The way organizations collect, manage and use their data is changing fast. Thanks to recent legislative and consumer behavior changes, savvy marketers are quickly shifting from third-party to first-party data to deliver personalized customer journeys.
After relying too long on third-party data brokers for their personalization, companies have now to reimagine their data collection strategy and get their hands dirty.
Here are a few ideas on how to implement a first-party data personalization strategy for your business.
The death of third-party data
But first, why the urgency?
Until recently, most businesses have relied on third-party data collection (or cookies) for personalization – with social media platforms making up the bulk of that data collection. First-party sources have traditionally been time-consuming and complex to implement, and third-party data marketplaces have filled that gap by offering centralized sources of user data at a low price.
But privacy concerns are now at the top of users' minds who are now reluctant to share personal data, forcing brands to adapt their user data collection strategy and privacy policies.
The largest and most obvious regulatory drive for greater data privacy has been the General Data Protection Regulation (GDPR) out of the EU. Organizations need to get consent from users for pretty much any data collected.
And major tech companies have responded to ballooning expenses and threats of regulatory fines. The biggest announcement came in 2020 with Google’s promise to phase out third-party cookies within two years. In 2021, they confirmed their commitment.
“We’re making explicit that once third-party cookies are phased out, we will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products.”
Other tech giants have also been rolling out similar changes. Apple’s App Tracking Transparency (ATT) framework went live in April 2021 and forced apps running on iOS to ask for user permission to track activity across websites and apps – making it much harder for organizations to create cross-platform personalization.
In the wake of those changes, everybody is now talking about "first-party data".
First-party data and web personalization
What is first-party data?
First-party data is user information an organization collects on its owned channels, not through third-party data brokers.
The organization places code on its apps and websites to track user behaviour like users’ IP addresses, login credentials, browser language, timestamps, demographics, which sites they visited, and items they left in their shopping cart.
For the sake of this discussion, we'll also include zero-party data inside this definition, which consists in information that a user proactively shares with an organization. This could be data from forms, surveys, polls – anything where a user directly shares information with you. This information provides immediate, explicit insights for an organization.
This is the sort of information regulated by laws such as GDPR.
What are the advantages of first-party data?
In a cookieless world, first-party data collection allows organizations to create better personalized experiences while respecting users' privacy. But other advantages also started to emerge for brands taking this new approach:
- Competitive advantage – Investing in first-party data allows you to build unique user profiles, unlike third-party data that is accessible to all your competitors. Building comprehensive personal information datasets is hard to replicate, and brands who do it well can set their customer experience apart from the competition.
- Greater accuracy – Assessing the accuracy of third-party data can be difficult – if not downright impossible – and entirely based on the reputation of the provider. With first-party data, you control the quality of the data you collect, and can often tight it back up to an individual user. Indeed, third-party data are almost always provided "anonymously", but first-party data can be tight up to a unique email address for example.
- Data management – Aggregating and reconciling data from multiple third-party brokers can be time-consuming and prone to errors, due to the fact that they may not all use the same data standards. However, by directly collecting first-party data, you can define your own database structure and ensure all customer data fit nicely in it.
- Cost savings – Using first-party data means you don’t have to purchase it. Yes, you do have to invest in tools to collect it yourself, but this is often a fixed cost rather than a variable (and more expensive in the long term) cost.
- Stay ahead of regulation – Limiting your exposure to third parties and opaque data management reduces your risk of data breaches. Using first-party data also helps you stay ahead of the gradual push by regulators for more transparency over how your data is collected.
First-party data strategy
Here are some good practices to implement first-party data collection.
- Only collect what you need – Collecting first-party data is based on the idea that you’re a trustworthy and transparent custodian of someone’s data. This means you always ask for permission before collecting data, you set out exactly how that data is managed and what it’s used for and then you only collect data relevant to your goals.
- A single source of truth – don't create yet more data siloes within your system. All your user data should be centralized an easily accessible via API integrations.
- Build a strong tagging infrastructure – nobody wants to manually manage data. Automate tagging and user classification (i.e. target audience) as much as possible.
- Create value for your customers – Are you giving your users reasons to share their data with you? Tell them about the benefits they’ll receive in return for sharing their data, such as enhanced customer experiences, relevant recommendations, or exclusive offers.
- Diversify your data sources – Diversifying your data sources will give you valuable insights and make your data analysis more robust and effective.
How to collect first-party data
When collecting personal information, consider the following sources:
- Zero-party data – you typically need to use some kind of online form that lets a user share information with you. This includes user registration/single sign-on forms, email subscription, progressive profiling, lead-generation campaigns, surveys, customer feedback, reviews, etc
- First-party data – a simple piece of code inserted in your website can help you track behavioral information such as IP address of the user, webpages visited, time of the visit, time spent on each page, source referral, etc
How to aggregate first-party data
Can a CRM be enough to manage your first-party data? Yes and no.
As long as you CRM can integrate seamlessly with another "publishing" platform (CMS, email platform, ad platform, etc), you can implement a web personalization strategy.
Tools like ActiveCampaign can be great for launching personalized email campaigns, but quickly reach a limit when trying to implement an end-to-end web personalization strategy.
Enter the Customer Data Platform (CDP).
What is a Customer Data Platform?
Customer Data Platforms (CDPs) are a type of software that aggregates customer data collected from a variety of sources, including CRMs, Data Management Platforms (DMPs), data lakes or warehouses, websites or mobile apps, and/or POS systems. The data can then be structured into central customer profiles and accessed by other software.
Why use a Customer Data Platform?
Moving to a CDP gives you three main advantages over other alternative solutions.
- Unified customer view: A CDP offers a single, 360-degree customer view for organizations. It centralizes your data scattered across different systems or departments, reducing data siloes. It can reconcile demographic data (typically sourced from a CRM) with event data (what happens on a website for example) and carry out those standardization and consolidation steps.
- End-to-end customer experience: By gathering all your customer data under one roof, you can deliver a personalized experience across the entire customer journey of a user. Before using CDP, organizations were limited to the user data provided on each platform (ads, email, website, etc). With a CDP, they can now combine those datasets to deliver a better user experience.
For example, a user viewing multiple videos of a specific business course on the social media account of a university will be shown a more personalized homepage with a focus on this same course (banner, highlighted course, personalized search suggestions etc) when they finally decide to visit the university website.
Should you move to a CDP?
Yes! If you’re still unsure, some of the core reasons why CDP’s are quickly dominating tech stacks across industries include:
- Zero-party data and first-party data are the only sure personalization path forward to implement a lasting marketing strategy, as we see greater regulation and market leaders announce their own push toward removing third-party data collection.
- The uptake of DXP technologies highlight the need for a more centralized and interconnected data management system to create greater user experiences.
- People want their data private while experiencing an ever greater level of transparency and personalization in their digital experiences with organizations.
Only a CDP can offer an “out-of-the-box” and easy-to-implement first-data collection and management solution for organizations. They integrate with DXP solutions seamlessly and can cheaply scale with organizations, unlike custom solutions.