Part 2: Customer Data Gold
The resolution and interoperability of third-party targeting data continues to deteriorate while first-party data remains a strategic asset.
It has been a busy few weeks since Google reaffirmed their cookieless policies and their intention to not bother with creating a like-for-like replacement. Since then, I’ve had a busy call sheet of various digital media industry publications seeking comment.
Thus far, there is a pattern arising that you and I already knew: First-party data is gold.
Dig where the gold is
In today’s second installment, we will focus on finding pockets of quality first-party data and the underlying incentives that influence its capture.
Late last week, I spoke with Digiday about the strategic advantage that retailers have regarding to first-party data capture.
First, what does it really mean when we say: first-party data? At its core, it means that a company has a direct (first-party) relationship with an individual. In other words, a company has a reason to communicate with you because, at some point, you raised your hand and said, “Yes please, let’s stay in touch.”
The timeframe and boundaries of that communication may be a bit fuzzy, but at some point, there was a reason you provided your information to that company.
Your standard e-commerce transaction has a quite obvious reason for this. You bought stuff. The retailer needs to get it in your hands. They’re either going to ship it to you, or you’re going to come down to their store and pick it up. In order to facilitate that transaction, you provided your:
And probably a credit card number
These are the core elements of what we call PII or Personally Identifiable Information.
Your PII record then gets decorated with the metadata about you as a customer. What does this person browse? What have they bought before? How often do they buy things here? Do they open our emails?
The standard retailer-based incentive structure is pretty cut and dry.
I want stuff.
The store has the stuff I want.
Store asks for payment and info about me.
I provide my info.
Store sends me stuff.
End of transaction.
Is it really the end of the transaction, though? Not so much. Along the way, you agreed (whether you read it or not) to allow the store to reach out to you about…well…anything it wants. You also allowed that retailer to create a curated experience based on your past behaviors.
The retailer will use your information to send you info about things you’re likely to purchase and will use everything it now knows about you to create a personalized shopping experience just for you.
Access to content is another hotspot for first-party data capture. Publishers that provide content worthy enough of subscription have the opportunity to capture PII for each subscriber.
It is important to note that “subscription” does not necessarily mean paid.
Free subscription: A lot of the content is publically available, but the good stuff is behind an authentication wall. There’s no cost to the subscription, but you need to create an account in order to access it. Often these are marketed as loyalty or insider’s clubs to create some sense of exclusivity. This model may also include some level of interactive forum, comments, message boards, etc., and therefore require that participants create an account.
Paid subscription, with ads: Publishers that have premium content that commands a price. The subscriber will need to pay a nominal, recurring fee in order to access the content. However, the content will still contain ads. These ads are likely to be targeted based on the user’s metadata and PII.
Paid subscription, no ads: Designed for the most discerning of content consumers that want an entirely ad-free experience. Within the content in question, the user will not experience any interruptive or adjacent ads. However, that does not necessarily mean that you will not be marketed to. The subscription platform may often use the information captured about you to market other products and services to you outside of the environment to which you subscribed.
Most publishers tend to be ad-supported businesses in the first place. Subscription models are a marriage made in heaven because they allow the publisher to build a proprietary, known-user database, thus enabling better ad targeting. Better, more bespoke ad targeting usually means higher ad premiums.
For example, think about a car-shopping website. I won’t name any names specifically, but we all know who the major car shopping sites are. At some point in the experience, most of these sites will attempt to solicit PII from you. It may be as simple as an email address, or they may suggest that you create an account to save your searches and make the process easier for you.
The more car buyers that sign up for these free services, the more these publishers can charge automotive advertisers.
Brands: If you don’t ask, you don’t get
Forward-thinking brands are now starting to design consumer experiences designed to capture first-party information. The goal is to establish that one-to-one relationship with each customer, at scale.
PII solicitation and capture happens at many touchpoints ranging from an in-store promotion to an app-based loyalty program.
The simplest strategy is to leverage every marketing communications touchpoint as an opportunity to solicit information about the consumer.
Join our loyalty program
Download this coupon
Get access to this special event
Let me send you a free sample
Simplified examples, yes. However, brands that do not ask their customers for information don’t get information. It is really that simple.
The scale criticism
The biggest criticism of first-party data is that it is hard to scale up. This is true, and it will probably get harder to probabilistically in the future. However, it is the only true targeting differentiator a marketer will have in the future. It is also likely to be the only form of persistent data asset that stands the test of time.
Within the Google ecosystem, privacy sandboxes and FLoC based targeting of small groups is expected to become the norm. You can still bring your own first-party data to the party, and target ads within the Google-owned ecosystem.
There will be many advertisers that use FLoC based targeting.
There will be some advertisers that use solid first-party data PLUS FLoC based targeting.
The marketers with some first-party targeting to sprinkle into the mix have a potential edge over those that do not. Personally, I want to be the marker with an unholy advantage over the competition.
DO read Part 1 of this series if you missed it.
DO continue to use every marketing communication touchpoint to solicit customer information. Figure out how to be elegant with your ask.
DO have an internal discussion about your current publisher-direct deals. What unique targeting capabilities do those publishers have? Are they better than what you have in house? Are they differentiated?
DO start the conversation about what kind of data marketer you want to be when you grow up. Does FLoC and other cohort-based models generate the efficient performance you need? Or do you need something more one-to-one like Unified ID 2.0?
📰 Oh hey, that was nice. Yours truly is quoted in this week’s Adweek Magazine (subscription required).
🔥 Speaking of FLoC, the Electronic Frontier Foundation (EFF) thinks it is a terrible idea.
🗓 Day Two of The Drum’s Digital Transformation Fest is today.
💵 This company will pay you $2400 to say away from all your devices and screens. Uhhh…I would pay that much to have someone take all mine away.
📊 Realtime-ish brand metrics for CTV campaigns? Ok, Upwave…I’m listening.
🍩 Free donuts might be the exact thing we need to get most American’s vaccinated.