A mix of first and third-party data allows for a more granular insight into audiences, which can in turn have a tremendous impact on personalised marketing campaigns.

But what’s the best way to blend these two different data sources, and how can we effectively apply them within performance-based advertising activity? In order to get an overview, we caught up with James Milne, VP business development at Tradedoubler, ahead of a session on the very same topic at PMI Europe next week. 

How would you rate the progress made by marketers in blending first and third-party data together? And how important is it to use both these types of information in performance marketing?

James Milne: In a world of personalisation, consumers are no longer satisfied with a one-size-fits-all homogenous approach. Historically, marketers have typically used third-party data and relied heavily on click-through rates [CTR] as a measurement metric. Algorithms that buy inventory with CTR as a KPI are optimised based on users who click most often, which is why such a low percentage of clicks convert into sales.

In the last few years, ad spend has had to become more accountable and a more targeted approach has been required to demonstrate a good return on investment. The need to improve campaign ROI has driven marketers to become more focused on data to improve conversion rates. Harnessing data insights is allowing brands to adapt to their customers’ changing behaviour and personalise communications. The most effective way to generate accurate insights and deliver cost-effective advertising campaigns is to blend data sets and measure conversions, not clicks.  

Marketers are starting to take note of the opportunities that blending data can offer and we’re seeing some interesting developments, especially with new customer acquisition campaigns. A good example of data blending is when a business uses its first-party data to gain an understanding of its customers, and then overlays this data with third-party data, either to find out more about its existing customers or identify new ones. It surprises me that this approach hasn’t been widely adopted yet.

Combining first and third-party data has become a cornerstone of smart marketing strategies. What are some of the advantages and challenges for performance marketing when pairing data sets? 

JM: When possible, using multiple data sets is always advisable. You can’t get the full picture from just one data set and using a single set can give a false positive, which is why combining data sets provides more accuracy and efficiency on whatever metric you’re measuring.

The advantage of combining first and third-party data for performance marketers is the ability to personalise advertising, while gaining a true understanding of who your customers are and who your future customers are likely to be. These insights help marketers deliver more targeted and personalised campaigns which generate high levels of return on investment. When measuring success based on performance metrics, such as CPA, actions are more important than clicks, which means blending data is a key success driver in performance marketing.

There are challenges when pairing data sets caused by the sheer amount of data involved. You need to be able to handle and analyse big-data. This is difficult for most brands to do in-house and is often better outsourced to a partner with the right technology and expertise, to ensure they are generating accurate insights from the data.

The first step to produce data-driven campaigns is to collect first-party data and many brands aren’t doing this, despite first-party data acting as the backbone of effective online marketing. Retargeting is a standard feature of most brands’ digital marketing activities, but it requires first-party data. Brands that are failing to capture these data points are missing out on potential sales. For companies that are harnessing their first-party data effectively, combining these insights with third-party data is the next step to optimise their digital marketing activities.

Do you think marketers need to be a little more cautious about how they acquire and use third-party data as a result of new EU data regulation laws (at least within the next two years or so…)?

JM: When the new EU data regulations come into place, marketers will need to be more careful when using third-party data, checking who they are buying it from and how it was collected. If the data doesn’t comply with the new laws it will be the company using the data that is at fault, not just the data provider, so it’s important that marketers review their current data sets and carefully select their data providers/partners.

The stricter rules will make data collection more expensive and the cost of third party data sets is therefore likely to increase. This shake-up could result in companies reviewing the data sets and act as a catalyst for the increased use of harnessing their first-party data.

It’s also worth mentioning that, according to our Digital Connections research, 87% of European consumers are concerned about how companies are using their data. However, a third of consumers stated that they are willing to share information with brands they trust. Brands need to make sure they are transparent about how they are collecting and using their customers’ details. Transparency is essential to build trust and mitigate privacy and data regulation issues in the long term.

We can’t wait to hear you speak at the upcoming PMI: Europe, James. Are there any sessions you are particularly looking forward to attend?

JM: I am most looking forward to the ‘Making your intent data count’ session, not just because we’re involved in this topic, but because I am really interested to hear other people’s positions on this and where they think the industry will go next.