As the industry scrambles for first-party data in the wake of the cookie bust, navigating the marketing landscape can feel like being part of a gold rush, with brands caught up in the frenzy. But before we all join this rush, let us stop and ask: Is this mad dash for data collection really the promised land, or heading towards a mirage?
The charms and pitfalls of first-party data
The value of first-party data (data owned and controlled by brands) is undeniable and brings transparency, privacy compliance, and deeper customer understanding, but don’t romanticize it. Building a robust strategy comes with its own hurdles. While owning your data sounds empowering, the reality is more nuanced. There are many reasons why first-party data isn’t the silver bullet you think it is.
Focusing on cost and ROI (return on investment) factors, a 2023 McKinsey study found that only 41% of companies actively measure the ROI of their marketing technology investments. Ta. Are you collecting data without a defined purpose or measurable results? Forget that investing goes beyond technology to include skilled analysts and privacy-compliant practices. Please don’t. Then there are concerns about efficiency and scale. Gartner highlights that by 2025, 60% of marketing leaders will struggle to personalize experiences at scale. Opt-in methods such as website forms and loyalty programs are valuable, but limit reach and diversity. Are you ready to expand beyond these silos? Many companies face serious data silos and integration issues. Twilio reported that in 2022, 53% of businesses said data integration was their biggest data management challenge. Fragmented data across customer relationship management (CRM), websites, and other platforms requires advanced technology and skilled talent. Do you have the tools and talent to bridge these gaps?
Additionally, there are other areas that play an important role, such as privacy and consent. Building trust is paramount. Mary Meeker, a prominent venture capitalist, emphasizes that “privacy is the new luxury.” Is your data use transparent and compliant with regulations such as DPDP (Digital Personal Data Protection) and General Data Protection Regulation (GDPR)? A breach can erode trust faster than data can be collected. there is. Additionally, opt-in methods such as website forms and loyalty programs reach self-selected and often unrepresentative subsets of audiences. This data bias can distort our understanding of the broader market, making it scoped and biased.
In addition to increased compliance costs, acquisition fatigue and privacy burdens must also be taken into account. Incentivizing opt-in with discounts and offers can lead to unsustainable costs and “data for free” behavior, limiting long-term value. Dealing with and complying with evolving privacy regulations such as GDPR introduces additional complexity and potential financial liability.
Beyond the Hype: Ask the Right Questions
Instead of blindly following down a rabbit hole of data, approach it strategically. In addition to the above, there are two important questions to ask yourself before jumping into this first-party craze.
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What specific goals are you aiming to achieve?
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How do you align your data collection to a clear goal: either increased personalization, better targeting, or deeper customer insights?
It’s important to define your target audience and understand their behavior and preferred channels. Not everyone will be willing to share their data, so prioritize segments that are more likely to opt-in. It is also important for organizations to have a clear view of their resource commitments. Be realistic about the workforce, technology, and financial investments required to effectively manage and enable your data. Additionally, most companies do not define how their success parameters should be defined. You need to define KPIs that align with your company’s goals and track progress to demonstrate the value of your company’s strategy. It always makes sense to take a balanced approach. Moving beyond the first-party data frenzy shouldn’t be abandoned. That is very important, but relying on it alone is like building a house with one brick.
Take a holistic approach
First-party data migration requires collaboration across the organization. By breaking down silos and facilitating communication, brands can use data effectively and responsibly.
Establishing a data governance council is essential. This cross-functional team develops data strategy, ensures compliance, and promotes responsible data practices. Additionally, investing in data literacy training will help ensure cross-functional employees understand and leverage data effectively.
Building a customer-centric culture is paramount as it prioritizes customer privacy and transparency and fosters trust through clear communication and ethical data practices. Additionally, our focus on contextual targeting allows us to leverage signals such as browsing behavior and content engagement to create more relevant ads without relying on personally identifiable information. Investing in customer experience is critical to creating a valuable experience that encourages data sharing naturally, without relying on incentives or intrusive methods.
Consider privacy-enhancing technologies such as federated learning and clean rooms to enable collaboration while protecting individual privacy. Employing identity solutions like contextual targeting and clean rooms allows you to reach beyond your data ecosystem while ensuring privacy compliance. Privacy-first design builds trust by being transparent about data practices and providing robust privacy controls, recognizing that satisfied customers are more likely to share their data.
Finally, it is essential to go beyond media activation. First-party data goes beyond media activation and impacts multiple departments across an organization. This is as highlighted by his CMO of an international CPG (consumer packaged goods) brand, who said, “First-party data is a CEO-level issue.”
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The first-party data craze is understandable, but before you get lost in the chaos, have a strategy in place. Building a sustainable, privacy-compliant, data-driven future requires a balanced approach that recognizes the challenges and opportunities of first-party data while exploring complementary solutions.
Remember, it’s not just about collecting data, it’s about using it ethically, efficiently, and effectively to achieve business goals. Look beyond the hype and build a future where data serves both brands and customers responsibly and sustainably.
Anil K Pandit is Executive Vice President and Head of Programmatic, Data and Technology at Publicis India.
