Teavaro lead consultant Ben McDermott offers six reasons why you should focus on a first-party data strategy in 2019 (if you haven’t already).
From GDPR to Apple’s ITP 2.0, in 2018 a digital marketing industry that relied on third-party data had to wake up to the reality that the oil that greases its engine is becoming scarce commodity. These changes have highlighted the one prized resource available to advertisers and publishers alike: first-party data. As brands and publishers alike have increasingly understood its importance lies in fortifying the relationship between companies and consumers, they have made first-party their focus, rather than promoting reliance upon the dark arts of cookie matching and data selling to reach customers.
In 2018, we at Teavaro foresaw this change and have been developing solutions to support both advertisers and publishers in realising the potential of their first-party assets. Looking back over our work and earlier posts during the past year, here are the reasons we recommend our clients to focus on a first-party data strategy in 2019.
Personalisation is a pretty obvious start, but who knows more about your customers or audience than you? For advertisers, webshops and own domains provide an abundance of data, from product interest to timeboxed issues, that can be utilised to provide a relevant, personalised experience to your customers. For publishers, content engagement is key, and can be used to construct a profile of your audience to provide advertisers with specific targeting needs to provide a premium audience. No revelations there.
By employing a first-party identifier, however, the collaboration between advertisers and publishers can combine this first-party data to take personalisation to the next step. Smart targeting employs the activation of first-party data beyond owned domains and across the user’s entire experience, using all the data at hand to increase efficiencies for the advertiser and revenue for the publisher.
Work with, not for, the Marketing Giants
While growth in digital marketing revenues grew in 2018, the majority of that growth was taken by the likes of Google and Facebook. These platforms not only leverage their vast first-party reach, but are built to absorb the data from their clients and partners to create enriched profiles that can be monetised further. As their dominance of the digital marketing ecosystem means that refusing to engage with these juggernauts severely impairs one’s marketing strategy, there is seemingly no escape from handing over your audience data.
However, all of the data from the campaigns advertisers run on platforms such as the Google Marketing Platform is available. So advertisers could be building the same profiles of their customers in their own databases, driving down costs across the ecosystem as in-house targeting capabilities become more refined. Indeed, by employing a first-party identifier, advertisers can extend this capability to profile prospects, extending knowledge and value creation throughout the customer lifecycle, something that our next point touches upon…
Consumer Funnel Efficiencies
Without resorting to Wanamaker’s well-known quote, we all know that despite the gains digital channels have afforded it, advertising is still hugely inefficient. A good first-party strategy can make further impact on these inefficiencies.
Research shows that, depending on industry, brands have a 5-20 per cent chance of selling to new prospects, yet once these prospects are converted into customers, there is a 60-70 per cent likelihood of selling to the same customer.
Taking this a step further, loyal customers can be worth ten times that of their first purchase. Accenture research suggests that 80 per cent of customer value resides in 20 per cent of the customer base, with 50 per cent accounted for by a 5 per cent super-loyal cohort. By focussing upon one’s customer base with NBA and similar, brands can employ a first-party strategy that can massively improve conversions.
One for both the larger publishers and advertisers, developing one’s owned channels and collectivising one’s audience can further nurture the first-party relationship. By employing centralised systems of identification and data collection across, say, a media publisher’s multiple channels, a relevant and holistic experience can be assured, and the aggregation of insights can benefit all through a central customer profile.
An added benefit is the shift in the balance of power away from third-party data providers, including the marketing giants, as publishers and advertisers can leverage their first-party data to operate self-sufficiently. And such strategies need not require a complete overhaul of existing systems; Teavaro’s FunnelConnect for one can augment existing systems with first-party identifier and data activation capabilities, providing a BAU approach to marketing activities while transitioning to a first-party focus.
Of course, there is the possibility to extend such strategies across publisher and marketing groups, with collaboration allowing for greater gains from first-party strategies, but that is a topic for another article…
If GDPR caused tremors throughout your marketing operations, ePrivacy, its bigger, badder brother is set to cause you even more headaches. The new regulation effectively attacks the third-party data market on another front, providing further consumer protections and requiring greater responsibility from companies collecting and using data.
Teavaro spent much of the year following GDPR defining the next steps in aligning to new regulations for its clients. An effective first-party strategy can greatly decrease the chances of falling foul of this regulation, providing a stable base for the employment of consent and permission strategies that ensure you are upholding your customers’ rights. The ability to identify your customers is key to this, allowing you to align their permissions to your activities and to ensure that no breaches occur.
Of course, where central regulation leads, others follow. Not only are browsers stepping up their game, but industry-specific bodies will be looking to employ rules that could have significant impact on data use and marketing activities.
For example, recent discussions around consumer loyalty mean that regulatory bodies are currently investigating how certain industries (e.g. insurance) deal with customer renewals. If any regulation comes in, it will benefit the consumer and require improved management from these industries when dealing with their customer base, potentially wiping huge margins from their profits. In the specific case of insurance, this scenario would mean that customer churn would take on greater significance, as insurers would likely be unable to exploit automatic renewals and thus the market would require them to offer competitive renewal options to their customer base as retention becomes an important concern.
We at Teavaro have assisted our clients in employing first-party data strategies that specifically address such use cases, seeing a 10 per cent improvement in customer retention in markets in which churn is associated with more than just lost revenue.
While the above may provide an overview of the benefits, the reasons that you should focus on a first-party data strategy will be esoteric, depending on your business, your architecture and your specific needs. However, there is no doubting which way the winds of change are blowing. And there’s no doubting that, be you a publisher or an advertiser, you should be considering the power of your own data and your own agency to make improvements to your digital marketing activities.