First-party data in advertising is emerging as the most essential way for brands to deliver personalized experiences while also respecting increased consumer demand for privacy and the proliferation of data protection regulations worldwide. Already, 54 % of marketing organizations report considering collecting first-party data as an alternative to privacy-invasive third-party cookies. Publishers are also eyeing the potential of first-party data, with 78% investing in related data solutions. Advertisers, agencies, and publishers that harness digital advertising first-party data can build a deeper understanding of audiences to fuel more relevant communications and premium ad inventory.
What is first-party data?
In a nutshell, first-party data refers to information collected directly from a brand or publisher’s customers/users. This data is gathered through direct interactions, such as via websites, apps, social media, or through customer feedback and purchases. Unlike third-party data, which is sourced from external aggregators, first-party data is owned and managed by the brand or publisher itself. This direct line to the customer makes first-party data a goldmine for advertisers aiming to personalize their content and make campaigns resonate more deeply with their target audiences.
Types of first-party data
There are several types of first-party data for digital advertising, including:
- Transactional data: sales records and purchase histories that reveal buying patterns;
- Behavioral data: actions taken by users on a website or app, such as page views, clicks, and time spent looking at content;
- Demographic data: information provided by customers during sign-ups, such as age, gender, and location;
- Sentiment data: data related to customer interests, lifestyles, and preferences sourced from surveys and feedback forms.
These various types of first-party data can be grouped in one of two categories: implicit data collected from user interactions, such as app usage patterns, website visit frequency, feature engagement metrics, etc., and explicit data actively shared by users, such as survey responses, and preference settings.
The importance of first-party data in advertising
As privacy regulations tighten and consumer concern over data privacy grows, first-party data offers a compliant and reliable alternative to third-party data collected through third-party cookies and other invasive approaches, most of which are being restricted or phased out. By leveraging their own first-party data in advertising, brands can create personalized marketing campaigns that resonate more deeply with their audiences, leading to improved customer loyalty and higher conversion rates. First-party data can also help brands overcome the challenges of data activation resulting from the signal loss currently affecting the industry and enable them to maintain highly effective programmatic personalization at scale. However, turning first-party data into audiences that can be activated in programmatic advertising campaigns is a challenge, as it can be difficult to link data to users. One way to overcome this challenge is through first-party IDs, unique identifiers that brands and publishers can use to map user activity across their digital platforms. Using first-party IDs, advertisers can link user activities directly to their first-party data, enabling them to build audiences at scale and dramatically improve reach.
Using first-party advertising IDs in digital advertising
First-party IDs combined with first-party data enable brands and publishers to create personalized user experiences and content by building 360-degree audience profiles from the intelligence captured by user interactions. Additionally, using first-party advertising IDs enhances privacy compliance by keeping data collection and management within the company’s control, aligning with stricter data protection regulations. First-party IDs also deliver improved audience match rates for advertisers to optimize ad spend and measure the impact of their advertising. Publishers, meanwhile, can increase yield, revenue and advertiser ROI by combining precise audiences bundled with inventory.
Examples of first-party IDs in digital advertising
One way of generating a first-party ID is when a user creates an account and logs into a website or app. In this case the “authenticated ID” associated with their account can serve as a first-party ID. This ID can track user activity, preferences, and interactions across the platform while the user remains logged in. However, brands need to achieve scale with their advertising campaigns and so also need to consistently recognize users that are not logged in. In this case, brands and publishers can use first-party cookies, but these are limited in duration and result in the same user being perceived as different users over time.
The advertising data foundation of the future
First-party data is fast becoming an indispensable resource for brands, agencies, and advertisers. Using first-party data effectively ensures compliance with privacy laws and drives superior customer engagement through tailored experiences. However, for first-party data to deliver in full, it needs to represent a 360 view of a single user’s interactions and must be capable of being activated at scale. For this reason, brands and publishers should look to complement authentication with telco-verified IDs to enable robust first-party audiences that deliver personalized advertising at scale. The combination of authenticated IDs for depth of user information and telco-verified IDs for a consistent view of non-logged-in users offers a compliant and future-proof platform for the advertising ecosystem of tomorrow.
Source: Novatiq
