What the heck is first party data? Get clear with definitions so you can grow your online audience
Marketing & Growth
February 14, 2023
First-party data is a powerful way to grow an online community, businesses, and organizations. You’ve probably heard the term thrown around because it has transformative power. Use this guide to refresh your understanding of first-party data and its role in online growth to plan your path forward.
This term refers to data that a customer proactively shares with a company. For example, an e-commerce business might run an online poll asking customers to vote on designs for an upcoming product. Customers understand exactly what data they’re providing.
First-party data is information that a company directly collects from its customers in various ways. Some examples of first-party data include a user’s location (inferred based on their IP address), the browser they’re using, and which emails they open. Importantly, there is no intermediary between the end user and the company.
Second-party data is simply another organization’s first-party data. For example, you might run a promotion with another company. As part of that promotion, your partner sends an email to their list inviting their customers to a webinar or conference. In this way, you have effectively borrowed another company’s audience.
Third-party data refers to information collected from people where there is no direct relationship with the end consumer. A variety of companies gather, organize and sell third-party data. It’s a commonly used resource in many forms of digital advertising. However, third-party data is significantly impacted by the pending end of third-party cookies.
First-party data is important for every organization that needs to grow online.
Google and Apple, which account for over 80% of the world’s web browsers, are ending support for third-party cookies. This is a major challenge. Epsilon estimates that 80% of advertisers depend on third-party cookies.
Various new technologies and protocols are being developed to support personalization in the cookieless future. However, none of these alternatives has found widespread adoption yet.
As a result, brands and publishers need to find other ways to grow. Growing your audience on your website (i.e., first-party data) is one of the best options for growth.
First-party data is one of the most powerful ways to pursue effective personalization. Since this personalization is based on data your audience shares, it is also less likely to spark negative feedback.
Marketing campaigns that extensively leverage first-party data deliver exceptional results, including the following:
First-party data offers insight into the behavior and interests of current customers. That type of data naturally leads organizations to emphasize creating campaigns aimed at current customers. That’s powerful because industry estimates show that returning customers spend 67% more than brand-new customers!
Widely cited research conducted by Boston Consulting Group, and Google found that companies that leverage first-party data saw two exciting benefits. First, first-party marketing efforts are much less expensive than the other alternatives. Second, the research found that “companies that link all of their first-party data sources can generate double the incremental revenue from a single ad placement, communication, or outreach.
The third reason is a touch more philosophical, but bear with us for a moment. Direct, trusting relationships are essential to any great business. When you rely on other companies for data, your growth efforts are at their mercy. It’s not a theoretical problem, either.
Over and over again, social media platforms have pulled in users and brands by offering organic reach. At a certain point, these companies shift their focus to advertising. Suddenly, you have to pay to access your fans.
When you have a direct relationship, no other company can step in and prevent you from accessing your audience. Even as technology changes, you’ll continue to have direct access to your customers.
Creating a direct relationship with your customers lifts your ROI; it reduces your dependence on third-party cookies and offers a great ROI. Now, look at all the options you can leverage to grow your first-party data.
There are multiple ways to gather first-party data depending on your marketing assets and business models. The following options apply to the vast majority of businesses.
These first-party data sources apply to almost every business.
The more first-party data you gather, the better you’ll understand your audience. Look for ways to leverage the following channels to enrich your first-party database.
Despite these different options for gathering data, getting started with first-party data isn’t always easy.
You’ve seen the powerful ways that first-party data can fuel growth. To maximize your chances of success, make sure these roadblocks don’t sabotage your efforts.
Many organizations collect significant data on their customers. However, simply collecting data does not produce value. You also need to take some risks with your data. For example, you may allocate a portion of your marketing budget to test new campaign ideas based on first-party data.
Many companies gather bits and pieces of first-party data across their organization. The marketing team may have great insight into how people use the website and email. At the same time, the sales team owns the CRM and customer conversations. For first-party data to deliver maximum value, it’s vital to bring together all your customer data and look for ways to use it fully.
The determination to act on data and the desire to collaborate are essential. Yet, solving both of these roadblocks will deliver limited results if there is no strategic support. An effective data strategy includes management support for first-party data, including investing in staff and technology.
The final barrier to first-party data success is failing to offer a compelling value proposition to your audience. When you seek consent to start gathering first-party data from your audience, one question will flash through your audience’s mind right away.
Fail to answer that question effectively, and your audience will close your website and move on with their day.
Some companies attempt to answer this question with comments about delivering a better website experience. There are better ways to persuade your audience to agree to share first-party consent. You might offer an incentive like a discount or early access to products.
An even more powerful way to connect with your audience is to invite them to engaging community experiences.
Digital community experiences offer a powerful way to build trust and gather first-party data simultaneously. Here are some ways to use Arena Live Chat and Live Blog to create more engaging experiences for your audience.
When a major news event matters to your audience, offering the latest details is almost irresistible. Imagine your audience is full of basketball enthusiasts who want to know how their favorite teams and players are doing. With Arena Live Blog, you can offer play-by-play coverage of games (and post-game coverage of records, strategies, and athlete interviews).
As you build a reputation for offering up-to-the-minute information for your audience, they will keep coming back for more. The best part is that your audience will naturally want to know about your live blog coverage. In other words, you have an enthusiastic YES when you ask permission to stay in touch (and gather first-party data).
Transform your website into a community hub with Arena Live Chat which takes just a few minutes to install. Once you have live chat installed, you can offer a variety of chat experiences to your audience.
Regardless of how big or small your live events, Arena Live Chat makes it easy to keep the experience brand-safe through moderation. Our automated profanity filter keeps inappropriate language away. Your staff can also use manual moderation to foster a positive experience.
Giving your audience a good reason to keep coming back to your website is vital to any effort to gather first-party data. Book a demo to see how Arena can help you to grow!