Why First-Party Data Is Important: Benefits & Business Value
Sep 27, 2022|Read time: 5 min.
- First-party data is customer data collected firsthand by a business from its customer base.
- Companies must collect and operationalize first-party data to comply with evolving privacy regulations.
- First-party data is cheaper to collect, more accurate, and allows for a personalized customer experience.
Most marketers think the sky is falling because third-party cookies are going away. However, data-driven teams aren’t panicking because they’re already reaping the benefits of first-party data.
As a marketing leader, it’s critical to see the business value of personal data you collect and control. It’s a better source of truth for retargeting visitors on social media, segmenting by demographics, or even understanding purchase history.
Let’s dig into the importance of first-party data from a business perspective.
Why first-party data is important
First-party customer information is one of the most valuable types of data a brand controls. It helps you create more purposeful marketing that builds direct relationships with your audience. It also strengthens your brand and brings greater efficiency to your business operations.
Ensures compliance with privacy regulations
2018’s General Data Protection Regulation (GDPR) changed the game for data collection. Despite being a European Union-based law and only protecting EU citizens, it extends to all websites worldwide, requiring user consent to store third-party cookies.
Safari, Chrome, Firefox, and Edge browsers are all blocking third-party cookies. By 2024, it’s likely third-party cookies will not exist.
When it comes to your business, it’s a bad idea to go afoul of GDPR. Furthermore, third-party cookies are largely unavailable due to browser blocking. That’s why you should renew your focus on first-party data sources. Harvest your own regulation-friendly customer data to power your digital marketing efforts. The good news is that it’s not difficult to stay inside the regs.
Sticking with first-party data won’t come back to haunt you later on. Plus, your marketing efforts won’t be negatively impacted when third-party cookies go away.
Improves customer data integrity
Third-party data, and specifically third-party cookies, is aggregated data that is stitched together and made available to marketers at a cost. Although third-party data is useful, it’s not as accurate as first or second-party data.
Why outsource data collection when you can simply collect it from your customers? Firsthand customer data is going to be far more applicable for the brand than data bought or sourced elsewhere.
When targeting customers, good data is king. It doesn’t get more relevant than gathering your own first-party data from many different customer touch points.
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Create a single customer view (SCV)
Also known as a “360 customer view” or “unified customer view,” an SCV is a method of combining all your client and prospect data under one umbrella into a customer data platform (CDP). A major aspect of SCVs is collecting disparate first-party data to create a single source of truth.
Also, it isn’t limited to first-party data collected from a marketing department, but all company-wide departments. The resulting perspective is much richer and more detailed than other methods.
The ability to unify data from sales, marketing, product design, mobile apps, and customer relationship management (CRM) platforms is game changing.
Reduces cost to gather customer data
Another reason first-party data is important is because it can dramatically reduce business costs.
Technically, first-party data is free because it is collected as a necessity of day-to-day business operations. While there is a cost associated with the various methods of collecting first-party customer data (i.e., running a newsletter, paid tools, etc.), you aren’t actually making an additional purchase.
Third-party data, often sold as 1,000 user blocks, ranges from a few dollars to much more per block. For larger businesses that need millions of data blocks, it’s easy to see how expenditures on data can become astronomical.
First-party data can require more time and effort to collect, but it’s often worth it.
Personalizes the customer experience
Personalization is another incredible use case for firsthand customer data. These detailed data sets reveal your direct customers’ wants and needs so you can translate them into more effective campaigns.
Highly specific customer data unlocks the potential to create personalized experiences that build trust and brand loyalty. When trying to optimize or improve offerings, services, or other aspects of your brand, lean into a first-party data strategy.
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Optimizes marketing impact
If you make marketing decisions empowered by first-party data then you can drive much bigger outcomes. When you prioritize data-driven marketing, you’re likely to achieve a higher success rate across campaigns.
For example, you can connect user insights based on how an individual engages with your brand across multiple digital marketing channels. Maybe a potential customer read an article on your blog, then shared a post on LinkedIn, and then clicked a link in a marketing email.
Again, the more you understand your customer (and have data to back it up), the more effective your marketing strategy and decisions will be.
Delivering business value in a cookieless world
Marketers have recently and rather quickly lost most access to third-party cookies. With privacy laws, new data protection laws, and growing public data privacy concerns, third-party data’s days are numbered. That’s why it’s the right time to turn your focus toward the data you can collect from your customers, which is far more valuable anyway.
Terakeet has always understood the importance of first-party data.
Utilizing 20+ years of proprietary first-party data, Terakeet is able to create detailed projections and modeling and deliver these insights to our customers. We’ve worked across just about every industry — finance, communications, retail, healthcare, and more — always adding to our wealth of cross-industry, first-party data.
All the tools we leverage and decisions we make are empowered by first-party data and that focus drives real-world, long-term wins for our customers.
Final thoughts about the importance of first-party data
Now that you see why first-party data is important to your marketing campaigns, it’s time to pivot your strategy to optimization. Think about how you can leverage data from your audience segments across the customer journey to build deeper customer relationships.
Deploy marketing automation to enhance personalization and boost ecommerce performance. Refine your attribution modeling. Create more effective loyalty programs based on customer behavior. And improve data management to understand how customers engage with your brand across different digital marketing channels.
Thankfully, first-party data is turning out to be even more powerful (and far more ethical) than third-party data.
Start leveraging your firsthand customer data today to build better connections with your customers, get better information about your target audience, and deliver on what your customers want and need.