what are the advantages of data strategy – WAU
First-party data, or primary data, is a technical term that refers to information generated by a company about its consumers from its sales, research and promotion channels – unlike the second and third-party data, whose data are made available by other organizations. Understand these concepts better!
Among the innumerable innovations of the 21st century, it was the valorization of a “currency” that completely transformed the way professionals, companies and consumers see the market for products and services. And we are not talking about the dollar, the euro or any other kind of currency, but the data!
Third, second and first-party data are terms related to the so-called Data-driven Marketing, a management modality that consists of the collection, study and use of data in decision-making in Marketing.
First-party data, however, are more valuable to companies, as they are generated from their own channels and platforms and, therefore, tend to be more accurate and reliable.
In this article, we explore this concept in detail, from its definition and advantages to its potentials and responsibilities in an increasingly data-driven market. Continue reading to check it out!
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What are first, second and third-party data?
The terms first, second and third-party data refer to the agency, institution or company responsible for collecting and making available a set of information.
Therefore, when conducting a study to prepare a marketing plan, for example, an organization can generate its own data, obtain market reports from partner companies or consult specialized companies that make this type of information available on open platforms.
Joni Castorino, director of Oracle Data Cloud, differentiated these approaches in a very didactic way at the 2016 Advertising Week New York conference, defining the 1st, 2nd and 3rd-party data, respectively, as “mine”, “yours” and “theirs” ”. We’ll look at each one below.
First-party data: “my data”
First-party data, or primary data, is information collected directly by the company that uses it. They are generated through marketing campaigns, website and social network monitoring tools, surveys and others.
The main characteristic of the first-party is that its information is collected from the company’s domains, that is, the channels in which it operates and the resources it adopts to carry out the fundraising.
Its biggest advantages are reliability, precision and confidentiality. The company establishes its own parameters and metrics in its analysis and can keep its reports protected.
Second-party data: “your data”
Second-party data, or secondary data, is the information collected by a partner company that is willing to share or commercialize this data.
This practice is very common among companies that explore different niches within the same market. In these cases, as there is no direct competition between the two organizations, they are free to help each other in a variety of ways.
A food supplement distributor, for example, could benefit from information provided by gym customers and vice versa. Likewise, a retailer can partner with its distributors so that they both gain insights into production, logistics and audience preferences.
The main advantage of second-party data is that it allows companies to access relevant data without the need to collect it, or to broaden their view of the market by combining this information with first-party data.
Third-party data: “their data”
Finally, we have the third-party data, the information provided by open data providers who share statistics on the behavior, habits and preferences of different consumer profiles from various acquisition channels.
Companies that sell or make this type of data available on sales and advertising platforms generally work with large volumes of information and use digital services, such as applications or online services, to collect it.
The biggest advantage of third-party data is its scope. They are very extensive and varied data that serve different types of business. On the other hand, this broad view may be lacking in precision and, as the data is open to the supplier’s users or customers, the chances of differentiating themselves in the market are less, since their competitors will also have access to them.
Source: Smarketing Cloud
What are the advantages of generating your own data?
In principle, the first advantage of first-party data is in control from its origin to its use. Since the company that generates the data is the same company that uses it, the strategies adopted to capture this information can be designed to directly meet the needs and objectives of the business in question.
However, the benefits do not end there. Below are some other important advantages acquired by companies that choose to generate their own data.
Accurate market information
One company often cited at events on the topic is Netflix. In addition to being a major entertainment hub, its platform is also a robust user analysis tool.
The company has a valuable database on the behavior of its customers within your channels and builds all your strategies, campaigns and even your content catalog from that information.
It is clear that business models like Netflix’s facilitate the generation of first-party data, however, more “traditional” markets are investing in technological solutions to promote constant interactions with the consumer.
This is the case of the automotive industry, which is popularizing various online services and adopting usage data in its campaigns.
Automating CRM campaigns
Marketing automation is increasingly exploited by companies, mainly due to the optimization it offers to the operations of a business.
With the popularization of Digital Marketing services such as Google AdWords and social media dissemination tools, third-party data has become the most used resource for the automation of campaigns and services on the internet.
However, companies that choose to create their own data acquisition channels and use CRM systems expressive advantages in relation to the others, especially when we talk about retargeting and remarketing strategies.
In e-commerce, for example, automatic activation of specific campaigns for users who abandon their cart or make frequent visits to a certain product or category is already frequent.
Campaign and product development
With detailed information about your audience, the chances of a company succeeding in the market multiply. New demands are easily identified, competition weaknesses are highlighted and the performance of products, services and campaigns can be measured in real time.
This gives companies unprecedented power, which can adapt much more quickly and effectively to the demands and desires of their consumers.
The possibilities are even greater when user data is obtained from monitoring and behavior analysis, as the wealth of reports in this modality is even greater.
It is possible, for example, identify problems and needs that consumers have not even realized exist and use that information to develop much more efficient products, services and campaigns.
How to employ the first-party data?
In general, the company that wants to start capturing and analyzing data from its consumers will need to invest in resources, communication and planning. Below, you will find a more detailed description of each of these parameters.
You can collect data from your customers in different ways. The most traditional is the famous customer registration in retail stores, but building a really rich information bank requires other resources.
This includes software specialized in capturing navigation data on websites and social networks, as well as the development of official platforms and applications or the contracting of services carried out by third parties.
Data Management Platform, or simply DMP, are SaaS software or companies that aggregate data first, second and third-party and organize them in different ways within the same place, making analysis much faster and more intuitive.
Granting of data
You will need to work on your communication to create a trusting relationship with your audience and encourage them to provide information on their capture channels such as pages monitored by plugins, forms and registrations.
People are increasing their awareness of the importance of their data and, therefore, they will not hand over that “currency” without something of value being offered in return.
Content Marketing is one of the most used strategies to encourage this reciprocity. When a company makes valuable knowledge or experience available to its audience, people tend to offer information more easily.
Although the tools facilitate the storage and analysis of data generated by users, the management of this information requires a series of technical and legal obligations.
The procedures adopted must be in accordance with the legislation of the country in which the company operates and the security of this information is the responsibility of the company that manages and uses the data.
The metrics and statistical parameters adopted need to be thought strategically taking into account the characteristics and needs of each business. In addition, limits and restrictions must be imposed in relation to the way information is used in the company and in its campaigns.
How to integrate data from first and third-party data?
If the first-party data provides a detailed view of your business and the third-party data allows for broad market insight, why not combine these two types of data to manage your marketing budget even more effectively?
This is a trend that is becoming popular with the help of DMPs and other platforms that provide this functionality.
Google, for example, allows its users to upload local data (first-party) and merge that information with its database (third-party) to improve ad targeting.
Facebook also offers some similar features, in addition to offering a number of other options capable of “polishing” the target audience of campaigns in a very precise way.
It is also possible to perform this integration manually simply by monitoring the data generated by their own channels and comparing them with the reports made available by other companies.
However, regardless of the resources used, the fact is that this strategy guarantees a micro and macro view of your market – management control unimaginable decades ago.
Why bet on data-driven marketing?
At the end of 2018, Waymo, a company that emerged from Google’s ambitious autonomous car project, celebrated more than 10 million miles traveled (about 16 million kilometers) on public roads in the United States.
Like companies that use data-driven marketing, Waymo cars are driven by data! Information collected by sensors, internet and GPS are crossed to define the vehicle’s position, identify obstacles, analyze the signaling and estimate the best path to be traveled. Imagine “running” your company with such precision!
In addition to understanding your audience’s profile and behavior in detail, The biggest advantage of data-based strategies is that actions are fully measurable. This favors ROI, as the results obtained can be continuously monitored and analyzed with enormous precision.
These advantages are making operational marketing lose space for intelligent strategies that adopt more precise objectives and can be continuously optimized according to the performance of activities and the market moment.
What is the scenario of this strategy in London and in the world?
According to The Digital Universe Of Opportunities study, promoted by Dell EMC, about 40 trillion gigabytes of information will circulate around the planet in 2020 and, like it or not, we all contribute daily to this thundering volume of data by doing research, using applications or simply leaving our cell phones in the pocket.
Several tools and devices have been introduced in our daily lives in recent years with the purpose of collect information about our habits, pains and desires, and this “data race” took on such great proportions that governments in different parts of the world began to define rules for the use of this information.
European data protection law and its impacts
Several countries in the European Union have already adopted their own laws on the collection and processing of personal data. However, in recent years, the need has emerged to unify these rules and establish basic standards for companies that benefit from this type of strategy.
Then came the GDPR (General Data Protection Regulation), the major European data protection project, approved in 2016.
The standards cover all companies that store or process EU citizens’ information.
However, since many affected corporations also carry out activities in several other regions of the world, the measures have had a domino effect, forcing partner and tertiary companies to adhere to the rules to avoid conflicts.
In London, the parameters for capturing and using data are provided for in the LGPD, the General Data Protection Law.
The data protection law in London
After a series of discussions about the possible implications that the rules could have for London companies, the LGPD was sanctioned and provides for the creation of a National Authority for the Protection of Personal Data, the ANPD.
The new standards have already been previously presented on the LGPD Brasil portal and should come into force by the end of 2020. Among the requirements mentioned, we can highlight:
- identification of data (personal, sensitive, child, public) and the means adopted for its acquisition;
- collection and processing of data under the consent of the owner, who must also be free to request the deletion of information when he wishes;
- adoption of security measures to prevent unauthorized access and accidental or illegal manipulation of data;
- creation of educational rules, procedures and actions on the use and security of personal data;
- communication to supervisory bodies (such as ANPD, Procon or Senacon) about incidents capable of putting information security at risk;
- identification of a qualified professional (natural or legal person) to guarantee the standards set out in the LDPG
The use of data draws attention due to the possibility to carry sensitive information about individuals, as well as the implications involved in their use. However, these features are already adopted by companies around the world and are delivering surprising results.
This relatively late regulation is a characteristic of the rapid introduction of new technologies on the market, but which does not affect the legitimacy of the strategy.
Data-driven marketing is a powerful resource that is undergoing natural maturation and it is up to organizations to adapt to their due legal requirements.
The fact is that, when properly managed and analyzed, data, whether third, second or first-party data, helps companies and communication professionals to obtain clearer and broader knowledge about the market and its consumers, in addition to generate valuable insights for new campaigns, products and services.
Do you want to know even more about how your strategy data can enhance your results? Then check out exclusive material on marketing indicators and OKRs and learn how to optimize your actions according to the response of your consumers!