How to Build a First-Party Data Strategy?

The death of third-party cookies has made understanding user behavior more challenging for publishers. This, in turn, limits their ability to show targeted ads to their users.

Luckily, there’s still first-party data which provides plenty of insights to ensure targeted and relevant advertising. Every time a user visits a web page and interacts with it in some way, they generate several data points. Multiply this by the number of visitors a publisher’s website receives, and we can see that most publishers have a wealth of first-party data at their disposal.

The challenge, for most publishers in a cookie-less world, however, will be one of how to collect, store, manage, and analyze this first-party data. This is where a first-party data strategy is helpful.

This article offers in-depth information on first-party data strategy, explains why first-party data is important and how it can best be leveraged to achieve marketing objectives. It also places importance of first-party data in perspective by briefly discussing the privacy policies adopted by Google over the years.

What Is First-Party Data?

First-party data is the information that marketers collect from their customers by directly engaging with them. It is collected through website interactions, social media engagements, customer relationship management systems, customer feedback and survey forms, loyalty programs, or mobile apps.

Unlike first-party data, other data types, such as second-party and third-party data, are not collected directly. Second-party data is the first-party data of another entity, which may or may not use it for its own purpose. It often shares it with another entity that requires it for commercial purposes.

Third-party data, on the other hand, is collected by entities that do not have a direct relationship with the customers.

Why Is First-Party Data Important?

There are multiple reasons why publishers are increasingly preferring first-party data, including:

Relevance

As first-party data is collected directly from consumers, it offers more accurate insights into user behavior and preferences. When consumers themselves inform businesses of their preferences through surveys and forms, there is little need to second-guess their preferences or to use complex modeling software to put together missing pieces of the consumer preference puzzle. This not only helps in devising more relevant marketing initiatives, but often ends up saving both cost and time.

Adherence to Privacy Laws

The first-party data approach ensures compliance with privacy laws, such as the European GDPR and America’s CCPA. As entities collect data after receiving permission from their target audience, it reduces risk of privacy law violation.

Personalized Experience

With first-party data, publishers can offer a more personalized experience to their target audience. It results in better customer support, engagement, and experiences. This helps fuel business growth.

First-Party Data Uses

As the information gleaned from first-party data comes directly from the customers, it can be used in multiple ways to build relationships with them. Here are some of the ways it is generally used:

1. Content Personalization

Advertisers use first-party data to create content that resonates with their target audience. After all, what could be a better source to learn about their target audience behavior, preferences, purchasing patterns, needs, and wants, than the customers themselves? By analyzing the data, advertisers can craft personalized content, offering a unique experience to every customer.

2. Customer Experience

First-party data also helps in enhancing customer experience, as it provides a deep understanding of every customer's preference derived from their own feedback. Based on these valuable insights, a website owner can personalize content, engage better, and offer what a customer needs – all these result in providing better customer experiences to its visitors.

3. Customer Retention Strategy

For businesses, customer retention is as important as gaining a new one. With first-party data on purchase behavior and preferences, it is possible to create an effective customer retention strategy that helps build long-term customer relationships.

What Is a First-Party Data Strategy?

A first-party data strategy refers to an approach that focuses on collecting data directly from the target audience and using it to improve advertising performance, enhance customer support, and strengthen relationships with customers.

Unlike third-party data collection, a first-party data strategy complies with rules and regulations related to data privacy, as consent is taken from the visitors before collecting their data for use.

Key elements of a first-party data strategy include:

Data Collection

Data is collected by engaging directly with the audience. This can be through website interactions, online forms, past history, mobile app, social media platforms, and customer relation management systems.

Data Integrity and Usability

Integrity is at the heart of a first-party data collection strategy. This not only implies ensuring that the data collected is accurate, valuable, and usable, but also ensures that such data collection does not violate privacy laws applicable in that jurisdiction. Further, it is important to ensure that the user whose data is being collected knows about the end use that the data might be put to, and consents to the same.

Data Management and Analysis

This element of a data strategy involves defining how the data should be organized, stored, and maintained. Once again, the element of privacy and compliance is paramount here, as the onus on ensuring that the collected user data is safe, and is not shared with other entities without the user’s permission lies on the entity collecting the data.

Data Analysis

Finally, the collected data is analyzed to gain insights into customer behavior, purchase patterns, and preferences.

Why Do Publishers Need a First-Party Data Strategy?

There are several reasons why a first-party data strategy is crucial for the success of the marketing efforts of both publishers and advertisers. Some of them are:

1. Demise of Third-Party Cookies

Until fairly recently, publishers relied heavily on third-party cookies to gain information on target audiences and track their behavior. With Google set to phase out the use of such cookies, marketers have no other option but to seek alternatives. First-party data strategy is currently one of the most reliable of all such available alternatives.

2. Ever-changing Privacy Regulations

The data privacy landscape is evolving rapidly, and nearly every major country has some form of data privacy regulation in place. A first-party data strategy allows marketers to collect data without worrying about the risk of violating any privacy law. It helps them stay ahead of the ever-changing regulatory requirements, as most of these target second or third-party data collection.

3. Strengthens Customer Trust

Today’s customers are more concerned about the privacy of their data than ever before. By leveraging a solid first-party data strategy, advertisers and publishers can develop transparent methods to collect data directly from customers, and with their consent. This assures their customers that the data shared by them will be used ethically. This in turn helps cement customers’ trust in an advertiser or publisher.

How to Create a First-Party Data Strategy?

Creating a first-party data strategy involves multiple steps. Here’s a simple five-step process to develop an effective strategy.

1. Set Goals

Start with setting goals that one intends to achieve through first-party data collection. These may include improving customer experiences, retaining existing customers, understanding the online behavior of potential customers, or personalizing marketing efforts, to name a few.

The goals will determine what data needs to be collected. This is important to define at the outset, because publishers have several data points that they can potentially collect such as

Clicks on a page
Downloads
Newsletter sign ups
Search queries on a page
Page metadata

And so on. From this data then, it is possible to derive several permutations and combinations of insights and inferences. Without a goal in place, it is very easy to get lost in this maze of data.

2. Determine First-Party Data Sources

Website activity, purchase history, customer behavior, email and loyalty programs, and sales interactions are some of the data sources available to advertisers. However, not all collected data, even though first-party, is valuable or relevant. Prioritize those sources that align most strongly with the goals defined in the previous step.

3. Establish a Process to Collect Data

When establishing a data collection process, it is important to pay attention to two things:

What data to collect
How to collect this data

The first point, which is, what data to collect, follows directly from the goals we defined in the first step of our strategy.

The second point, which is how to collect this data, can be accomplished using a variety of tools, the simplest of which is Google Analytics.

For Google Analytics to collect first-party data from a website, it should first of all have the GA tag installed in its source code. Once this is done, publishers can also integrate their Google Ad Manager (GAM) with their Google Analytics, as long as they’re using GA 360. Once Google Ad Manager has been integrated with GA 360, publishers can see all the relevant ad manager data

This integration also allows publishers access to the Remarketing and Advertising Reporting features in Google Analytics, which is very useful for creating lists of audiences most likely to be interested in the products and services advertised.

Besides Google Analytics, other tools available to publishers to collect data are:

Hotjar
Smartlook
Pixels
Data Management Platforms (DMPs)

Publishers who feel they lack the technical expertise to work with these tools can always seek help from an adtech expert such as Publift.

4. Develop a Data Standardization Policy

This step involves creating guidelines around how data should be defined, stored, formatted, used, and updated. Once it is developed, make it accessible to everyone involved in crafting the overall marketing strategy.

5. Come Up With a Measurement Plan

It is essential to assess the performance of a party data strategy to determine whether it is effective and achieving its set goals. For this, identify key performance indicators (KPIs), which can be directly influenced by the use of first-party data, such as engagement rate or customer retention rate. Next, invest in tools and systems needed to track these KPIs. Finally, use the insights gained from this to improve or update the first-party data strategy.

First-Party Cookies vs. First-Party Data: What’s the Difference?

Often, the terms first-party cookies and first-party data are used interchangeably as both are related to the collection of data. There, however, is a marked difference between the two, especially when it comes to functions and characteristics.

First-Party Cookies

These are small text files that websites create and store on the devices of users. The data collected through these cookies include language settings, login details, location, and previous searches. Websites generally collect these data to offer users a better experience. First-party cookies are privacy-friendly unlike third-party cookies.

For a more detailed understanding of how these two types of cookies differ, have a look at our detailed guide on First party vs Third party cookies.

First-Party Data

Compared to first-party cookies, first-party data is a much broader concept that extends beyond just the use of cookies. Information here is obtained through website visits, customer engagements, transactions, feedback forms, and other forms of direct interactions, and data collected includes user behavior on the website or browsing history. Websites use this information not only to improve customer experience but also to create an effective marketing strategy or personalized content.

Google’s Privacy Changes—An Overview

The success of a good marketing strategy hinges on customer data. However, rising user concerns about privacy and the introduction of privacy regulations, such as GDPR and CCPA, have significantly disrupted the way data is collected and used.

The result has been an increasing pressure on online platforms to adopt more robust privacy policies.

Google has been consistently making changes to its privacy rules to ensure compliance with this rapidly evolving data privacy regulation landscape.

In 2018, it introduced multiple updates to enable advertisers and publishers to comply with GDPR in the European Economic Area (EEA) and the UK.

A year later, in 2019, the tech giant helped advertisers, publishers, and partners comply with America’s CCPA by offering restricted data processing.

In February of 2022, Google announced its plans to phase out Android Advertising ID, a unique identifier that allows advertisers to measure the performance of their campaign and user behavior on Android devices. It also launched a multi-year initiative to build Privacy Sandbox on Android, with the intention to introduce private advertising solutions.

In July 2023, it stopped offering restricted data processing for Customer Match because of changes to CCPA, which bars service providers from engaging in cross-context behavioral advertising, which includes Customer Match.

And, after years of declaring its plans to phase out third-party cookies, Google is finally set to do so by the end of 2024. Website owners will now find that a good number of Chrome users on their sites have third-party cookies disabled. In view of this, advertisers must now look for third-party cookies alternatives such as the use of first-party data to effectively engage their target audience.

Impact of Privacy Changes on Publishers

Privacy changes have impacted publishers who earn a major portion of their revenue from ads on their websites.

With new privacy rules prohibiting the use of third-party cookies that were critical for targeted advertising, several publishers are set to lose the ability to display relevant ads to their audience. This could lead to a significant decline in their revenues from ads.

For sustained revenue growth, such publishers must invest in new methods of collecting data, especially first-party data. These new ways of data collection must adhere to regulations while gathering valuable audience insights.

Publishers must also explore ways to build direct relationships with their audiences. By crafting personalized content, they can directly engage with their website visitors and encourage them to share their data willingly.

Final Thoughts

Publishers must embrace privacy-focused approaches to gain insights into their target audience. Methods such as third-party cookies and cookie syncing no longer comply with privacy regulations and are seen intrusive.

This makes it important for publishers to look for a cookie-free alternative, such as first-party data strategy. It offers privacy-friendly, relevant data as it is collected directly from customers. Collected data can be used to create personalized content, improve engagement, and deliver better customer experiences.

Publift has been helping publishers increase their ad revenue by an average of 55% since 2015. If you are a publisher with $2,000 in ad revenue, contact us today to learn how we can level up your revenue using an effective first-party data strategy.