When you know your audience deeply, good things happen. You can create more personalized content, which helps build brand trust. You can more easily turn leads into customers. And (here’s the best part), you boost your bottom line. But how exactly do you better understand your audience? The answer is simple: first-party data.
In this episode, we'll dive into the benefits of first-party data and highlight the differences between first, second and third party data with Aaron Turkle, Director of Paid Media, and Ron Hadler, VP of Data & Innovation at Red Door Interactive.
What's the difference between first, second, and third-party data?
Ron: Sure, sure. I'll just go through some simple definitions of first, second, and third-party data. First-party data is data that you generate from collecting data on your website or your CRM, etcetera. It's data that you've generated. Second-party data is actually first-party data, but it's generated by somebody else. You have a sister brand or somebody you partner with, they generated that data, they've owned it and then they either share it or sell it to you, so that's second-party data. Third-party data is essential, wherever you're getting your third-party data, they don't really have a first-party relationship with the customer that generates that data or the data that it's about. So it's generally aggregated from many sources, but it's generally dealing with really good stuff. Behavior and demographic data, so understanding people's mortgages, number of children, if they like the color blue.
Reid: Aaron, anything to add on that from the media perspective?
Aaron: Yeah. And I think what goes along with each one of those, is going to be, at least from a media point of view, some cost implications. So first-party data, the cost there is whatever it takes to capture that data in your own business operations. Second-party data is a partner, might be a similar kind of aspect there, but there's also potentially some costs in terms of purchasing. Third-party data is going to be, again, based on the quality, based on the source, based on the platform you're accessing it through. There's going to be some kind of implications in terms of how you're able to purchase it. It's going to increment what you're paying on it for display campaigns, for other places that you might be leveraging it within the platforms. There's a lot of value in ways you can close gaps with each one of those. So keeping those in mind whenever you're deciding which parts of it and how they can interact with each other, is really important.
How is first-party data collected? What kind of information can you collect?
Reid: Well, we're going to focus on the first party part of that today in this episode. So I want to focus on how that's collected. We talked about it being, whatever it takes to collect it yourself, but how is that collected? Ron, can you talk about what kind of information you can collect and how we collect that?
Ron: Sure. I mean, you're already collecting it, is most likely the case, right? You have forms on your website, whether somebody is signing up for a newsletter or they're contacting you, or you're asking for their information. You're doing transactions through your e-commerce, where you're collecting first-party data. The analytics that you have on your websites is first-party data. That data that you have in your CRM, that you're collecting about your customers, that's first-party data. You're generally doing it through your social media, for folks who are associated with your profile. You can do surveys, and even customer feedback is first-party data. All of that is collected by you. You own that data, so to speak. It doesn't mean you don't have responsibilities about privacy and security, but that is essentially your first-party data to use as you'd like.
Reid: And Aaron, anything to add on that?
Aaron: Yeah. There's a lot of, I would say, lead gen forms in places that a lot of platforms are really getting into that first-party data piece. And they have a lot of controls baked in, and there's things you need to keep in mind in terms of the fields that you can, or shouldn't incorporate into what's being captured, depending on the agreements or the things that you've decided to use for the data with your clients or your customers, and how you're able to pull that out.
Aaron: There's a lot of places that you can capture it within any kind of tactic. If you're asking people to sign up for a newsletter, you might be able to do that directly inside Facebook or directly inside LinkedIn. And then how you take that off-site or use it in a different way, is pretty important there. There's a ton of other places you might capture. If you have an event happening live, maybe you're asking people to provide their information for a coupon or some other aspect that you already have that kind of intent baked in, where they showed up to learn more about something. Same thing for a digital event that wouldn't be happening currently, where you're not able to meet in person where you're capturing some of that information.
Aaron: So what's really important in terms of how that first-party data is being collected, from the paid media side of it, is that you have as much as possible, that kind of context or intent whenever it was captured. So if these are people who made the time to go experience something or go to an event, it tells you a little bit about how much interest they might have in the product or that service at the end of the day, as opposed to somebody who maybe they just signed up for a whitepaper that has a much broader use case.
Is first-party data collection safe? What kind of privacy regulations are in place?
Reid: So as marketers, we want as much of this information as possible, so we can identify our audiences and to better fine-tune our messaging. But at a consumer level, privacy becomes paramount. I think people are really concerned about the information that they share with these brands and may not realize maybe they're sharing with these brands. Again, I don't think in most cases brands are trying to do it from a nefarious standpoint, but we want to target and optimize our messages between those two, the consumer and the brand and the marketers. What kind of privacy regulations are in place to make sure everyone's kind of doing this on the up and up? Ron.
Ron: Yep. So California is kind of leading the United States with their CCPA, which passed in 2018, came to effect in 2020. In November of 2020, they also passed the new version of that, called the CPRA California privacy rights act. It won't be live until January 1st, 2023, but it's a little bit more akin to what kind of started a lot of this data privacy, which is the European GDPR, which stands for general data protection regulation. And with the CPRA, it's more like you have the ability to say, do not track. You have a lot more rights as a consumer, in order to be able to understand what somebody's collecting about you, be able to correct that information if it's wrong. You can restrict it. You can also have them go through an obligation, so there's a lot of more things and it's more akin to the GDPR.
Ron: Now what we found, since the GDPR has been out for so long, is that more people are actually opting into it than opting out of it. And people are doing the right things. And the folks that are not adhering to it, are probably the folks that you don't want to do business with. So it's a good thing for both the consumer and the brands. That's kind of like your privacy, your compliance, and I guess the other part of that is security, right? So when you're talking about, I've got all this information, they're storing all this information about me, it's almost a biography if you will, because there's so many bits of data about you that brand's hold, is that security.
Ron: And here's really kind of the no varnish truth, is that it's not a matter of if your data gets stolen or exposed, it's a matter of when. We live in a connected world and that will happen. So understanding, being prepared, having some of those privacy tools that you know because you worry about credit cards, things like that, in place. As a consumer, those are the things that are important because that will happen no matter with the best security. And you look at all the major brands, everybody's experienced some sort of a breach.
Reid: So it's interesting, part of this conversation for the consumer level. You mentioned that people were, at a consumer level, more of them are opting into it than not. And I think, is it because they realize what the benefit of sharing some of this information? I mean, I know at a personal level, if I opt into certain things, I get whatever. I get certain things fed to me that I want, maybe news topics or something to that effect. At a consumer level, what do you think that behavior is? As well as then... I mean, I also want to bridge that a bit, is the role of brand trust. Do you trust certain brands over others?
Ron: Absolutely. And I think you got it exactly right, right? So for brands that are putting these policies and adhering to them, in place, that gives a sense of trust to the consumers. And I think the consumers are viewing it that same way. Wait, they actually care about my privacy. Then I have the trust to give them access to that because the idea behind having all this data is that I do get tailored ads. I do get tailored offers to things that I'm actually interested in. It's not just a waste. I'm not looking at fluff when I browse the internet or cruise through Facebook, I'm actually looking at things that actually resonate with me. So I think it is actually a good thing, and I think consumers are responding to that. That's what the data tells us.
Reid: So, Aaron, I'd be curious about weighing in on this too. From a media standpoint, if you were to compare two brands with one another and one's got good brand trust and thereby able to collect the first-party data that you want to target, versus another one maybe has poor brand trust with its consumers, therefore maybe choose to opt-out more often. What are you really giving up at that point, at an ROI standpoint, if you're not using first-party data?
Aaron: Yeah. No, it's a great question. I think in terms of the good or bad brand trust, the brands that have been handling this well, have taken the opportunity to kind of explain and tell the story about why they're collecting specific aspects of data, what they're going to do with it, how you can really fully understand what the implications are. A lot of those things that we just talked about with better site experience, better advertising experience, where you're actually getting things that are relevant to you and if you're going to see ads, it's going to be part of day-to-day existence on those platforms. Making sure that you get the right ones and ones that are actually useful and relevant to you, are important. And there's some brands that have, like I said, taken that in and been really clear about how they're utilizing that.
Aaron: And that's part of that initial kind of brand pillar of, are you going to be trustworthy with my data? Am I going to be getting a better experience from this? In terms of the ROI, I think first-party data itself builds into a lot of ways and how you're able to run your platforms. In terms of that kind of good user experience, if I'm able to collect that first-party data, there's a lot of different things where... Let's say you're purchasing something like a toilet seat. You probably don't need a toilet seat collection, and so we want to make sure we add your purchase data into our systems so we don't keep hitting you with ads for that same kind of product, over and over. It's something that we want to be able to delineate that experience for people, and we can make it a better one.
Aaron: And it's saving me money as a marketer. I'm not spending money trying to reach someone who doesn't want to buy my product anymore, so that's going to have a long-term impact on your ROI. There's a lot of stuff you can do, building out, retargeting other aspects to it, but it's kind of a cohesive unit there, where our target is going more effective if we're able to use this. We're actually able to give a better kind of customer experience continues to build that brand trust.
How does the upcoming Apple iOS 14 update fit into this equation?
Reid: Well, and nothing more important than good brand trust for toilet seats. Safety first. So speaking of brand trust though, I mean, now we're talking about kind of, there's a degree of governance that lives in between the consumer and the brand right now. And I think the topic, as you're certainly here in February of 2021, is the Apple iOS 14 update. How does that now fit into the equation? You've got Apple, you've got Google, you've got kind of these intermediaries trying to govern this, not to mention the government trying to handle this, but now the iOS 14 update. Let's talk a little bit about that, if you would. Maybe Ron, why don't you start with that and then move to Aaron.
Ron: Sure. And this is really mostly affecting mobile. This is affecting kind of how... Because it's the iOS versus the Mac operating system. And it's really affecting, when it comes to from our viewpoint, our world of Facebook is kind of one of the biggest ones that it's affecting because everybody accesses Facebook through the app versus just a web browser. This is affecting web browsers also, mind you, but it's really kind of affecting the app. And I hate to use the word onerous, but it is a little bit onerous in how Apple has kind of gone through this.
Ron: They've kind of ramrodded it through, gone very quickly. And then you've had these big brands like Facebook, Google that have to just react to what they are basically laying down as the rule of the land. And so, kind of the biggest things that are doing, is just the kind of attribution window, is really reduced. They had up to 28 days to get attribution, now it's down anywhere between 24 hours to seven days. So beginning to understand that you're not going to get a long tail attribution for some of the things that you're putting out there as far as that.
Reid: Ron, to interject on that one. Can you define attribution in this case for our listeners, just to make sure that they're kind of understanding, because that's a big part of it.
Ron: Sure. Attribution is the sense that a conversion happens and can be directed or specifically given credit to an ad that was shown on Facebook, in the case of a Facebook ad. So I click on a Facebook ad, I visit your website, I make a purchase, that purchase is attributed to the ad. And so you understand that, you're looking at things like return on investment, what you spend on the ad, how many people got to it. And so being able to understand your ROI for your ad and your marketing, your attribution is going to be off because it's going to be a very, very small window. So I think that's pretty big, we will have less of that. Now, our volume of traffic should be just fine. We just won't have the right attribution. So in the sense that the number of sales attributed to a Facebook ad, will probably go down, although the number of amount of traffic should be the same because you're still placing the ads on Facebook. They're still attractive to your customers. They're still clicking through. You just may not.... They just might not get the attribution.
Reid: And you're talking about it in specific ways, because I think as we adapt to this, you kind of have to start looking through kind of inferred attribution of, because you did something, you think something happened, compared to how closely we used to be able to track it.
Ron: And yeah, for those folks who have a long tail sales cycle, it's going to be almost impossible to kind of really... It's going to be just inference, right? You know you put them out there, you know they're making a difference, but you're not going to get that last-click attribution, so to speak.
Reid: Well, old school advertising, when we didn't have data at all. Clearly, as the agency, the ads were working, which just couldn't have been a great product, it was the ads.
Ron: Which 50% was not working.
Reid: Right. So Aaron, weigh in on this topic too. I mean, again, talking about Apple iOS 14, but also the broader idea of intermediaries. I think it feels like a brand positioning of Apple compared to Google and there being from a competitive standpoint. But everyone kind of has a role in this, and Apple being, the IOS particularly being such a major part of it.
Aaron: Yeah, absolutely. I think Apple's stance on privacy for the individual and being able to make your decisions, there's a lot of really great things there in terms of being able to decide who has access to your information and how that's shared and how that's controlled. From a marketing standpoint, like Ron talked about, it can lead to risks from efficiency or being able to understand the age-old question, 50% of my media spend is wasted and I don't know which 50%. We want to get as close as possible to understanding that whole picture, so that's going to be a big impact. Google is on the same track, where they're getting rid of quite a few different tracking aspects and cookies within Chrome. I think it's just a trend across the entire industry in terms of what's going to be available and just trying to match those different factors together and solving that question of, where are the performance executives coming from, is going to continue to evolve as these things are rolling out across every platform and the way that you can interact.
Brands rely on Customer Data Platforms (CDPs) to record first-party data. What are the top CDPs on the market right now?
Reid: So speaking of another aspect into this whole thing is, now we can talk a little bit about customer data platforms. So there's another piece of technology now, we've inserted into the process, which are CDPs to record this first-party data. Ron, what are... So just for our audience to kind of get some context around this, what are the top CDPs on the market? And maybe, I mean, articulate a bit. Actually, expand that of what's the benefit of a CDP to begin with.
Ron: Yeah. And I mean, before I kind of go to that, I would say top CDPs has got a bit of a misnomer, right? And especially from Red Doors' point of view. We're requirements-driven, so what you want is, the best CDP that meets your requirements. So I can give you top CDPs by revenue, but that doesn't necessarily mean it's the best CDP for you.
Reid: Yeah, that's a good point.
Ron: So before I kind of get into that and some of those kind of brands, a CDP is essentially, like you said, customer data platform. It's a place to store your customers. It's a place to safely store their PII information, the transaction's behavior, or a biographical data. What's important is that it kind of integrates with where you are generating that data, whether that's your CMS', your e-commerce, your CRMs. So it is able to pull that data into the CDP.
Ron: It can do things like segmentation, creating specific audiences based upon those different attributes. You can also do profile stitching, so using some of that second party or third party data, and stitching together the profiles between that data into the different platform. So last thing, and this is very important to Mr. Aaron there, is that you can activate on that data, right? You can take that data and push it out to the important platforms of your ad platforms, your email, your messaging, all of those things where you really want to kind of use the data to do better marketing. So I mean, all the top brands have some sort of CDP out there, whether that's Microsoft, Adobe, Salesforce, Segment, Treasure Data, all have CDPs. I'd say, if you really want to do a good... You need to do a platform evaluation, you need to start with your requirements, understanding what are you trying to get out of a CDP? And then you can basically... Because there's 87, right? As of last year, and the previous marketing technology survey, to go through and understand which is the right CDP for you.
Reid: And there will be more and more every year, as we know, but all with their different perspectives and why they exist, and they have to differentiate too. Which one aspect of this, I think too, because we talked about this earlier, which is, I think CDPs can also help you manage the GDPR and CCPA requirements a bit too, right? If you have to expunge certain data, provide it back to a consumer because of what they wanted. Is that true?
Ron: Yeah. You definitely have a better view of understanding what data you have about a customer, because you have it in one place, right? So there's still some probably follow up to make sure that, if it needs to be deleted, get out of maybe the source database and CRMs and things like that. But you understand, I can export to a customer that's saying, "Hey, what data do you hold on me?" So it does help quite a bit within that. One of the things is that, CDP is purely a marketing term. The idea of having a customer in the database goes back to what they used to call a marketing database or database marketing. It's really just kind of got a newer, fancy name for folks who are basically using one place to hold all of your customer data. But it's certainly come along, and a lot of people having some sort of form of that because it's resonating with marketers.
First-party data collection is often used for retargeting. What else can it do for marketers?
Reid: Yeah. So that's the technical version of it, and some part of it. But Aaron, maybe you could talk about what can this first-party data collection use, beyond retargeting, I think we talked a little bit about that, privacy. What else can it do? What are some use cases from your perspective for first-party data collection?
Aaron: Yeah, so we talked a little bit about excluding people who have made purchase to product, if it's not a quick turnaround. There's a lot of things you can do as well, so back to that toilet seat example. Maybe they have that upgraded toilet seat. Maybe they want to add on a bidet, which is something that's been kind of a hot word in 2020. So there's quite a few things you can do once you start to understand and segment that first-party data, where you can say, I know what that use case is. I know what that next problem might look like or that next solution might be, or maybe the next product that's going to help make it an even better experience.
Aaron: There's a lot of things you can do in that segmentation and clear understanding of where your consumer is in that kind of purchase cycle, or where they are in their journey of using the product. Another piece of it is, all of this first-party data, and each platform is going to have its own setup in ways that you can leverage this, but when you load it in, you're actually able to build what's called a lookalike or a similar audience. And it's going to take all those things that we talked about earlier, that second-party, third-party data aspects that are around that kind of best customer that we have. And it's going to see what kind of people are out there that look similar to that audience. And it really improves and enhances and kind of turns your prospecting because you're able to actually look for those people who have similar aspects about them, as to your best customers.
Aaron: And so it's a really strong way to boost across the entire cycle for your platforms. I would say things like CDPs also make that a lot easier because you're not having to manually move lists between platforms, you're not having to worry about is this a safe way to transfer PII? Are we compliant with how we're handling things? Is there any kind of... Somebody who is maybe putting an Excel file in an email, which is the last place we want to have a PII. It's a great way to kind of maintain all of that together and keep that cohesion and update to the segments for where people might be.
Reid: Yeah. I mean, we've talked about it at a kind of macro level. Ron, you and I have talked about this in the past, is the value of owning your own data, owning your own audience. Before, I think, before CDP as movement, you talked way back, is database marketing. But kind of that mid part of it is, we started letting people like Facebook or Google, own our audience for us. They built the lookalike audiences and they use this data. And now I think we're evolving to recognizing, particularly as it relates to this privacy movement, that it's better for a brand to kind of know their audience and then use that data, not just externally, as we're talking about with Aaron and the media, but even internally within email, direct mail, on site, different products that we can serve. Maybe elaborate from your perspective, Ron, on any other use cases, not obvious ones that markers might be overlooking if they don't get involved in first-party data.
Ron: Yeah. And I mean, I think it's kind of circle marketing, sort of circle of life, right? We used to have the single database where we kept our customers and then we had all these platforms that are great at generating great data for us. And now we're coming back to no longer having it siloed, it's in the CDP, right? So that's really kind of the advantage, is all our data's in one place. That allows us to do things that Aaron mentioned, but I think personalization is one of the things that we didn't kind of bring up there. So really kind of helping us get that personalized content on our websites messages and things like that.
Ron: I think sales nurturing is one of those things that people are not necessarily thinking about, because you're not necessary storing all of that data within Salesforce, so you are probably using it through transactions and stuff like that. You gather that, they can push it back into your CRM, based your sales kind of nurturing through that. So I think those are a couple items that we can also get out of our CDP.
Reid: Absolutely. And guys, this is a fantastic conversation and hopefully our audience is sold on the idea of using their own... Owning their audiences, and what they can do with first-party data. So with great appreciation, thanks for joining us.
And for our audience, be sure to check out show notes from this episode, our detailed POV on Apple's iOS 14 update, and more at reddoor.biz/learn. And as always subscribe to The Marketing Remix and leave us a review on Apple podcasts.