Breaking Down First and Third-Party Data

What is first-party data? Graphic of first-party data as part of larger programmatic strategy

Online audience data is crucial in digital marketing; businesses and advertisers rely heavily on this data to gain user insights and target their customers accordingly.

Marketers generally collect two types of audience data: first-party data and third-party data. As the demand for user privacy continues to grow, the value of first-party data is increasing, while the use of third-party cookies faces demise.

So, what is first-party data exactly, and how does it differ from third-party data? As a leading programmatic agency in Auckland, This Side Up understands the ins and outs of audience data collection. We break it down in this blog post and explore how the deprecation of third-party cookies is shaking up the industry.

What is First-Party Data?

First-party data is any information a business collects directly from its audience. This data is generally more reliable than others, as the brand collects it directly, with no third-party getting in the way. Common sources of first-party data include newsletter or subscription sign-ups, survey data, customer purchase history, and customer feedback. Marketers primarily use first-party data for retargeting existing customers.

As the deprecation of cookies is coming, harnessing first-party data is more critical than ever. Let’s explore some unique benefits of first-party data and how to use it.

Why is First-Party Data Important?

Gain Deeper Audience Insights

First-party data is highly valuable in advertising because it lets you take advantage of your unique relationship with your users. By collecting first-party data, you can better understand customer lifecycles and gain deeper insights into their online behaviour. It allows you to see their journey first-hand, from their initial stages of learning about your business to purchasing a product and spreading the word about it. You can also use this data to improve customer relationships and increase engagement.

Unique to Your Business

Only your business will have access to your first-party data, allowing you unique information that no one else can use. This valuable information will give you an edge over your competitors in your marketing efforts.

Target the Right People

Targeting the right people allows marketers to create more focused, targeted campaigns. First-party audiences have already visited your website and engaged with your brand. These audiences are, therefore, more likely to convert, making them more valuable to marketers.

What is Third-Party Data?

So, what is third-party data, and how does it differ from first-party data?

Unlike first-party data sourced from a business’s own users, third-party data is information collected by an external entity with no direct affiliation with the user whose data is collected. Multiple sources often collect this data, including websites and other platforms. Third-party providers, such as data management platforms, combine this data and sell it to advertisers. Advertisers can use this aggregated data to deliver ads to audiences identified as target customers based on parameters set in purchasing these audiences.

Collecting third-party data sometimes allows for broader insights into user behaviour. It’s a great way to access data that leverages customer behaviours and emerging trends. However, more results don’t necessarily equate to better results. Third-party data isn’t as targeted as first-party data, meaning the results can vary. So, while you may get more potential users, it may not always be useful or relevant to your business.

The Deprecation of Third-Party Cookies

Third-party data is primarily collected using cookies. Websites with no direct relationship to the site you’re visiting (like social media websites or advertisers) implement these cookies to track users’ online activities. These sites can then use this data to build profiles about a specific user.

First-party cookies, on the other hand, are created by the website that you’re visiting.

Often referred to as ‘tracker cookies,’ people have frequently criticised third-party cookies for threatening user privacy. Due to these concerns, Google and other major browsers plan to discontinue their use. In addition, users have become more accustomed to clearing their online browsing data, cookies, and caches, so third-party data pools are dropping. So, what does this mean for advertisers?

Currently, advertisers rely primarily on third-party cookies to engage users online. A future without cookies means these advertisers must find new ways to collect audience data. Ultimately, the deprecation of third-party data will mean that first-party data will become even more valuable. First-party data complies with privacy laws, making it the most ethical and reliable way to collect audience insights.

Marketers should use first-party data to understand their customers better and target their audiences more effectively. By harnessing first-party data correctly, businesses can improve their marketing campaigns, strengthen customer relationships, and boost their return on investment.

Updates to Google Ads & Google DV360

In addition to the deprecation of third-party data, Google Ads & Google DV360 plan to deprecate the use of Similar Audiences for targeting in 2023. This feature uses your data segments to look for new audiences who display similar online behaviour to your existing customers, otherwise known as ‘look-alike’ audiences.

From May 2023, Similar Audiences (from either Customer Match or Floodlights audiences) will no longer be useable for targeting and reporting; by August 1st 2023, it will be removed from all campaigns. So, how will this change affect audience targeting?

In place of Similar Audiences in Google Ads, new durable solutions such as Optimised Targeting, Audience Expansion, and Smart Bidding can help businesses leverage their first-party data. These upgrades will allow for greater automation, crucial for reaching relevant audiences and measuring results.

 The strategies you use will depend on your goals and the type of campaign you’re running:

·       Optimised Targeting – For Display, Discovery, or Video Action Campaigns.

·       Audience Expansion – For Awareness and Reach Video or Consideration Video Campaigns.

·       Smart Bidding – For Search or Shopping Campaigns.

DV360 also has Optimised Targeting and a similar feature called Targeting Expansion.

Businesses must continue to adapt to our ever-changing marketing landscape by transitioning to these more durable, automated strategies. Preparing for such changes will ensure you meet your campaign goals and achieve higher performance results.