Why First-Party Data is Crucial for Brands in a New Era of Advertising

Apple, Meta and Google have all implemented data privacy rules that have impacted the advertising landscape. Here’s why first-party data is a key part of the solution for brands moving forward.

Data is king in the world of digital advertising. As more and more of our lives have moved online, brands have been able to leverage insights to better understand their customers and tailor marketing messages accordingly. This has made data an essential component of digital success for brands — leading to higher conversion, engagement and retention rates across all channels.

However, the days when advertisers could collect user information without consent are swiftly coming to an end. Consumers are more selective with who they share their personal information with, and new privacy regulations have pushed tech giants like Apple, Meta and Google to restrict data collection on their platforms. In turn, this has greatly reduced the ad performance for brands across all industries.

These new privacy rules mean that brands can no longer rely on third parties to collect data for them — leaving many advertisers scrambling for a solution to continue growing their businesses online. In response, many brands are moving towards first-party data to learn about their customers’ behaviors and preferences in detail — and using it to deliver the best digital experience possible.

Let’s take a look at why first-party data is so important as we enter a new era of advertising.

What is First-Party Data?

First-party data is any information collected directly from customers or prospective customers. This could include anything from contact information (email addresses and phone numbers) and basic demographics (age, location and interests), to purchase histories, browsing habits and beyond. This data can be used to gain insights into customer behaviors and preferences, which can then be put to use for creating more effective and efficient marketing initiatives.

Third-party data, on the other hand, refers to marketing insights acquired through external sources, which has been greatly limited in recent months. Apple iOS 14 update made it difficult to track iPhone users and target them with personalized ads through platforms like Meta. Whereas Google has decided to phase out third-party cookies, significantly restricting the data collection of web visitors that was previously used to provide personalized digital experiences.

The key difference between the two is that first-party data is collected with the consent of customers and web visitors. This information is then owned by the company itself and can be used to create ads, content and digital experiences that cater to an individual’s interests.

Using First-Party Data to Amplify Your Advertising

So what are the benefits of incorporating first-party data into your growth strategy? The most obvious advantage is that it gives brands greater control over their customer experiences. They’re able to collect their own data without relying on third-party vendors or external sources, which gives greater visibility into who their customers are and what they want.

It’s important to remember that personalization is the key to any winning digital marketing strategy — and understanding audience segments is the first step in the process. Insights from first-party data help brands to personalize content and communications for different audience segments, enabling businesses to provide seamlessly customer experiences from start to finish.

Not only does first-party data make brand messages more effective, but it can also be used to lower advertising costs. The insights collected from customers means brands can make best use of marketing budget by targeting the customers who are actually interested in purchasing or converting, rather than wasting resources on people who aren’t likely to convert anyway. By analyzing multiple touchpoints, brand can get a detailed view of the customer journey, allowing them to lead customers down a path that leads to conversion.

Finally, first-party data is great for improving customer retention. In a highly competitive digital environment, customer retention is easier and often less expensive compared to new customer acquisition. Brands can use the insights from first-party data on their repeat and existing customers to thoroughly understand pain points — and provide unique customer experiences and tailored messages to drive brand loyalty.

How to Collect First-Party Data

Before you can begin amplifying your advertising with first-party data, you need to make a plan to start collecting it. The first step is to understand what type of data you want to collect. Do you want to learn how customers respond to different types of content? Or would you like to analyze how users navigate your website?

Once you’ve identified what type of information is valuable to your business, you can start gathering it. This might take place through a variety of your brand’s “owned” channels, such as direct surveys and polls, social media platforms, loyalty programs or various marketing tools (such as Google Analytics).

The key is to provide the right value exchange. 90% of consumers are willing to share their personal information for the right incentive, such as improved convenience or a personalized experience, according to a recent study by BCG. That’s why brand tokens, such as those from Cultos, are another popular method of data collection that’s quickly gaining steam, as they incentivize customers to help their favorite brands grow.

Instead of collecting data by invading consumer privacy (third-party data), first-party data relies on mutual consent and cooperation, which is possible when consumers feel they’re receiving something of value in exchange. That could be early access to product launches, content or product recommendations, loyalty programs that offer rewards or exclusive benefits.

It’s also important to maintain customer trust by keeping their data safe, so be sure to make your privacy policies clear and accessible, and be transparent about how you use your customers’ data.

Bring Your Customer Acquisition, Engagement & Retention to Web3

First-party data is the next step in the evolution of digital marketing. By collecting information directly from customers themselves, brands are able to craft more targeted messages and create personalized digital experiences — increasing acquisition, engagement and retention as a result.

Get transparent, secure and actionable first-party insights by partnering with Cultos today.