The benefits of third-party data for companies’ customer engagement efforts today are few.
It’s been a valuable type of data in that it’s helped business technology users develop and augment audience segments, enhance the profiles for existing customers in their database, and target individuals with personalized ads, emails, and other messaging.
However, one could argue the downsides of data aggregated and sold by third parties (e.g., inaccurate and/or incomplete information about individuals, no way to know if individuals have consented to having their data collected) outweigh the pros of the data source.
Factor in the growing prominence of first-party data as businesses’ premier marketing resource, and it’s easy to see why many organizations are ‘making the switch.’ That is:
Eliminating usage of third-party data and, instead, collecting and utilizing first-party data to better understand and engage with their prospects and customer base.
Knowing it’s time to kick your third-party data habit is one thing. But now, in a market in which digital disruption is the norm, is the time to recommit to first-party data to achieve better lifecycle marketing outcomes and scale and streamline your engagement strategy.
Third-party data: No longer the primary marketing resource for companies
Using third-party data exchanges is still a go-to approach for organizations across industries.
These companies collect audience data for both potential customers (individuals they’ve yet to collect any data on or create profiles for) and their existing customer base (to aid their data enrichment efforts for their customer profiles).
But securing demographic, behavioral, and contextual data sets and other audience information from these marketplaces is often expensive, unreliable, and unsustainable.
In short, the ROI from strategies built around third-party data (ones that rely on demand-side platforms and data management platforms) continues to decline for companies.
Many of which now see the data source’s disadvantages:
Only 21% of companies use third-party data to drive their personalized marketing efforts today, compared to 37% that use first-party data. — 2020 Merkle report
77% of marketing professionals said General Data Protection Regulation has impacted how they use third-party data in targeted marketing. — 2018 Sizmek survey
Just 42% of digital marketers deemed third-party data suppliers a reliable and effective data source for their marketing programs. — 2018 DemandLab survey
Of course, ‘blending’ first- and third-party data in certain instances can strengthen companies’ customer engagement efforts and help them gain deeper audience insights.
For instance, businesses could use ‘bonus’ third-party data and information for their existing prospects and customers to augment those individuals’ database profiles.
As New York Times VP of Advertising Data Kendell Timmers wrote for AdExchanger, though:
“Third-party segments can, over time, approximate an audience that might be more interested in an advertisement, but it is not a truth set, and there are limits to how targeted marketers can get.”
(Side note: The Times would certainly know the limitations of third-party data. The publication recently announced it would phase out the data source for ad buying by 2021 and monetize its first-party data set by sharing it with advertising partners.)
What is a definitive truth set is first-party data generated via modern marketing approaches.
First-party data: Far more effective for marketers than third-party data
First-party data’s reliability and accuracy compared to third-party data are certainly two key reasons why organizations continue to prioritize it in their marketing strategies today.
Arguably the biggest differentiation between the two data sources, though, is companies that collect first-party data know 100% of its origin (e.g., channel, source, or touchpoint where it was secured) and the consent status for individuals for whom they’ve collected data.
It’s this certainty that empowers marketers to confidently and accurately activate data. The same can’t be said for third-party data.
Marketing can never be fully certain externally sourced data can be activated whenever and wherever they need. This lack of trust and assurance ultimately deters efficiency with their marketing programs and, thereby, leads to poor marketing outcomes.
Marketers, data scientists, analysts, and advertisers with first-party data, meanwhile, can do things like build dynamic custom segments and deploy predictive machine learning models.
Both of these particular tactics can enhance several engagement initiatives: from lifecycle orchestration and campaign development to behavioral and contextual targeting.
Value exchange critical to building consent-driven first-party data strategy
The key to generating ROI from such marketing initiatives, however, lies in providing enough value to your target audience to convince them to ‘opt in,’ share their first-party data in the first place, and allow you to use said data across your marketing program.
“Leading brands understand that data isn’t something they have a right to own,” BlueConic COO Cory Munchbach recently wrote in a Forbes Business Council post. “Rather, it’s something that consumers are willing to give in exchange for value.”
In other words? An organization’s ability to collect first-party data — and fuel business growth — depends on its ability to build a mutually beneficial relationship its customers.
Businesses must provide a high-quality, end-to-end customer experience to individuals.
That is, they must ensure the most appropriate messaging (e.g., customer-tailored deals and product recommendations) is shared at the most applicable customer lifecycle stage.
In exchange, these individuals become more likely to remain engaged with the business. This reciprocal relationship is an aspiration for customer-obsessed companies today.
But it’s one that requires the right mix of people, processes, and technology to enable organizations to deliver bespoke experiences in a streamlined and scalable fashion and, subsequently, build long, fruitful relationships with their customers.
Utilizing first-party customer data — and a pure-play CDP — to accelerate growth
On the tech side, there’s no better solution to help your organization make the most of its first-party data than a built-for-purpose, pure-play customer data platform like BlueConic.
Our CDP helps companies in many industries unify first-party data from across sources.
Specifically, BlueConic enables multiple growth-focused teams across our customers’ businesses to improve their core tasks — and generate better business outcomes.
Consider Belgian Cycling Factory’s (BCF) strategy centered around first-party data collection and utilization — one that has helped it navigate the new normal created COVID:
Prior to investing in BlueConic, the bike manufacturer relied heavily on its dealer partners to provide shopper data. Roughly 90% of its pre-pandemic business came from physical retail stores. (A significant amount, to say the least.)
When COVID hit, those dealers’ stores shuttered. This meant it was vital for BCF to build an ecommerce store — and a first-party data set to enable the company to develop an engagement strategy that drives customers to that store.
The online shop was live within a week, enabling BCF to transition to a direct-to-consumer business model, capture first-party data directly from visitors and shoppers, and use that data to further engage past and prospective shoppers.
The BCF team also saw additional opportunity to leverage its increasingly robust first-party data set: Develop a “marketing-as-a-service” program for its partner dealers to deliver highly personalized experiences to potential customers in different dealer regions and grow traffic and sales.
This first-party data prioritization has led to considerable growth to date.
Just as importantly, though, it’s helped BCF gain richer customer insights, construct more sophisticated segments, and activate data in a more efficient manner across touchpoints.
And BlueConic plays a pivotal role in the company’s ability to bolster engagement and accelerate business growth, according to BCF Sr. Marketing Advisor Michel Lenaerts.
“We saw positive ROI from BlueConic in one month. Not only does it help us better understand our customers and improve marketing, but it also provides the insights we need to show dealers how to sell more,” Lenaerts said.
Utilizing third-party data or relying on partners to supply you with second-party data (e.g., BCF’s dealers) will only lead to inefficiencies across your business — and insufficient ROI.
Conversely, unifying first-party data in BlueConic can help you put the customer at the heart of your business, empower all teams to make better decisions, encourage innovation and growth across the company, and — at the end of the day — generate more revenue.
Chat with the BlueConic team today to learn how our pure-play CDP can help you liberate your first-party data and improve your marketing and business outcomes.