Google’s announcement in January that it plans to completely phase out third-party cookies by 2022 was the latest evidence that first-party data is becoming the preferred data entity for brands and consumers. Issues of privacy and increased desire for personalization are also indicators that third-party data is falling out of favor.
The recent decline of data management platforms (DMPs), which are used primarily to collect and manage third-party data for effective targeting, is another sign that brands and businesses are shifting their priorities to first-party data.
First-Party Data Fuels Modern Digital Advertising Campaigns
“Getting more first-party data has become a CEO initiative with major brands,” said Matt Kilmartin, formerly Chief Revenue Officer of DMP Krux. This growing emphasis on first-party data is a response to privacy concerns (and crackdowns) and consumer behavior that seems to indicate an increased interest in personalization and more authentic one-on-one connections with brands.
DMPs don’t typically provide this personalization, instead offering actionable target- audience data gleaned from audience behavior via third-party cookies. While this is a valuable service, AdAge notes that DMPs as they have been used are “at odds with an industry moving toward a more direct relationship with consumers – engaging them personally on social media – and focusing on first-party data, such as a consumer's phone number captured at point of sale.”
Audience segmentation, a clear benefit of DMPs, is often being executed with first-party segments created in-house and customer data platforms (CDPs) that focus on direct relationships between brands and customers. “There’s going to be a renewed emphasis with marketers on first-party segmentation,” said Anne Hunter, a media and data executive. “Marketers will build the segments themselves and look for activation cues that aren’t cookie-based."
Consumer Privacy Concerns A Factor In The Rise Of First-Party Data
It’s widely known that the big four have undergone intense scrutiny from agencies in the U.S. and abroad related to issues of user privacy and questionable data sharing practices. The ongoing investigations and lawsuits have made consumers increasingly wary over the last several years about how much they share and how that information is being used. Coupled with an increased interest from younger consumers for more honest, authentic connections with brands, and it’s no surprise that first-party data collection and hands-on segmentation and targeting are becoming preferred among brands.
Digital Marketers Adapt To Increased Reliance On First-Party Data
Even with CDPs and an increased commitment to personalized targeting, after the Google announcement there was some grumbling in the advertiser world. Given the existing infrastructure for third-party data, there are fears about effectively facilitating audience targeting as third-party data becomes less common.
However, digital marketers are adapting. For example, propensity marketing, introduced by P&G, allows P&G to use first-party data and machine learning to build “smart audiences” that can be targeted where and when their behaviors intersect. These narrowly- targeted audiences allow for more personalized outreach and one-to-one brand building. Whether it’s propensity marketing or another transparent value exchange between brand and consumer, brands will need to get closer to their audiences by scaling first-party strategies. The evolution of DMPs is simply another indication that data collection is changing and brands need to as well.
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