Is first-party data enough
Thoughts on the emergence of second-party data based on the Nielsen Annual Marketing Report and Merkle's Customer Engagement Report 2021
I stay away from glamorous titles, unlike I have today.
During the process of writing my last article: Google and Responsible Marketing (I share thoughts about the state of retargeting ads in a cookieless world, Google’s role play and the importance of first-party data) I came across Nielsen’s article:
First-party data is a good start, but it’s not enough. The article is inspired by the data provided by this year Nielsen Annual Marketing Report:
“First-party data is the lifeblood of any brand’s marketing efforts, and 86% of the marketers surveyed for this year Nielsen Annual Marketing Report recognize its importance.
Despite the acknowledgement, however, overall confidence in data quality is universally low.
For example, 41% of the marketers at large companies (defined in the report as organizations with marketing budgets of more than $10 million) view data accuracy as a challenge. But they’re not alone.”
Companies with smaller budgets find it less problematic, but at a time when the importance of person-level connections is rising, all brands should have maximum confidence in their data quality.
The importance of first-party data cannot be debated in a cookieless future. According to Nielsen, 86% of marketers from companies of all sizes recognise the importance of first-party data.
Nielsen’s recruited 260 marketing professionals and completed the survey online between October and December 2020, while 485 other respondents screened out or led to incomplete responses.
Merkle in its Customer Engagement Report 2021 informs for a long-term strategy, first-party data collection and connectivity will be the top priorities in order to expand customer identity and addressability without the third parties.
52% of respondents said that, because of regulations, they are prioritizing the collection of more first-party data from digital experiences, which further highlights its importance.
The next priorities are identity and connections (i.e., how it all comes together).
“Even organizations flush with first-party customer data often find it fragmented and siloed across systems. The key to bringing that data together around a customer is through identity or the various IDs and attributes that can be assigned to a person.
A single customer ID can be linked to customer data in many systems and then be brought together, and there are many emerging solutions aiming to do just that, such as customer data platforms (CDPs) and private graph solutions.”
According to Merkle along with first-party data readiness, organizations need to start thinking on how it plans to invest in technology due to the rising data restrictions.
“This may include establishing a private identity graph where the organization takes more control over its first-party data. The company may explore the building or joining addressable networks, co-ops, or consortiums where partners are found to exchange and connect their first-party data.
Most companies should focus on new experience strategies that build a first-party data asset with a private identity graph.”
74% of respondents said they are increasing investment in tech/vendor solutions, due to rising data restrictions.
Rise of second-party data
In addition to this, the rise of second-party data cannot be ignored.
Merkle defines, “Second-party data is data that is shared by partner companies, alliances, and consortiums. Second-party data can be used to create new addressable audiences for prospecting or to enhance existing data in the company’s private identity graph.”
According to DigiDay: “Second-party data is essentially just first-party data owned by another company, such as a publisher. There are two main ways publishers tend to offer up their data to advertisers as second-party data.
The first is to blend it with data owned by an advertiser, which will then use the combined dataset to reach known audiences as well as new, similar audiences across the publisher’s sites.
For the second, a publisher will ring-fence specific data from its inventory and sell it to advertisers who want to use it to reach people on sites other than those owned by the publisher. The selling point for advertisers is that the data they buy is from a trusted source.”
Merkle found out that about three-quarters of respondents see second-party data partnerships as a high priority to their organization.
Nielsen report also emphasizes the growing acceptance of second-party data by marketers. “Surprisingly, especially when customer acquisition is a top priority for marketers this year, brands have yet to embrace data partnerships as a way to enrich their own first-party data.”
The ongoing challenge for organizations is not the availability of data and its integration into digital marketing activities.
The problem that Nielsen has recognized is that brands of all sizes are primarily focused on data sources that highlight action at the end of a customer journey, such as an actual purchase, credit card charge or interaction with a web page.
“As marketers begin focusing on the entire consumer journey rather than just an endpoint, multi-touch attribution solutions will become critical in identifying all touchpoints rather than just the last one.”
Data gives the power to understand the consumer. However the consumer today is messy and selfish. Just offering discounts might not do the job in a competitive market. This led to the emergence of the word “Personalization.” And one needs to have a 360 degree of understanding of consumer interest be it offline and online.
This brings me to the topic of “Omni-Channel and real-time personalised experience.” But let it be for some other day.
Besides, not everyone will and has the budget to invest in data-related technologies so they will pay for the second-party data.
P.S. Second-party data is also murky.