All Brands Should Own Their Advertising Data
We are living in the information age and data is now one of the planet’s most valuable assets.
Is your business maximizing data to its full potential?
A business’s data makes the difference between growth and stasis. This is why so much money is spent on great lists, qualified leads, and access to the perfect audience segment. Data fuels sales, strengthens relationships, and optimizes businesses resources.
Ultimately, consumer data makes it easier for brands to personalize their advertising, strengthen their value prop, and appeal to prospects with hyper-targeted messaging. Data illuminates key audience features, from their buying habits and preferences to where they engage online and what drives their decisions. All of this information helps businesses expand their reach and maximize the profits earned from each consumer.
Each touchpoint generates data, and these insights are invaluable.
So why are businesses OK not owning their data and relying on third parties?
For many companies it’s hard to assign a specific value to data. It is a lot easier to put faith into the big tech platforms that currently monopolize the advertising industry. These platforms have become trusted among most advertisers, despite the lackluster results and challenges that plague many that advertise with them. It becomes easy to fall back on existing methods, but every business must recognize that abandoning data to third parties represents a missed opportunity.
Data will advance your bottom line, but not all data is the same. Let’s take a look at the three primary advertising data types.
Data Types in Advertising
Achieving your advertising goals requires data in the right combinations. First, second, and third-party data each has certain pros and cons, so let’s explore in more detail.
What is First-party Data
First-party data is collected by your organization from your audience members. There are variety of sources that first-party data comes from, including website visitors, email subscribers, transaction records, social media followers and CRMs. Being that this data is collected and owned by your organization, you have much more control over it. Collection processes, storage, and management is all in your hands. This makes it easier to ensure that it is secure and accurate, without relying on help from others.
Perhaps the biggest value of first-party data is exclusivity. This is your company’s data, and no one else has access unless you provide it. Exclusive data provides a competitive advantage, especially when the data is strong. Accuracy is another incredible benefit of first-party data, as it comes directly from your customers and prospects. Third-party data will never be as accurate, because the sources didn’t willingly give it to you at some point in the funnel.
Compliance is another reason that first-party data is incredibly valuable. As regulations tighten and cookies are abandoned, third-party data capture becomes increasingly difficult. First-party data doesn’t present this challenge, as it is fully compliant with GDPR, CCPA, and IDFA. The limitation of this data is its scope. With first-party data you don’t gain information on new audiences, as it only really allows for retargeting of prospects and customers.
What is Second-party Data?
What is Second-party Data? Second-party data is really just first-party data repackaged and resold by the company that owns it. After collecting data from their audience, the owner sells it to other organizations. This is becoming a growing data segment, as there is a lot of value in this data and companies have begun to realize this. If a business in the real estate sector has a lot of great first-party data, they can find another company with audience overlap and sell them their data.
There is a lot of value with second-party data, as it delivers deeper insights into your target audience segment. There is confidence in the understanding that this audience data is similar to your own, positioning you to expand your reach with new customers. Often this data is sold without a middle-man, avoiding third-party data brokers. This maintains some exclusivity and a competitive advantage, as few businesses have access.
Some of the challenges that second-party data presents include integration and availability. First-party data is collected and managed in varying ways. When this is sold to new businesses, it can be difficult to combine existing data with new second-party data. Finding organizations that provide trusted data is no easy task. This is why second-party data is often available in limited quantity.
What is Third-party Data?
Third-party data lacks the accuracy and exclusivity of the aforementioned data types. This is because it is purchased from a broker that did not actually collect the data. Instead, it is aggregated from a number of different websites with the aim of building consumer profiles that are accurate enough to deliver results. There is serious value in this data as well, as it can provide consumer insights previously unavailable to your company.
There is a massive amount of third-party data available for purchase from resellers across the internet. This data can be used to develop the profiles of your existing customers while improving your understanding of new audiences. When purchasing this data, it is mostly organized based on existing segments, making it easy to integrate without too much analysis and sorting. This ease of access also makes it possible for competitors to gain access to the same lists.
The unavoidable reality is that third-party data isn’t exactly compliant. Data privacy laws restrict is use and collection in order to improve user privacy. The heart of this issue is cookies, which are used to track user behavior and collect third-party data. This severely limits its use. Another challenge is the lack of transparency around third-party data collection methods. The result is low quality and improperly aggregated data.
Privacy, First Party and Third-Party Data in Advertising Strategies
Privacy, First Party and Third-Party Data in Advertising Strategies As businesses find product-market fit and scale operations, their data focus changes. Early on in the business development and advertising process, the focus is on simple questions. Where are users coming from, where are they dropping off, and what are retention rates? The answers to these questions can be illuminated through third-party tools like Google Analytics that help with reports, dashboards and more. These tools make it easy to track performance and make adjustments in early campaigns.
This doesn’t work forever, and eventually the questions become more granular and targeted. How many users entered the funnel through multiple referral sources, what value can you assign to each channel, how does engagement change from web to mobile? All of these questions are impossible to answer using certain third-party tools. Much more specificity is required from reporting, and if you don’t own your data, you can’t go much deeper. At a certain point, the tools you have become limited and the value of data ownership becomes much clearer.
The most effective method to quickly improve advertising results is found in first-party data analysis. This data owned by your organization will improve targeting, increase ROI, and provide visibility of the client’s path to purchase. Ultimately there is more flexibility with first-party data, empowering your organization in a number of ways.
All great advertising campaigns are data-driven. This is because data helps deliver a targeted, personalized and scalable campaign. Without a focus on data, it’s nearly impossible to know what works and what doesn’t. Owning this data ensures that you have visibility of the entire process, including who you’re targeting and how to appeal to them.
Your audience is the most important consideration when deploying ad campaigns, as this information dictates your message, your publishers, and your creative. The goal is to reach and convert audiences that will become brand loyalists, returning month after month or year after year to do repeat business and spread the word about your offerings. Data will illuminate these audiences, empowering you to continually engage them in the right place at the right time. If you don’t own this data it becomes hard to hone these ideal audiences.
Perhaps the most important reason for data-driven ad campaigns is the ability to optimize. Data illuminates the best path forward so that you can make decisions based on demonstratable success or failure. With your own data, you can see what is leading prospects through the funnel and converting them. Ultimately this improves ROI by helping pinpoint where budgets should be allocated for the desired results.
According to AppNexus, upwards of 97% of programmatic ad campaigns lack targeted creative for each audience segment. This is a huge missed opportunity to improve performance and boost the ROI of advertising campaigns. In these instances, there is no attention being paid to how to customize ads, which results in generic and ads that lack personalization. To improve on this, businesses must activate their data and deliver advertising experiences that resonate through a tailored and nuanced approach.
Data is key here, as it helps determine how and where this personalization should occur. Data-driven creative targeting utilizes the insights gained and combines them with AI or machine learning to serve personalized ads to prospects at each stage of the funnel. A prospect at the top of the funnel resonates with different creative than those at the bottom of the funnel. Ad campaigns that factor this into their strategy increase performance and ROI.
Owning your data ensures that your business is maximizing its performance, as there is more insight to pull from first- or second-party data. Instead of relying on mysterious third-party data, you are using accurate information to drive your strategy. This will ensure that your creative resources aren’t wasted on irrelevant information.
User Privacy vs Advertising Practices
Privacy is top of mind for most internet users. Everyone wants to feel secure when it comes to their personal data and information. Many fears exist in this area, but that doesn’t mean that collecting and utilizing data needs to feed these fears. In fact, there are ways to ease these fears when demonstrating the value that data represents for a more personalized experience, and the methods used to ensure this data is handled securely.
Data provides consumers with a more compelling advertising experience. This experience is increasingly tailored to the prospects, aligning with their demonstrated interests and habits. These experiences are much more likely to convert, and are definitely more enjoyable to come across on a daily basis. The end result is a mutually beneficial relationship in which businesses reach the perfect audience and audiences gain insight on products and services that they resonate with.
As the owner of the data, you have an opportunity to help your customers feel at ease. You can provide them options to remove their data, or have visibility into the data you collect. This helps build trust as your customers can better understand what their data is being used for, and how it is being protected. Owning your data allows you to ensure the quality and privacy of the data you collect. Relying on third-parties eliminates this level of control and customization, as you lose the ability to impact the privacy and reliability of third-party data. Ultimately, this means lower quality data and lower quality results.
Can You Trust Third-party Data Sellers?
Most businesses rely on third-party data for their advertising. Trusting third-party data resellers comes down to how they gather data, how fresh it is, and whether it is widely utilized by other organizations. Unfortunately, the traditional data collection methods are not ethical.
What we discussed above begins to illustrate the downsides of this approach. In the long run, owning your data will unlock a world of value for your business. More sales, saved resources, and better customer experiences are all impacted by data. If you choose to bypass the ownership of data, you are missing out on the potential to optimize all of these areas.
It isn’t worth the missed opportunity. While it might take some time to start actualizing these results and seeing the value, over time the value of data ownership becomes abundantly clear. It’s time to stop relying on third-party data, and prepare for the future of advertising. This means businesses should be prioritizing their approach to both first- and second-party data. The quick fix of third-party data just isn’t worth it anymore.
We are entering a new era of advertising in which consumers have more control over their information and how it is used. Businesses must respect these changes and prepare for the shift in consumer expectations. Internet users want a private and personalized experience, and data is at the heart of these expectations. Third-party data does not address these issues, as the information collected is generic and not very targeted.
Businesses that anticipate these changes and begin to prioritize data ownership can ensure the privacy of their audience while delivering a tailored experience that inspires engagement and conversion.