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Post-GDPR: Is there Still a Case of First-Party vs Third-Party Data?

Post-GDPR: Is there Still a Case of First-Party vs Third-Party Data?

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The dominance of third-party data

Third party data has long ruled the roost, and that’s not surprising. It’s cheap, readily available, and there are enormous pools of data to dip your toes into. For example, at the time of writing, Oracle have 7,929,571,428 different data points available to purchase (GDPR issues notwithstanding). These kinds of data marketplaces have empowered endless marketing campaigns to deliver great ROI by enabling marketers to paint a deeper picture of their customers. What are our likes? What are our favourite websites or TV shows? It’s all there, readily available for your modern day marketers, packaged up with a CPM price tag in an easy to use UI.

However, third party data doesn’t just enrich a brand’s understanding of its customers, it can be used to create ‘look-alikes’, or scalable audiences to increase reach beyond your known customers – clever right?

Third party data has its weaknesses

Unfortunately, it’s not that simple. 

When it comes to 3rd party data, it’s always been about quantity over quality. If your job is to convince businesses to monetise their data, your bonus is paid out on how much of it you can get your hands on. If your business chooses to monetise their data, you’ll also be paid out based on how much of it is used. In both cases, data providers and data brokers are being incentivised to provide scale at all costs. 

On top of this, everyone has access to the same data. There is simply no way to gain a genuine competitive advantage when your competitors are using the same web inventory and the same datasets. Yes, you can out-compete on scale, but this may not be the wisest investment – or strategy.

Finally, no one really knows how much third-party data is being used. The truth is, the entire industry relies on self-reporting and usage statistics that are almost impossible to verify. I’ve genuinely had clients tell me that they have never been charged for the third party data they’ve used. It’s so complex, fragmented and, frankly, a mess.
The amazing thing is that the big players are still turning over millions every month without knowing how good the performance actually is. 

Politics has thrown a lot of data practices into question

GDPR has thrown a lot of data under the spotlight, and so have presidential elections and referendums. Scandals such as Cambridge Analytica, saw data handling become a family conversation around the dinner table. Consumer awareness has grown, trust has been lost, and it will take time to build it back.

In order to be compliant, brands have had to close multiple data streams. As a result, third-party data is no longer as cheap or quite as readily available as it was – although it is likely to be of a lot better quality going forward.

With all of its weaknesses considered, which have been compounded by GDPR, it may not be surprising that third-party data is no longer the darling of the ad and marketing tech industries as it once was.

Where first-party data is different 

Unlike third-party datasets, first-party data is unique and private to the brand.  
With more businesses pushing ‘data’ to the top of their marketing focus, our industry is seeing an increase of DMP and CDP adoption that does not focus on third-party. Take Infosum or Neodata for example – both of these new generation DMPs have strong offerings that steer clear of the murky world of third-party data.
Given that it comes directly from brand’s users, first-party data unquestionably paints the most accurate and relevant picture of the customer base. In direct contrast to third-party data, it’s about quality – when done well, delivers a much stronger ROI. With the right tech in place and a well thought out strategy, results can be considerable. 

First party data: there are obstacles to overcome

However, first-party data does have its drawbacks. Unlike third-party data, it is only an insight into existing customers, it doesn’t help with gaining and discovering new audiences, which is crucial for breaking into new markets. Also, handling data isn’t necessarily in the DNA of every business – some marketing teams just do it better than others. 

Then there’s also the problem of having the data to collect in the first place. Many brands - particularly smaller businesses looking to expand - may not have the depth required in their datasets to create genuinely powerful campaign strategies. On the other hand, some larger companies find their architecture too rigid and siloed to uncover the great potential of wealth they are undoubtedly sitting on.

It is therefore unsurprising that the industry has begun to pivot towards a third route. Second-party data can be obtained by a commercial partnership between two businesses, where marketers can leverage another known company’s data. 

This is a new era where more high-quality data will be supplied by companies whose sources can be more easily vetted than before. Whether this is a true change though, we’ll have to see. 

What’s the lesson?

For marketers, data has become a vital ingredient. 

While both types of datasets have their drawbacks, especially in the wake of GDPR, combining carefully selected first, second and third party data effectively is the key to truly unlocking your audiences and delivering the strongest ROI in your campaigns.

Regardless of the data you use though, it’s about how you utilise it. With regulations such as GDPR and the upcoming ePrivacy directive, we’re seeing a rise in the need for highly skilled data practitioners. It’s more crucial than ever to ensure you have the in-house skills to draw out value and insight from your data. 

 

 

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Alex Jacobson

Alex Jacobson

    Alex holds just shy of 10 years’ experience within the digital marketing and data technology marketplace, kick-starting his career at leading agency iProspect as their Digital Specialist in Technology Platforms. In 2015, Alex joined leading marketing cloud platform, Oracle, as their Data and Technology consultant, where his work with The Economist projected the BlueKai DMP to win Best Media Technology Partner 2016. 

    In 2017, Alex made his most recent move to the pioneers of the DataTech services sector, SBDS, where he manages the client strategy arm of the business. Alex’s deep knowledge of the DMP and CDP landscape places him in the best position to work with clients during and post DMP/CDP implementation, to ensure they extract the most value from their investment and drive business results.

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