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First-party data: What it is, why it’s important, and how you can start collecting it 

Since time immemorial, mobile- and the rest! – marketers drove their campaigns with third-party cookies that collected data from their apps and websites … and for a long, long time, that’s just ‘how things were’ – it worked, and it seemed like it always would …

But then a shift happened; folks started to think about all that data they were inadvertently sharing with marketers, advertisers, brands and lord only knows who else every time they clicked on a link, followed an in-app ad, or fell down a deep rabbit hole with a chatbot. Where was that information going? Who was capitalizing on the fact I was born in 1986, that I enjoyed K-pop and had an aversion to broccoli? And how were these insights really being used? As privacy concerns mounted, the Big Two finally stepped in. Google told us of their intention to phase out the use of third-party cookies to track Chrome users, and last year, Apple introduced App Tracking Transparency giving iPhone users a say in which – if any – apps could track their activities outside of the app in question. 

The upshot? A happier customer, and a long but still very lingering demise of relying on third-party data to power our campaigns. Brands got tetchy, marketers grumbled, and then … well we just got on with it. How? With a renewed focus on first-party data. Turns out that first-party data is actually pretty darned useful in helping us mobile marketers to crush it when it comes to personalization, bang-on-target campaigns, and nurturing a cohort of users that are often more than happy to share their personal information with us; using first-party data at the heart of marketing strategies saw a revenue increase of up to 2.9 times compared to those businesses that didn’t, and found they were able to reduce spend by up to 1.5 times. In this blog, we’re going to take a deeper dive into the benefits of a first-party data strategy – and look at what getting started with first-party data collection looks like …

First things first – what’s the difference between first-party data and third-party data?

Third-party data usually comes from a source external to your company – a third-party data provider – and not from the direct relationship you have between your business and your customers. More often than not, third-party data is collected from a veritable banquet of digital sources – websites, social media, mobile web, and of course, mobile apps. It’s collected, aggregated, segmented, and then sold on to brands for their own use, usually in the realm of marketing and advertising. 

Example: An outdoor clothing brand wants to advertise to adventurers who live in California, so it calls up a third-party data provider and purchases a list of app users in California who have at some point shopped online at some point for, say, mountain bikes. The brands then ship their marketing campaign to target those users with a view to driving them to their app or website. 

Most of us are familiar with this approach to campaigns, but we’ll also be familiar with its shortcomings: 

  • Quality: Purchasing third-party data is pretty much a gamble – you are completely in the dark when it comes to certainty about the quality of the data you’re working with. 
  • Reliability: When you buy third-party data, you’ve little insight into how it was collected, who it was collected from, and why. 
  • Relevance: Without knowing where the data came from, or why it was collected, you can really take a punt as to its relevance to your probably very specific needs. 

Point is, the data you purchased may be utterly irrelevant to your needs, and you’ll never know until campaign results roll in the money’s been spent. What’s more, a costly, wildly off-the-mark campaign could impact your reputation too … who really wants to ship a 2-week long campaign that reaches the wrong users with the wrong message?

The average yearly cost of utilizing poor quality data is $14 million

All that said, it would be remiss of us to say that the use of third-party data has no benefits at all – it does, particularly in both the scope of information it can provide and as well as the sheer number of touch-points it can scrape from across a global digital ecosystem. What’s more, this type of data is segmented in advance for categories like demographics and psychographic, saving your team a ton of time and money. It’s also great for outbound campaigns – something that first-party data just can’t deliver effectively on.

First-party data is collated directly from your audience, generated through interactions across your apps or websites, or collected by your CRM platform, email comms, and social media channels, amongst others. This kind of data is based on a direct and intentional interaction between you and your audience, so it’s not anonymous; users knowingly provide it, and your business collects it for a specific purpose. Its benefits are many:

  • Quality: Your first-party data can be an incredibly valuable asset to your business because it comes direct from your actual customers. You know where it’s come from and you know it’s got something to offer – it’s your audience data and no one else’s. 
  • Reliability: This two-way – not three-way – partnership that first-party data is built on means it’s waaay more reliable than the data sets you’re buying blind from third parties. Being reliable, you’re in a far better position to confidently carve out a competitive advantage built on real, trustworthy insights. 
  • Relevance: Because your first-party data is about your audience and your business, it’s directly relevant to how you plan to use it. You know where it came from, and you know why you collected it so you know it’s got value when it comes to utilizing it. What’s more, your audience in all likelihood expects you to use their data to deliver value to them, creating a highly beneficial two-way relationship – particularly when it comes to personalization.

Bottom line? First-party data puts you back in the driving seat with a clear view of the road ahead when it comes to campaigns that need to hit the sweet spot of valuable, relevant and personalized interactions – and the results can be significant. It delivers the insights and ability to far better engage target audiences at the right points in the customer journey, something third-party data alone just cannot do. But it’s not all high-fives and pats on the back; it’s a well-known fact that first-party data can be difficult to scale because it comes from a company’s own in-house activities. This means marketers will often look at combining first and third party data (along with zero and second – but that’s for another blog!) to widen opportunities and maximize on campaign efforts. 

Now that you’ve got a good overview of first and third-party data, let’s take a look at a few methods used to build a first-party data collection:

App registration

We all log into apps on our smartphones every day, providing information about who we are in exchange for the value our chosen brands provide. The smart enterprise knows that they must provide tangible value to each and every one of their customers, so when you first register, you’re almost always guaranteed (I said ‘almost’ because some brands are still failing to do this) something in return – usually a discount code, an invite to an exclusive sale, a refer-a-friend incentive such as first month free, and so on. 

In-App interactions

Capturing data on how your app users interact with your brand is critical in building a valuable first-party data set – from clicks and views to time spent in-app, cart and purchase data, these insights not only tell you who’s visiting your app (and from where they’re visiting it), but also the content they’re consuming and the products they’re interested in. Once you’ve got this data, personalization is the next step to deliver exactly what your customers want and expect.

Loyalty and rewards programs

We’ve said it before and we’ll say it again – customers want to feel special when it comes to the brands they choose to spend their hard-earned cash with. Just about every brand offers a loyalty scheme these days, but with loyalty on the wane, brands are looking to be more creative with what a covetable loyalty scheme needs to look like if it’s going to bring genuine ‘aha’ moments to the table (something that’s becoming trickier). Offering customers a diverse range of rewards and incentives that keep your brand (and not your competitor’s) at the forefront of their mind is a science, but get it right and you’ll find that your customers want to share their personal information with you, giving you a veritable banquet of first-party data and your customers a relationship with you that they can’t imagine doing with anyone else.

Surveys and polls

One of the most effective methods of first-party data collection, surveys are a great way to engage app users and get their thoughts on all manner of brand topics – often delivering insights that are pure marketing gold in the process. When they really plug into the zeitgeist, surveys can often take on a life of their own, particularly when it comes to social media shares.  If you’re thinking about surveys to ramp up your first-party data sets, remember to reward for participation.

In-app purchases

With both Android and iOS app revenues reaching an eye-watering $111 billion in 2020, it pays to focus on your customers to deliver what they want beyond the product alone. In-App purchase data will tell you not only what users are buying, but what products they might consider purchasing, how often they make a purchase, what price points work best for them, where their power customers live, and what time they’re most likely to be considering a purchase. When married with the offline purchase data you’re collating, you’re afforded rich insights into your customer profiles, helping you to focus products on the optimum channel (in-app/website/in-store) and focus your marketing efforts where they’ll be most effective.

Feedback and reviews 

Customer reviews and feedback is one of the richest sources of first-party data. Whether it’s directly via your mobile app, your social media channels, your website, or a third-party channel, a customer review can help you fine-tune your app and your campaigns – as well as providing you with rich insights into your product which you can utilize to create the product your audience really wants. Onboarding process too time-consuming? A buggy interface? A dud of an update? Regularly mine these reviews, figure out what’s working and what’s not, and watch your app go from strength to strength.

In our experience, the real ‘aha’ moments – and they’re few and far between – come from insights gleaned from first-party data. While none of the above are new strategies when it comes to first-party data collection, they’re food for thought and great examples of how it offers way more than just a bunch of information sloshing around your database that tells you who’s using your app. Building brand awareness, reaching the right people at the right time, efficient, effective personalization, the ability to build a product and app that delivers what your audience wants, the foundations on which to drive real growth – first-party data is a goldmine and any brand worth its salt will be focusing on its collection and utilization in 2022 and beyond. If you’d like to find out how Kumulos is helping brands to drive results with first-party insights, let’s start the conversation!