A New Frontier: Using Web3 to build first party data

As the digital marketing landscape continues to evolve, first-party data has become the holy grail for brands seeking to personalise their marketing efforts and create more meaningful connections with their customers. This information, directly collected from consumers, offers invaluable insights into consumer behaviour, preferences, and needs. With the dawn of Web3, the decentralised internet, brands have a unique opportunity to enhance their first-party data collection in a more secure and consumer-friendly manner, right in time as first party data becomes increasingly difficult to obtain.

What is first party data?

Before we dive into the how and why Web3 can help, let’s define the various types of data available to brands:

• Zero-party data is data that a consumer intentionally supplies — from a registration form or a survey. This is the holy grail of data — accurate, owned, direct answers to a brand’s most pressing questions with direct customer consent. This data is of highest accuracy, but lowest volume — we can only survey customers so often.
• First-party data is the data collected on consumers based on their interactions with a website/app. Brands crave this data — accurate, owned, aligned to a brand’s questions about customer preferences and in line with privacy regulations. This data is accurate and in most cases of sizeable volume.
• Second-party data is someone else’s first-party data. For brands, this could come from social media, Shopify, or retail partners. This data is still accurate and in line with privacy regulations, but the data may not answer key brand questions and brands have to pay or partner for it.
• Third-party data is a collection of several first-party data sources aggregated across websites and applications by independent researchers and companies. This is the least accurate, least aligned to a brand’s key questions, has questionable sourcing (privacy) and can be expensive.

Why is First-Party Data becoming harder to obtain?

First-party data is becoming hard to collect for four main reasons:

1.Privacy Regulations: The introduction of privacy regulations like the General Data Protection Regulation (GDPR) in Europe, the California Consumer Privacy Act (CCPA) in the U.S., and similar laws in other regions have made it more challenging for brands to collect and use first-party data. These laws require businesses to obtain explicit consent from consumers before collecting their personal data, and they also give consumers the right to request that their data be deleted.

2. Changes in Technology Platforms: Major technology platforms like Apple and Google have made changes to their policies and systems that limit the ability of brands to collect first-party data. For example:

• Apple’s iOS 14 update includes a feature that requires apps to get the user’s permission to track them across apps and websites owned by other companies — 62% of users decline to share information.
• Apple has also taken steps to protect user privacy by implementing a feature called Intelligent Tracking Prevention (ITP) in its Safari browser. ITP blocks third-party cookies and limits the use of first-party cookies for tracking purposes.
• Google has announced plans to phase out third-party cookies in Chrome, which many brands have relied on to collect first-party data.

3. Increasing Consumer Awareness and Concerns About Privacy: Consumers are becoming more aware of and concerned about how their personal data is being collected and used. This has led to an increase in the use of privacy tools like ad blockers and VPNs, which can make it harder for brands to collect first-party data. In addition, some consumers are choosing to opt out of data collection altogether, or to provide less accurate information when they do consent to data collection.

4. Brands are terrible at using first-party data: for all the data that consumers give to brands, it is not improving customer experiences and often gets leaked. Consumers get offers and ads to buy products they would never buy and when was the last time you were surprised by a gifted experience from a brand? For these reasons, customers are increasingly reluctant to share any data with brands.

Web3 and First-Party Data: The Perfect Synergy

Web3 is the next generation of the internet, which is based on blockchain technology, tokens, smart contracts and decentralised networks. We won’t get into the specifics of what Web3 is, which you can read more about in other blogs we’ve written, but introduces new ways for brands to interact with and understand their customers. Tokenizing engagement is one of the strategies that can be used to get better first party data:

1. Direct Relationships and Trust: In a Web3 environment, brands can establish direct relationships with their customers without intermediaries through the use of wallets and tokens. This can foster trust and encourage customers to share more accurate and valuable data about themselves. For example, a brand could connection directly with every follower and customer, issue its own tokens and offer them as rewards for customers who:

• create a wallet — using BlockTrust’s ID3 wallet,
• buy products — using BlockTrust’s Proof of X Dapp
• influence on behalf of brands — using Proof of Influence DApp
• attend event — using Proof of Attendance Dapp
• consent to share their data
• engage with the brand in other ways — fantasy gaming, visiting metaverse, etc

2. Transparency and Control: Blockchain technology, which underpins Web3, provides transparency and control over data. Customers can see exactly how their data is being used and can control who has access to it, including un-granting access (in line with GDPR rules). This could make customers more willing to share their data with brands. In addition, the use of tokens can provide a clear record of customer engagement, which can be valuable data for brands.

3. Incentivized Engagement: By gamifying engagement, brands can incentivize customers to interact with them more frequently, broadly and deeply. For example, a brand could offer tokens for completing surveys, writing reviews, making repeat purchases, purchase other product lines, or purchasing partner products and services. These interactions can provide valuable first-party data.

4. Personalized Experiences: With the data obtained through tokenized engagement, brands can use all these “web3 cookies” to create more personalized experiences for their customers. This can lead to increased customer satisfaction and loyalty, which can in turn lead to more opportunities for data collection.

5. Data Accuracy: The direct and incentivized nature of interactions in a Web3 environment can lead to more accurate data. Customers have a clear incentive to provide accurate information in order to receive their tokens or other rewards.

6. Enhanced Data Security: With Web3, data is stored across a decentralised network, reducing the risk of data breaches. This enhanced security can increase consumer confidence in sharing personal information, providing brands with richer, more reliable first-party data.

However, it’s important to note that while Web3 and tokenizing engagement offer exciting possibilities for brands, they also come with challenges and risks, including technical complexity, regulatory uncertainty, and potential privacy concerns. Brands will need to navigate these issues carefully as they explore these new approaches to customer engagement and data collection. BlockTrust has helped hundreds of brands navigate these challenges, so please do reach out if you need any assistance with the above

Finally, Web3 is set to redefine the digital landscape, offering a unique opportunity for brands to revamp their first-party data collection strategies. By prioritising data ownership, enhancing security, delivering personalised experiences, fostering transparency, and tokenising engagement, brands can tap into the power of first-party data like never before….but move quickly before the Web2 powers rug pull the first party data for themselves.