What Is First Party Data (Customer-First Data) & How To Collect It
Big changes are on the way for the world of marketing. Specifically, these changes are in regards to how information is collected from users. In the past, information was collected through what are called third-party cookies. Now, with privacy concerns over users’ information being collected, things are changing in a big way. Businesses are going to have to adapt to accommodate these changes. This guide will walk you through what is customer-first data and how to collect it.
To understand what customer-first data is, also known as first party data, let’s take at the origin of data collection. Pretty much since the internet has existed, it has used what are called “cookies” to collect information and track customers. You have definitely visited websites before that give you a heads up that they will collect your “cookies” or tracking codes, when using their site. Cookies are used to create and administer personalized content for users, providing them with information and content that is relevant to their interests.
This method of collecting third party cookies started off normal enough, but over time things got out of hand. The buying and selling of customer information became widespread, and customers’ privacy quickly dissipated. A big problem with this was how dishonest and shadowy the process was. Information was being collected behind the scenes without customers really knowing what was happening, or without having a real say in how they felt about it. This led to big frustrations.
That brings us to today. Now, customers are pushing for a privacy-first approach to collecting information. The tech industry heard these complaints and has made strides in protecting the customer first and foremost. Third party data collection is taking a backseat, and devious practices are being shut down.
Changes In Data Collection
So what big changes have happened, exactly? And what changes are still on the way? The two biggest examples of this are with updates from Apple and forthcoming updates from Google. Both of these fundamentally change how information is collected.
Back in June, Apple made some big announcements regarding privacy protection for their users. These changes would arrive come fall, when they were added to the iOS 15, iPadOS 15, macOS Monterey, and watchOS 8. In the past, Apple could track and share your information essentially anywhere through your Identifier For Advertisers, or IDFA. The IDFA basically functions as a unique set of DNA, or identifying information, for each device.
This all changed with the iOS 14.5 update. Now, apps have to ask the user if it is OK to collect their data. That means Apple users have the option to prevent their information being stored and shared any time they want. This update applies to every Apple device, which means one billion users worldwide can opt out of tracking. And, just as you might expect, the vast majority of people prefer their privacy.
Next, let’s look at Google. They have announced a plan to gradually phase out third party cookies by sometime in 2023. This doesn’t mean there is zero tracking, however. To replace third party cookies, Google is going to try something called “Federated Learning Of Cohorts”, or FLOC.
Using FLOCs instead of third party cookies is sort of like using a “big picture” type of approach instead of tracking individual cookies and information. Essentially, FLOCs group large amounts of users into similar categories based on shared interests. This means information is gathered up and lumped in anonymously to create generalized, big-picture cohorts. Ideally, this ensures that privacy is more protected than it currently is.
We’re still a little ways off from seeing how FLOCs will play out. Debates over their effectiveness are ongoing, but it is safe to assume that it will result in big changes to information collection either way.
So what’s next? If third party cookies are out the door, what are companies going to do instead?
This is where customer-first data comes into play. Also known as first party data, this is a method of collecting information that is completely open, honest, and consensual. There’s no sneaky data collecting, no hidden strategies, or anything that isn’t up-front about the process.
First party data can be collected in a few different ways. First, you can just ask them for information such as their email address. You can also gather their information from their engagement with your business, such as what they’re browsing or purchasing on your website. Finally, you can gather first party data by directly communicating with them. This might come in the form of engaging in messaging on your social media platform or emailing back and forth. In each of these cases, you and the customer are consensually offering information and their privacy is protected to the degree that they choose.
Customer-first data also includes what is known as “zero party data.” Much like the name implies, it means there aren’t any parties involved when information is shared. In a nutshell, this means the customer gives you their information without you even asking. When a customer signs up for an email list or fills out a profile on your website, this is zero party data.
How This Will Affect Your Business
Now, this means your business is going to have to really focus on first party data. Without access to consumers’ highly-detailed data that third party cookies would normally provide, it becomes more challenging to deliver hyper-focused, personalized marketing. Bottom line, this is going to take some effort to properly adapt to.
With that said, try not to worry too much. The world of marketing is constantly evolving, and that’s not a bad thing. In order to stay ahead of the curve, let’s take a look and what your business can do to roll with these changes.
First off, this means it’s time to rethink the phrase “return on ad spend.” These privacy changes are going to result in less visibility on user activity. If one of your leads sees an ad on Facebook and makes a purchase several weeks later, it might be harder to decipher what led to that sale. Was it the Facebook ad they saw several weeks earlier? Or, is it due to something else? Maybe they saw another ad on a different platform.
These privacy updates mean you might not necessarily be able to tell which specific platform did the heavy lifting for that sale. Because of that, it is imperative to rethink how you view ROAS. It’s time for a big-picture perspective when it comes to your advertising.
How is this accomplished? For starters, consider measuring your advertising effectiveness through “marketing efficiency ratio,” or MER. Your marketing efficiency ratio is an all-encompassing look at the results. Basically, it’s your total revenue you brought in divided by how much you spent on advertising.
MER forces businesses and marketers to take a step back, zoom out, and look at the entirety of the return on investment (ROI). It doesn’t mean you have to start cutting out marketing strategies and sitting on the sidelines. It just means that you will have less specific information on customers, and that the data will reflect that.
Rethink Product Promotions
These privacy updates make it more difficult to create ultra-specific, hyper-targeted ads to individual users. That means your business may need to rethink your approach to product promotion.
If you don’t have the information to know what product or ad would be the most effective for a consumer, what should you do? Does your company still make very targeted and specific ads, roll the dice, and hope they work? If so, you run the risk of rolling out ads that are too niche. Ultimately, that could mean they aren’t as effective as you had hoped.
A new approach is required. And much like our last section, it means the big picture becomes more important. There are a couple different ways to do this. If your business doesn’t have a huge variety of products and SKUs, you can shift your ads to focus on your product line as a whole. One ad can show off a collection, or your entire brand, if there isn’t too much to show off. For example, a company that sells fashion products can make an ad that shows off handbags and cosmetics instead of just one or the other. Remember, without access to private consumer info you won’t necessarily know their specific interests. Running a broader ad campaign means you can cover all your bases at once.
For businesses with a lot of different products or SKUs, you may want to focus more on best-sellers. Play the hits and do what works. It doesn’t mean you have to forget about everything else. However, it does mean it’s a good idea to be especially mindful of what type of ads you’re pumping money into.
Don’t forget about average order value (AOV), either. Does your company have bundles to advertise that are effective for boosting AOV? What about high ticket items that can bring in robust profits? At the end of the day, you have to do what’s best for your business. That can differ depending on a lot of factors, but a new “big picture” approach is worth considering.
Customer-first data, aka first party data, is incredibly important for lookalike audiences moving forward. You might not know as much as you used to about your consumer base, but you still know enough to connect with ideal audiences.
Having customer email addresses is still very valuable info for your business. If you have these, you can connect this information to Facebook. From there, the Facebook algorithm can find new customers for you. In the end, you can still count on this to be a worthwhile and effective strategy.
You can still go beyond just connecting email addresses, though. Lookalike audiences can be created through criteria such as who is visiting your site or what products they are purchasing through your store. Using this information means you still have a good idea of what lookalike audiences are worth your time.
Ultimately, customer behavior can still be analyzed even without third party cookies. It just means that you have to acquire this information via customer first data. That information is going to be key moving forward.
Use Ads To Collect First Party Data
So what about the ads themselves? Should your ads always focus on making a sale, or are there other goals that you should consider? If you’re only ever trying to make that next quick sale, you might be doing yourself a big disservice.
Now is a good time to consider the goals of your ads. You can shift your focus to making the goal of your ads about obtaining first party data. Remember, gathering email addresses is a great way to create lookalike audiences and gather high-quality leads.
Try creating an ad campaign that aims to get a solid email list going. You can do this through offering discounts if they sign up, or doing giveaway contests, or simply just letting them know they’ll get important news and updates. Sure, you aren’t bringing in loads of sales right away. But you are setting yourself up for long-term growth instead of short-term success. This big-picture approach, focusing on the importance of first party data, is going to be crucial with these privacy changes in place.
As we established previously, ads are going to have to be more broad and general because of a lack of third party data. That means your business has to get more creative across the board to make up for it. Creativity in an ad will largely determine whether an ad works or not. Is your ad copy exciting, informative, and succinct? Are you using a mix of videos and images to get your message across? It’s not enough to run the same-old-same-old and expect it to click with a broad audience.
We’ve mentioned how important it is to gather first party data and a couple ways to accomplish this. While gathering email lists are great, they are really only the tip of the iceberg. In fact, there’s a lot more first party data available if you put in the effort. And the more info you gather, the easier you can create your own customer profiles.
One easy example of this is having a customer fill out their birthday when they sign up for an email list. That information alone gives you access to staying engaged and running promotions for these customers.
Asking customers to fill out forms also gives you access to beneficial information. These forms can be as sparse or as detailed as you prefer. Just remember that shorter forms are typically easier to get customers to fill out. Also consider adding incentive to fill out these forms. Do they get a percentage off their next order for filling it out? If so, you might get more forms.
Your forms can include information such as what they’re browsing for, their preferences for products, and more. What products do they need? Are there certain styles they prefer? Are they shopping for themselves or for others? All of this helps you create customer profiles that give you a more clear understanding of your audience.
Optimize All Of Your Tools
Now that third party data is taking a backseat, it’s a good time to take an honest look at all the other tools at your disposal. What has been working? What’s been falling behind? You have to consider everything from your copy to landing pages to user experience on your website. And that’s really just scratching the surface.
All of these tools can be used to pick up the slack that third party data is leaving behind. Are your email campaigns effective? Are they being used to retarget valuable and reliable customers?
Take a good look at your landing pages and whether they are converting. What can be improved? Are they a quick and easy way for customers to get where they want to be? Also review your website. Is the layout clear and cohesive? Are users able to easily navigate each page? All of these are important to engaging with your audience in a way that draws them in and keeps them coming back.
Keep in mind that the better these areas are, the better your customer reviews will be. Testimonials and positive reviews can be used in conjunction with your ads as well. Your company’s image is going to be crucial with such big changes on the horizon. These privacy changes are a perfect excuse to take some time fine-tuning what you already have. That way, you’re well equipped for whatever lies ahead.
Change is difficult, but that doesn’t mean it has to be bad. As customer privacy becomes increasingly important, businesses will have to adapt. Gathering first party data will have to be your new focus, and your ads might have to start looking a little different as well. But with these changes comes the opportunity to connect with your audience, and even individual customers, in a way that businesses hadn’t considered before. At the end of the day, the customer is what’s most important. Keep that in mind as you move forward, and you’re on the right track.
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