apply this to the value exchange?

Part of the two-way ‘value exchange’ is giving the customer a benefit in exchange for their information such as offers, or useful information like an eBook. In exchange marketers can deliver better customer experiences and more effective marketing. The principles of good data stewardship are vital to sustaining this cycle.

What you’ll need to do is identify what will appeal to your user in exchange for their data. The recommendation from the BCG is that marketers follow three best practices when asking customers for permission to use first-party data:

  • Visibility: Ask for permission with a neat user interface, and they make it easy to withdraw permission by giving users control.
  • Candour: Be upfront about the reasons for collecting data, the benefits and usage.
  • Value: Highlight the incentives, such as a better customer experience.

What can we do with this data?

At this point I would usually ask, ‘how long’s a piece of string?’. If you have the right support and skills then there are infinite possibilities on what you can do with first party data. To summarise the three key themes however:

  • Strategy: Marketers can use the data to understand customer segmentation and support business objectives through problem solving the barriers to purchase, following data analysis. More importantly, first-party data can be used to upsell or cross-sell, to predict and even to prevent churn of customer loyalty through bespoke user experiences.
  • Collection: There are many different first-party data sources. The most common sources include on-site browsing, interactions with digital paid ads, and CRM databases. This data can then be linked to a demand management platform (DMP) and used to increase conversion further along the funnel.
  • Analysis & Activation: Only when data sources are integrated and linked to marketing activation do we see significant increases in ROI, this requires specialised support. We can use first-party data in multiple ways, ranging from the basic (e.g. audience definition) to the advanced (e.g. predicting future consumer trends).

Being able to get a good grip on first party data is becoming an increasingly important part of forming an effective advertising strategy. With Google now having announced their path to eliminating cookies that use third party data, your business needs to plan how to gain this information directly from users.

Get ahead of your competition with ClickThrough’s free guide to ‘Preparing for the Cookieless Future’. Download the free eBook today to access our collated guide to navigating the months ahead.

By Macy Edwards – director of digital paid media

Tags

cookieless
Cookieless marketing
cookieless world
third party data
first party data
digital maturity
trust