The Marketing Data Dichotomy: How to Use and Protect Your First-Party Data

There’s a push/pull dichotomy occurring right now in marketing around data: just as data is increasing in value and becoming more critical, it’s getting harder to collect.

This friction is tough for marketers to navigate. So how do they leverage every data asset they have to drive marketing performance while ensuring it doesn’t fall into the wrong hands?

The Push: A robust data program is needed to succeed

Marketing leaders know that data is a critical component of good decision-making. But the stakes have gone up. The pandemic has increased online commerce and advertising competition, both of which are powered by data.

At the same time, winning the customer experience online is a much different challenge than before. Consumers have expressed their desire for more personalized brand experiences that consider their previous shopping behavior and expressed interests. To do that, marketers need powerful and individualized data.

The bottom-line: brands that don’t meet these higher customer expectations won’t garner their attention or dollars.

The Pull: Data is becoming more scarce 

Ongoing privacy policies and regulations are pulling back the volume of data that marketers have become accustomed to using. From specific blows to data such as Apple’s ATT and Google’s upcoming changes to Chrome to consumer data deprecation trends such as ad-blocking, cookie clearing, and data opt-ing out, advertisers simply have less data to activate on than before. Moreover, they will have even less of it as we move forward in time. 

A recent Interactive Advertising Bureau report underscores this pressing issue: “If we don’t diversify our approach to the market, soon we’ll be operating by the equivalent of candlelight,” said the IAB’s Angelina Eng.

The bottom line: a fully-realized data-collection program is required to combat data deprecation trends and keep your team data-rich.

First-party data to the rescue

Brands are scrambling to react to the deprecation of the critical datasets they need to run their marketing campaigns. As a result, some are turning to third-party data vendors. For example, according to Skai data, paid social advertisers significantly increased their reliance on third-party audiences by 37% in 2021.

But, the smart money is on first-party data as the future of data-driven marketing. In one study, 53% of marketing organizations are investing more in 1st-party data to adapt to the changing data landscape. In another, 61% of high-growth companies are shifting to a first-party data strategy.

The Benefits

It’s “free.” Of course, brands still need people and tools to collect and utilize first-party data, but it can be used repeatedly without paying a data vendor a premium each time.

It’s unique. Your first-party data is information that only your company has. So if you’re looking for a competitive advantage, it starts with your first-party dataset.

It’s powerful. Two-thirds of marketers (or more) believe that first-party data provides the best path to true customer understanding and, therefore, to better performance.

The 3 kinds of first-party data marketers need to use and secure

Personally Identifiable Information

Probably the most critical first-party data to keep secure is PII. Your customers’ key details—name, address, social security number, email address, passwords/accounts, etc.—is the kind of information that has the potential for front-page headlines if leaked. After all, identity theft is a big issue, with more than consumers losing more than $56 billion in 2020. In the hands of the wrong people, PII can be used to commit fraud and other crimes. 

Collecting and using PII help marketers engage in highly targeted and personalized promotions that can often be the difference between successful and failing programs. But using it requires practitioners to handle it with care. Even sharing it between partners requires fastidious “clean rooms” to ensure that it stays protected. In addition, some industries such as pharmaceuticals/health care and financial services are highly regulated in the way they safeguard data and can be fined by the government if they don’t follow the rules. 

Of course, beyond the profound responsibility of keeping consumers protected, brands must safeguard PII because of how sensitive consumers are—and rightly so—to data breaches. It’s hard not to surmise that some of the biggest PII breaches in history are directly responsible for the sharp rise in consumer data scrutiny that has created the challenges marketers face today. 

Business Performance Metrics

Practitioners use this information to optimize and improve future business and advertising programs. Getting budget allocation, creative strategies, partner/agency evaluation, etc., right are essential decisions to operating a profitable business. Ask any marketer how important first-party data is to success, and they’ll all tell you it’s vital to guiding proper decision-making. 

Not only can marketers use their own performance data to drive marketing success, but so can others. Many hands may touch a campaign from inside a company and across various marketing technology platforms—both native and third-party. Even though this data is certainly less secure than the processes in place to protect consumer PII, in the hands of a competitor, a brand may find itself being outmaneuvered in today’s highly competitive marketing by its own stolen metrics.

Retailers or publishers can also use ad performance or product sales data to create new private label products, for example, which will ultimately hurt the company’s share. Knowing what’s selling, what’s not, what price points are working, which options and selections are driving average order values, etc., are key competitive advantages that must be protected.

How big is the private label business, and how much does it affect name brands? The 2019 Forbes.com article 4 Reasons CPG Brands Are Losing Out To Retailers’ Private Labels highlights the impact of just a single private label brand, Costco’s Kirkland:

Costco introduced the Kirkland brand in 1992, 27 years ago, and that brand did $39 billion last year, whereas all the Kraft and Heinz brands did $26 or $27 billion. So here they are, a hundred years plus, tons of advertising, built into people’s habits and everything else, and now Kirkland, a private label brand, comes along and with only 750 or so outlets does 50% more business than all of Kraft-Heinz brands.

Sensitive Business Intellectual Property (IP)

Finally, business IP such as product identifiers, traffic trends from owned properties (websites/apps), or target audience definitions—anything that is used by a business to go to market or support their strategic value proposition in their industry—is critical to protect from the hands of competitors. 

But today’s competitors are not always the other brands on the shelf at the grocery store. 

It’s important to remember that many brands even compete in some areas with the publishers they spend millions of dollars with each year. So even though these publishers have access to many marketing metrics, there’s no reason to share any additional information unless it directly contributes to marketing ROI. 

And publishers are opening their doors to let brands bring more and more of their first-party data into their walls. Sharing this proprietary IP can enable publishers to better target and optimize ad delivery on behalf of their brands. For example, conversion data that can’t be tracked by publisher pixels can give publisher algorithms a better line of sight to pair consumers with ads and ultimately drive better ROI for those companies. 

But, what are these brands giving up to gain this performance edge? Who knows? But, indeed, if intellectual property is so powerful that it can drive bottom-line results, then it certainly has the potential to help others.

How are you navigating this data dichotomy?

Are you bringing any and every potential data asset into your marketing program to maximize your growth potential?

Your data is your most valuable asset, but it’s worthless if you can’t use it and dangerous if you can’t keep it safe. Our Secure Data Architecture enables your data to be more impactful by bringing it closer to activation without exposing it to publishers, competitors, or bad actors. 

Skai’s Secure Data Architecture allows you to protect your most valuable asset and makes it even more potent by bringing your data closer to your activation. In addition, our best-in-class capabilities prevent your data from being exposed to publishers or competitors.

Integration and ingestion. Bring in all your first-party data, PLUS performance data from other publishers, with peace of mind.

Analysis and transformation. Secure and discover your most valuable data to share only the most impactful metrics.

Activation and impact. Optimize all of your KPIs without oversharing or exposing your data to competitors.

Do you have a custom data security need? 

Talk to the Skai team today to learn more about our Secure Data Architecture and its advantage to our clients.

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