In its 2022 global marketing trends study, Deloitte found that “61% of high-growth brands are shifting to a first party data strategy, while only 40% of negative growth brands said the same.” [1]
Data-driven decision-making is not a new trend for marketing or business in general and first party data, in particular, is something that marketers have been using to deliver smarter, more relevant marketing for some time.
What has changed recently is greater attention to consumer privacy online bringing the type of data being used to make marketing decisions under greater consideration.
The good news is that even amid the current changes (deprecation of third party cookies, consumer privacy regulations), the data your business collects directly from your audience has become even more important.
In this article, we’ll review what first party data (aka 1st party data) is, how it’s collected, and how to use it to create a first party data strategy that generates better business outcomes.
Please note: The information provided here is not meant as legal advice. We recommend you consult with a legal professional regarding the collection and use of your first party data.
What Is 1st Party Data?
First party data is information that a company has collected directly from its audience with consent. This can include information your customers provide to you directly, information about website visitors, or information from your email subscribers.
Examples of 1st Party Data & How It’s Collected
In practice, first party data covers a wide range of information. Here are a few examples to illustrate what first party data includes.
Information Collected About Website Usage
This could be information such as how many times users visit your website, or demographic information about your website users, such as age ranges and geographic location. For most businesses, this type of information is collected using website analytics tools like Google Analytics or specific CMS analytics tools like Squarespace or Shopify Analytics.
Information Collected From Email Subscribers
This could be information such as your average email open rates or the type of emails that your email subscribers are interested in receiving. This information can be collected via an email marketing software such as MailChimp, ConstantContact, or ActiveCampaign. It could also be collected from users via a questionnaire they submit when they subscribe to receive your email.
Information Collected Via Forms On Your Website
Most businesses include contact information and likely a contact form on their website to enable people to get in touch with them. The information a user submits via these website forms is also considered first party data.
Information Collected From Current Customers
Often you’ll have information about current customers that’s been collected from the service or products they purchase from you. This could include information on how often products are purchased from you or from direct email communication your business has had with a customer. This type of first party data could also include things like direct customer feedback or information collected via a customer survey.
Information Collected From Your Social Media Channels
If your business is active on social media channels, you’ll also have first party information on those channels, such as the names (or handles) of your followers. A more specific example of first party data your business receives from these channels could include demographic information or location information of your Facebook audience that you can find within your Meta Business Suite audience insights.
If your business receives direct messages from a user on a social media channel, the information contained in the message would also be considered first party data.
1st Party Data vs 3rd Party Data
So what’s the difference between 1st party data and 3rd party data? Well, third party data is information that has been collected by a third party. Third party information can include information about people who have never interacted with your brand and it’s often something that is paid for by the company that would use the data. An example of third party data is an email list you purchase from a third party.
Another common use for third party data is within advertising when an advertiser tells a 3rd party ad platform to target people within a certain interest-based audience. The data that is collected and would be used to add people to the interest-based audience is considered third party data because the advertiser didn’t directly collect that information, rather it is based on information collected by the ad platform.
Why Is First Party Data Important?
Because first party data is the information you collect directly from people who have interacted with your brand in some way, it provides you with valuable insight into your audience. This insight can help you to improve your business outcomes, whether that is through enhanced marketing results, better customer service, improved product offerings, or something else.
In addition, as a business, you have control over how, when, and why first party information is collected. As consumer privacy laws change, the type of information & how it’s collected makes a difference in how and when it can be used. With new privacy regulations, comes greater responsibility for businesses to do the right thing by ensuring they are using and collecting consumer data responsibly, legally, and ethically.
One important impact of changing privacy laws is the focus on shifting away from allowing 3rd party data to be collected via cookies. While these 3rd party cookies will be phased out in the near future (or have already been eliminated from some browsers), first party cookies, which allow businesses to collect information about their website users with consent, are not yet going away.
This change means your first party data is becoming even more important as other forms of consumer data may become less reliable in the future.
Benefits of 1st Party Data
We’ve touched on it a little already, but let’s get into the specifics with a few key benefits of first party data for your business.
High Quality Information
1st party data can and should be your highest quality data for several reasons. The first is that you control how / when / why it is collected and used. With other forms of data (like 3rd party data) your business isn’t directly involved in collecting the information so you don’t really know how accurate it is.
You’re also collecting information from an audience who has interacted with your business in some way making this data the most relevant to your business because it’s a very specific set of information that applies directly to your audience. With other forms of data, the quantity of information collected is likely going to be larger, but because it’s collected from a much more varied audience, it may not all apply or be as relevant for your specific business.
Cost Effective
First party data collection is cost-effective because it’s largely collected via free or low-cost tools. Think Google Analytics, email, or direct correspondence. When your business wants to use data from a 2nd or 3rd party source, you’ll likely be paying for this information directly. A cost that isn’t required with first party data.
Less Restrictive
First party data is data your business owns and has been directly collected from your audience with consent. Because of this direct connection, there are typically fewer restrictions on the way data can be used to inform your marketing decisions. Making first party data less restrictive than other data types.
Please note: The information provided here is not meant as legal advice. We recommend you consult with a legal professional regarding the collection and use of your first party data.
How Can First Party Data Improve Business Outcomes?
Now that we know what it is and its benefits, let’s move on to how you can use 1st party data to improve your business outcomes. There are probably thousands of ways you could use your first party data to drive your business forward, so we’ll cover just a few here.
Understand Your Customers and Target Audience
Most businesses are likely already using their first party data to better understand their customers and target audience. This is done when you look at your business conversion rates, the locations of your customers, what products or services your customers are purchasing, your customer’s average order value or lifetime value.
You can also use this information to find out how/where your customers spend their time online, i.e. do they prefer to browse social media for information, shop on Amazon or read their email to stay up-to-date or find new products.
These pieces of information paint a picture of your ideal customer that you can then use to find more of these customers, leading to business growth.
Better Allocate Your Marketing Resources
Looking at first party data such as how users find your website can help your business to better allocate your marketing resources for better business results.
Here’s an example, your business is spending money advertising on Facebook, Google, and Pinterest. With first party data you’ve collected, you can see that Google shopping ads have the highest conversion rates for your business; however, conversions from Facebook purchases had a higher average value leading to a higher ROAS on this advertising channel.
Using this information you may determine that you should re-allocate the money you are spending to advertise on Pinterest to either Facebook or Google, depending on your business goals. Once you do, you’re likely to see either higher overall ROAS or a higher conversion rate across your advertising spend because you’ve reduced or eliminated channels with lower performance on these KPIs.
Personalize Your Content For Your Audience to Improve Conversions
Here is another invaluable use of first party data that can have a huge impact on your business’s bottom line. Looking at your website usage, purchases made, and email open and interaction information (all first party data, of course!) can help you to create content and messaging across your marketing and communication that is most relevant for your audience.
When your content (whether that’s email, advertising, blog posts, service information, or something else) is more relevant, your business is likely to see better outcomes.
Let’s look at a real-life advertising example of how more relevant advertising led to better business outcomes.
A business advertising home services in their local market used first party data to understand that most of their advertising leads were coming from customers in a certain age range; however, they were currently advertising to customers of all ages.
They decided to test excluding people within certain age ranges from their advertising targeting and when they did saw an increase in the number of their conversions, while spending the same amount on ads. This led to a corresponding decrease in their cost per conversion and ultimately, led to more business because the leads they were getting from the targeted age group were more likely to convert.
These three examples are just the tip of the iceberg when it comes to the benefits of using first party data to deliver better business outcomes.
In order to get these insights & realize the benefits, it’s important that businesses are able to collect first party data and organize it for easier analysis. This is all part of a first party data strategy.
The Foundation of a First Party Data Strategy
Every 1st party data strategy starts with data collection. Once you’ve collected the data, your strategy should also include how you’ll store the information, and how/who will be analyzing the information to build better results.
This strategy is going to look different for every business depending on your audience, industry, business size, and organizational structure, but every business should at least be thinking about a first party data strategy.
Here are the steps you can take and a few questions you can use to get started with your own first party data strategy.
Step 1: Understand the Data You Are Currently Collecting
What first party data does your business have and where is it currently stored? Are you using website analytics tools? Email marketing tools? Social media? Do you request customer feedback? Knowing what information and tools you are already using for first party data collection, will help you to better determine if there is other information you may also need.
Step 2: Determine If There is Other Information You Would Like To Collect & How You Will Use It
Do you want to know where your website leads come from? Are phone calls important to your business? Are you monitoring what services generate the highest revenue? Do you know which of your emails are opened the most?
This type of data can help you to understand your audience and customers better. If there is something you are wondering about, you may be able to uncover this information using your current tools or if not, there may be other tools that would be able to help you more easily uncover this information and analyze this information. Before you start collecting more information, it’s important to plan why and how you will use it.
Step 3: Determine Where Is All The Information Is Stored & How to Access It
Many tools and service platforms that you use for your business will store the first party data you are collecting for you. For example, a website analytics platform collects information for you about website usage.
Some companies (often larger organizations) determine that it is best to have all of their first party data in one place and may decide that a customer data platform (CDP) will be the best way to collect their customer information to make it easier to use.
A CDP is software that can collect information from multiple sources or tools into one centralized data hub.
Step 4: Analyze The Information
It’s one thing to collect information and another thing to actually use it. This is why having a plan in place on the ‘why’ is essential to your first party data strategy. When you know exactly how you’ll use the information before you even collect it, the analysis and use will come naturally.
Analysis of your first party data is what will help your business to make data-driven decisions that lead to better business outcomes.
Step 5: Test and Implement Changes Based On Analysis
After you’ve analyzed the first party data you have, it’s time to act. We recommend testing changes you make to understand how they’ve actually impacted your business’s bottom line. Before you implement changes, determine how you’ll measure the impact on your business, so that you know if the changes you’ve made are truly benefitting your organization.
Conclusion
First party data is an invaluable resource that every business can use to reach its business objectives. Whether you’re trying to improve your customer retention rates, generate repeat purchases, reach new audiences, or find new customers, your first party data can help you get there.
Do you have questions about how first party data can help your business? Or maybe you’re already using first party data to achieve your business goals? Let us know in the comments below or send us a message. We’re here to help.
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