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By Rudderstack Team

The Importance of First-Party Customer Data After iOS Updates


When Apple released its iOS 14 updates, it included some significant data privacy changes that will limit access to the acquisition of users’ data (also known as third-party data). Since companies have previously relied on this type of data to fuel targeted campaigns and marketing efforts, it seemed like the end of the world. But it need not be.

In fact, a new era of marketing is now upon us—the building blocks of which are first-party data. It’s replacing third-party data as the new currency marketers can use to create trust with consumers and deliver better experiences rather than “target” them with unwelcome messages.

What the Apple update means for customer data

The biggest impact of iOS 14 is that users will now have to intentionally opt-in to allow their data to be collected and used by third-party sources. In the past, this opt-in was not required, and so data was being gathered on nearly all users, likely without their knowledge.

Today’s consumers are growing increasingly concerned about data privacy. Given their uneasiness about unknowingly sharing their data, it’s not unreasonable to assume many users will prefer not to make their data available.

As a result, third-party cookies will be more difficult and more expensive to obtain. That’s because third-party data will only be collected by and provided through a few major platforms, most notably Google and Facebook (now Meta).

Following the law of supply and demand, with fewer providers of third-party data, those few will be able to charge a premium. The restricted access to third-party data gives data and marketing teams fewer ways to target potential customers with relevant messaging on key platforms. Ad performance, as a result, will suffer.

The good news is that companies still have complete control over their own platforms: their websites, their apps, and other properties. Knowing this, they should shift their focus to gathering and using first-party data. By using their own data, companies can future-proof their businesses against further changes. In almost every way, first-party data is superior to third-party data.

Why first-party data is superior (even though it’s harder to collect)

First-party data has always been superior to third-party data. The reason third-party data had been so widely used is that it was easier to collect at scale, store, and manage. Data and marketing teams needed only to purchase the data, and that gave them massive amounts of information they could use to gain insights and make decisions.

To understand why first-party data is superior, we should first revisit how it’s different from third-party data. A simple way to do that is to think of an online news provider. Let’s say you subscribed to the news site’s daily newsletter by providing your email address.

To the news provider, your email address, name, address, and any interaction with their newsletter (clicks, shares, etc.) is first-party data. If the news provider then sells that data to an advertiser (with your permission, of course), that same data becomes third-party data to the advertiser.

To help you further understand those differences, there are four key ways that first-party data is better than third-party data:

Accuracy

Third-party data gets outdated over time, potentially losing its accuracy, because it’s not constantly updated. The problem is, you don’t know how outdated it is because you don’t have firsthand knowledge of when and how it was collected. But with first-party data, you have full control. You know when and how it was collected and how it’s updated. So, you have a strong idea of how accurate it is and how much you can trust it.

Relevance

Third-party data is collected at a massive scale from a broad range of a platform’s users, so you have to extrapolate insights and apply them to your users. First-party data comes straight from your users, allowing you to derive direct insights into their behaviors and preferences.

With first-party data, you also have full control over what data sets you collect, so you can efficiently focus on what’s important to your business. With third-party data, you can only select from the data sets that are available.

Availability

As we’ve discussed, third-party data will get harder to obtain. But first-party data will always be at your fingertips, waiting for you to take advantage of it.

Cost

Third-party data is expensive. For context, a study on the usage of third-party marketing data in the United States found that in 2019, industry professionals in the country spent $5.1 billion on third-party data. Leaning on first-party data means that you get to save the outrageous cost of third-party data that is neither accurate nor effective. You’d never have to buy first-party data. You already have it. You just have to invest in tools to store, organize, and use it.

How first-party data helps you achieve better results

With first-party data collection, you can achieve results that aren’t possible with third-party data.

The increased importance of first-party data provides the catalyst for data engineering teams and marketing teams to work more closely to generate more effective campaigns. Data teams can support marketing by collecting data according to their needs, which allows marketers to gain valuable insights into customers’ behavior.

When data teams put the right system in place, marketing can see how customers use all the companies’ channels in real-time. These insights give data and marketing teams the information they need to make informed decisions about how to refine user experiences and processes, as well as deliver more relevant ads, offers, and messages. In short, they don’t have to guess or extrapolate; they can see for themselves what needs to be done.

Another key benefit of first-party data is that it allows data and marketing teams to deliver automated, personalized experiences. So, potentially every customer can get an experience that’s tailored to their needs and preferences.

A simple example of personalization lies in how companies deliver offers to customers. Nearly everyone has received an automated offer from a company for a product or service they would never use, or worse, that they’ve already purchased. Using first-party data, companies can deliver offers for products or services that complement prior purchases, reflect shopping behavior on company platforms, or match customers’ unique interests. That’s an important capability because, despite their concern for data privacy, customers expect personalization. They want to see messages and offers that are designed for them and will reward brands that are able to do it.

In short, first-party data helps data and marketing teams get to know their customers in ways third-party data never could. This allows companies to differentiate themselves by being exactly what their customers need when they need it. By using first-party data to deliver custom experiences, companies have been able to achieve cost savings of up to 30% and increased revenue by as much as 20%.

How you can access your first-party data

The good news for data and marketing teams is they already have the channels in place for first-party data collection. Websites and apps are rich sources of data that are waiting to be tapped.

They just need an effective way to collect, organize, and analyze that data, so they can gain the insights and put them to use. That’s where RudderStack comes in.

RudderStack makes it easy for companies to collect user data from their own websites and apps, enrich and transform that data in their data warehouse, and activate it in best of breed downstream tools like Braze, Salesforce, and Amplitude.

RudderStack is the perfect tool for data teams scrambling to solve their first-party data problems and ensure data privacy. To learn how RudderStack can help you take advantage of your first-party data, get a demo today.

First-party data collection boils down to trust

The iOS updates, and others that are sure to follow, are harbingers of a new era of consumer expectations. People are placing a higher value on trust than ever before. The more they trust brands, the more likely they are to buy; a 2019 study found that more than 80% of consumers feel they need to trust the brands before they buy.

Third-party data often represented a breach of that trust. Over the last few years, consumers have developed an awareness of their data privacy and have grown weary of giving up their data and being “followed” online.

First-party data offers a path to building that trust. It allows you to be relevant to your customer, delivering the messages, experiences, and products they need.