How to Start Collecting First Party Data
As digital marketers, we always want to know more about our customers. It’s a cliche that money is power, but when it comes to targeting ads, optimizing for search, and maximizing your return on ad spend, knowledge is at least money.
That’s why first party data has become such a critical part of the advertising ecosphere. So much so that 92 percent of leading marketers said using first party data to understand what customers want is crucial to growth. That’s particularly true now that Apple is blocking third party cookies and Google is following suit.
But hang on – what is first party data? Or third party cookies? Whose party is it anyway? To answer these questions and more, we’ve put together this guide to navigating the challenges and opportunities of first party data. Read on!
What is the difference between first party, second party, and third party data?
So what does it mean when people mention first, second, and third party data? What’s the difference?
Like first, second, and third party perspective, the “parties” refer to who is collecting the data and their relationship to you.
- First party data is information you collect directly from your audience.
- Second party data is data you didn’t collect yourself: it came secondhand from another organization you partner with that’s sharing it with you.
- Third party data is data collected by an organization that has no direct relationship with you or your audience.
What is first party data?
First party data is collected directly from your customers or website visitors. The data can comprise customers’ names, email addresses, demographic information, purchase histories, website activities, interests, and so on.
Since it comes from your own sources, first party data is highly reliable. You know where the information came from and how you gathered it. Second or third party information can have accuracy issues that are difficult to anticipate in advance. It might not be clear, in some cases, where some third party data comes from and that can make it harder to use it to draw the right conclusions about your customers.
How is first party data collected?
One of the most common ways to collect first party data is through the use of a tracking pixel on your website, social media profile, or product page. Tracking pixels are tiny single pixel-sized snippets of code designed to be invisible or otherwise camouflaged on a site that record information about the user’s behavior on the site along with other pieces of information such as the user’s browser, operating system, location, IP address, time on site, etc.
You can also collect first party data through customer surveys or forms on your website. For instance, you could invite people to download an ebook or subscribe to a newsletter but require them to answer a few questions about themselves before they can do so. You can offer discounts, free products, or access to exclusive offers as an incentive for users to provide data, though be careful to strike the right balance. People might not mind giving you their name and email address to access a free newsletter, but if you expect them to fill out a form with 12 different questions about themselves they need to be highly incentivized that what they’re getting in exchange is worth their time.
Customer survey forms and web analytics tools are always ways you can gather first party data about your users.
How is first party data used?
Depending on how much and what kind of data you collect, that information can be put to many different possible uses. But zooming out, the primary ways organizations use first party data are:
- For retargeting website visitors for ads in the future
- For tracking conversion
- For nurturing customers through the sales process
- For gathering information about customers to refine buyer personas
Think about a company like Netflix: Netflix relies on first party data to recommend movies and TV shows to its customers. The company uses the customers’ search history, watch history, preferences, ratings and demographics to make all sorts of recommendations about what they’re likely to watch in the future.
But it’s not just digital behemoths like Netflix that put this information to good use. Understanding how many times a user has been to your website, what products they’ve looked for in the past, how close they came to making a purchase, how closely they resemble the demographic profile of other customers you’ve had in the past – all of these pieces of information are invaluable for determining the best way to convince them to make a purchase in the future.
What are the challenges of collecting first party data?
As first party data becomes increasingly important, you might face certain challenges when collecting it. These challenges include a lack of customer trust, a limited data pool and data silos (data siloed across different departments or systems, making it difficult to access).
Consider building trust with customers, expanding your data collection channels and unifying your data to overcome these challenges. Make data privacy regulations a top priority when collecting first party data by complying with them to avoid fines.
What is second party data?
Second party data is customer information that you haven’t gathered yourself, but that was collected by another organization you partner with. For instance, the information Google or Facebook provide to other advertisers seeking particular audiences: this is second party data. You didn’t collect it yourself; it’s being provided by another company you work with for you to use.
What is third party data?
Third party data is information collected across a wide variety of sources by an organization that doesn’t directly interact with your company or your customers. This sort of data usually provides broad demographic insights drawn from governmental, academic, or nonprofit sources – information that can be useful for making big picture determinations but that lacks the granularity or specificity of the information you’ve gathered yourself about users on your website.
How do you manage first party data?
The best way to manage first party data is through customer relationship management systems (CRMs) and customer data platforms (CDPs).
CRMs such as HubSpot collect and store information about your customers and allow you to track any interactions between them and your marketing and sales team. This lets you gather leads and nurture potential customers through the marketing and sales pipeline.
CDPs such as Adobe or Segment allow you to keep track of user behavior on your website. It gathers behavioral, transactional, and demographic data about your users in order to assemble customer profiles.
What tools and platforms are used to manage first party data?
When choosing the right tool, look at the data types and integrations it supports and determine whether it can pair with your existing marketing tools. Some common tools for collecting and managing your data include:
- Google Analytics for businesses insights into how visitors interact with your website.
- HubSpot Forms for creating and embedding forms on your website to collect data.
- Formstack for creating and managing forms without coding.
- ConvertKit for collecting and managing email addresses.
- Gravity Forms for creating and embedding forms on your WordPress websites.
How can first party data enhance customer experience?
When consumer data collection makes headlines in the news, it’s almost always for negative reasons. Some giant company has found some new way to gather information that customers never realized they had access to and people panic about the erosion of privacy in the internet age.
People are right to be concerned about their privacy, and new trends in data collection (see below) are responding to those precise concerns.
That said, though, consumers have also come to expect a high level of personalization that simply isn’t possible without data collection. And when you make good use of the data you’ve gathered, you’re able to enhance customers’ experiences and connect them with just the right products and offers at just the right time.
Track and segment your customers so you know where they are in the sales funnel. A message that will be helpful to one will be repetitive or spam-y to another. If you’re using data to carefully keep track of your customers’ progress, you can provide them with personalized offers or content that fit their particular needs.
How can first party data improve marketing campaigns?
First party data can help you understand how customers relate to and interact with your brand. Find creative ways to work with that information and use it to guide your marketing campaigns.
Some suggestions for how to do this:
- Personalize your marketing campaigns. Frame your marketing messages around your customers’ preferences, behaviors, and needs.
- Personalize your website for each customer and send them offers specially tailored to their interests.
- Don’t simply retarget users with the exact same item they were looking at on your website – make new recommendations based on their interests and past purchases.
How to protect customer privacy when collecting and using first party data?
Consumers are more willing to trade their personal data for more fulfilling and relevant experiences. As such, first party data gotten from then can help you understand them better. You will know where to improve and identify growth opportunities.
As you handle personal data sources from your customers, it’s important to understand the law and regulations surrounding data privacy. Know the specific facets of these laws that apply to your operations. Common examples include California’s California Consumer Privacy Act and the European Union’s General Data Protection Regulation. You should stick to certain best practices to improve first party data privacy and security. These practices include:
- Obtaining consent before you collect or use personal data.
- Making it easier to correct and delete personal data.
- Protecting the data from unauthorized access by using strong security protocols.
- Using and storing sensitive data properly.
- Getting rid of collected data after it serves its purpose.
For years, third party cookies were a staple of internet advertising. Like the third party data we mentioned above, third party cookies allow ad-tech companies to track users’ movements across multiple websites then sell that information to individual companies and marketers.
The phasing out of third party cookies is placing renewed emphasis on the importance of first party data: and first party cookies are still a viable option for most websites to consider. While first party cookies won’t let you track a visitors’ actions across other websites, they will help you compile user information and track users’ behavior on your site.
Put first party data to use for your business.
Executing a first party data strategy that balances privacy and value exchange is difficult to do. At Big Sea, we work closely with a range of organizations – from nonprofits to online retailers to B2B tech companies – to help them gather and make effective use of data. Contact us to find out how we can help you turn data into leads for your business.