It’s Your Data — Use It: Revisiting The Value Of First-Party Data In A Post-GDPR World

Jon Shalowitz
Mar 14, 2019 · 4 min read

Back in the early days of e-commerce, I had a hard time convincing myself that it was safe to give my credit card number — or any other personal information — to a website.

Today, however, I wouldn’t think twice about it.

As a society, we’ve become more and more comfortable sharing our personal data with our devices. Data is everywhere — we create more than 2.5 exabytes of it every day, and researchers predict that there will be 163 zettabytes of the stuff by 2025.

But not all data is created equal.

First-party data is any data your company owns. This includes website traffic statistics, newsletter subscriber data, owned email marketing data, e-commerce data, and the content you publish and promote on your site. The best part is, it’s completely within your control. It also builds on itself over the years, giving you deeper and more flexible insights than you could have obtained through third-party data alone.

Third-party data comes from a data aggregator, usually a DMP (data management platform) or another service that collects and analyzes the information. For instance, your credit card purchases or your online shopping browsing history.

Up until recently, third-party data was considered the best way to get info on your customers — for one thing, there was a ton of it.

But now, privacy and efficacy concerns have rendered third-party data somewhat less viable. In particular, the General Data Protection Regulation (GDPR) — a 2018 EU regulation on data protection and privacy — has catalyzed new concerns about how companies are using personal information. It’s always in the news, generating widespread skepticism and renewed privacy fears.

Today, companies who leverage first-party data are better-positioned to make product recommendations and provide better customer experiences.

Here’s why you should focus on making the most of your own data.

Third-party data isn’t worth all the headache.

Imagine going into a Gap store and being approached by someone trying to sell you an iPhone.

It would feel intrusive — not to mention irrelevant — but that’s exactly how that’s how a lot of ads appear online today. You could be on Amazon and another completely different company, with no affiliation, not only knows that you’ve been there but that you’ve made a purchase.

The abuse of third-party data was the norm for a long time.

After all, Facebook and Cambridge Analytica’s notorious data scandal didn’t even break the law. And companies took full advantage of it, buying it from unscrupulous vendors to the point of generating controversy and prompting congressional intervention.

But things are changing. In the wake of these regulatory concerns, there’s been a big shift in how the public perceives personal data. Post-GDPR, organizations must obtain verifiable consent from EU residents that is explicit, informed and freely given. That’s why AT&T promised to stop selling its customers’ location data to third-party service providers, and Verizon promised the same after a congressional investigation found the company’s location data was being misused by prison officials to spy on innocent Americans.

What that means is, third-party data is going to become increasingly harder and more expensive to get from reputable sources.

And it isn’t necessarily that useful anyway. Because advertisers may have no idea where the data is coming from, nor have any idea how accurate it is. This leads to massive cost inefficiencies. Brands need data to conduct advertising campaigns, but if the 3rd party data is of poor quality while increasing in price, they’re wasting money on something that won’t do them much good.

But that’s okay, because you still have a wealth of info at your fingertips you should be using.

First-party data is an invaluable resource — if you know how to use it.

In an age of consumer empowerment, all companies need to create personalized and highly targeted experiences by responding to customer wants, needs, and intent in real-time.

And what better way to accomplish this than using the actual data that details every customer interaction with your brand?

It’s free. It’s fresh. And — most importantly — it’s yours.

First-party data is the foundation for understanding your customers because it’s based on actual interactions with your brand across numerous consumer touchpoints, rather than the behavior of those users on other sites.

You can make the most use of first-party data when it’s paired with an AI component to detect customers’ behavioral signals. Today, the most successful content marketing strategies and eCommerce merchandising strategies leverage their first-party data sets by harvesting audience signals such as intent, behavior, and interest.

Using a combination of first-party data and AI, brands can connect with new customers online based on their interests.

For media companies, AI can weigh the likelihood of whether a new reader will find a piece of content interesting, and deliver the exact message most likely to resonate with that particular person. For eCommerce companies, AI can determine the best product or collection of products to put in front of the customer in real time to maximize basket size. AI is particularly good at is testing and evaluating different paths and probabilities based on the behavior of other similar users.

This isn’t to say that third-party data dead is dead. But there’s a time and a place for it. And in today’s regulatory climate, it can’t be the only type of data used in your company’s marketing strategy.

As truly valuable third-party data becomes increasingly more expensive and harder to come by, first-party data will be the safest way to collect information about your customers and fuel your brand strategy.

Most importantly — it’s yours. So why not use it?

Jon Shalowitz

Written by

4x startup CEO. AI, CX and Digital Transformation. CEO@LiftIgniter

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