Why marketers are giving second-party data a second look - ClickZ

30-second summary:

  • Without cookies and mobile ad IDs, marketers will have to find new ways to get data that helps them understand and connect with customers.
  • Second-party data has evolved with privacy in mind, allowing brands to access login data, device information, geolocation data, interest-level information, and transaction data to enrich their own data and identity graphs.
  • With second-party data, marketers have more transparency and control. The origin of data used to build pre-packaged, third-party audiences is not always clear.
  • Marketers can build more cost-efficient, custom audiences with second-party data compared to off-the-shelf third-party data.

Marketers want to build smarter, more efficient campaigns that reach the right consumers. They want more control over their data choices. And, frankly, they’re tired of haggling over the same audiences in marketplaces where high-demand drives prices up and up and up. This is why marketers are giving second-party data a second look.

I say second look because second-party data has been around for a long time. But today’s second-party info doesn’t just come from site publishers. It isn’t simply aggregated registration data from services like Groupon, either. And it’s accessible in new ways that are not reliant on cookies or mobile ad IDs, which as we all know, will soon become obsolete. It has evolved.

Some think of it as simply “someone else’s first-party data.” That’s fair, but the description doesn’t illuminate the full scope of what second-party data offers. (Read more...) it does include things like emails and phone numbers, it also encompasses a host of information showing logged in behaviors across websites, mobile apps, and TV.

It includes a wide array of data points, from mobile transactions and geolocation data to demographic and psychographic data to behavioral and contextual data that provides insight into consumer interests.

Ultimately, second-party data gives marketers a result that is greater than the sum of its parts. That’s because when combined with first-party data strategies, it gives marketers the necessary intelligence to build audiences, and measure campaigns with greater control and effectiveness.

Why more marketers see value in second-party data

There are a few key reasons for this second-party data renaissance. And they follow some of the main reasons the ad landscape as a whole is shifting:

1) Without cookies, marketers need privacy-centric data marketplaces

As most marketers know, the demise of the cookie – our primary means of gathering and transferring data across the ad ecosystem – is underway. The pressure is on brands to find new ways to get to the data that helps them understand and connect with people.

Meanwhile, website and mobile app publishers need new ways to tether their content to the valuable data reflecting their users who engage with it.

Privacy-centric second-party data marketplaces make that a reality. They allow brands to access login data, device information, geolocation data, interest-level information, and transaction data to enrich their already valuable first-party data and identity graphs. And through identity resolution, they ensure validated user identity without cookies.

2) Marketers demand more cost-efficient, custom audiences

Marketers have struggled to differentiate against rival brand-customer acquisition strategies for years because everyone’s been using the same exact pre-packaged audience segmentation. And, sure, maybe there was a time when some brands were comfortable bidding against competitors for the same off-the-shelf, third-party data.

But there are problems with that approach. For one thing, third-party data marketplaces offer no customization and little transparency into where data comes from or how audiences are built.

Plus, the price of that data, despite its limited value, sometimes is inflated. Why? Because everyone has been scrambling for the same third-party data scraps.

When brands are all bidding on the same audiences built by the same data providers, they compete to outbid one another, driving up the price. And when prices are artificially high, it limits the ability for marketers to gauge the true ROI of third-party data.

3) Marketers want data control

In earlier days before brands had in-house data scientists, many were simply not set up to take advantage of sophisticated data offerings. But they’re a lot savvier these days.

I have many clients that come to me with requests for more reliable, granular datasets. They want to be able to tailor to their unique business needs. Second-party data fits the bill because it provides marketers with the raw intelligence that can be combined with additional datasets to further enhance their data-driven strategies with greater control and speed.

Endless ways to enrich customer data

So, there are some pretty good reasons for this renewed interest in second-party data. But you may be wondering how brands are using it today. The truth is, it is immensely versatile.

Data teams can mix and match second-party data in ways that best suit their needs, no matter the vertical because it can be delivered through marketplaces in unstructured form. This way data teams can mold it to apply to the unique purposes of each brand.

Are you a retail marketer? Retail brands use second-party TV intender data showing things like which audiences watch particular programs, for example.

These linear TV and OTT insights bolster their first-party data and create more robust audiences. And they use it to measure, too. Second-party data gives them more confidence in campaign measurement because they can tie audiences back to TV ad exposure.

Then also inject linear and OTT data into their attribution models to measure the performance of their TV investments alongside the rest of their addressable media.

CPG brands can’t always readily access detailed information about who’s buying their products, but they can fill in the gaps with second-party contextual and behavioral data. Today, I see CPG clients achieving deeper customer and conversion insights through second-party data from in-app partners and coupon providers.

Second-party data provides practical value for travel brands like hotel chains and airlines, allowing them to share data associated with those customers in a transparent, privacy-safe manner. And geolocation data derived from second-party marketplaces can fuel innovative campaigns aimed at frequent travelers.

Auto brands use second-party location data to connect people to points of interest to get a better sense of who might want a rugged truck or fuel-efficient commuter car. Rather than simply adding someone to an “auto-intender” audience because she visited Cars.com, second-party data provides transparent, reliable audiences based on real intent signals such as requests for test drives or lease information.

And for financial services advertisers who want to build custom audience models but must ensure sensitive data is removed, the transparency afforded through second-party data marketplaces is especially appealing. The fact is the provenance of data used to build pre-packaged third-party audiences is not always clear.

The days of marketers relying on third-party data are nearing an end. And that can be a very good thing. The industry’s reinvigorated emphasis on second-party data moves marketers forward toward more data control, more efficient campaign spending, and more customized audiences.

I, for one, am looking forward to the smarter marketing that second-party data will bring to my clients and our industry.

For more insight into the rising prominence of second-party data, please read this post from my colleague, Lori Walker Gosnell.

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