We all know that juicy insights served up from high-quality data can help marketing agencies turn a good idea into a great one. But, that extra ideation power can come with a cost: customer privacy.
With the world of marketing increasingly governed by strict data privacy regulations, it can be hard for agencies to get their hands on data that can make a difference. As the industry starts shifting away from overreliance on third-party data to more first- and zero-party data, it’s important to take stock of what is lost and what is gained from the marketing tool box.
So, let’s break it all down.
Third-party data (and it’s limitations)
For years, marketing agencies have relied heavily on third-party data to target consumers, optimize campaigns and measure effectiveness. However, the deprecation of third-party cookies and regulatory pressures are causing this data source to become less reliable and accessible. And even if it still has its uses, working solely from third-party data can be extremely taxing for agencies.
Campaign personalization challenges
While third-party data can provide generalized insights into user behavior, it often lacks the granularity needed to tailor campaigns effectively for individual users. For example, an e-commerce agency may be able to identify a broad segment of users interested in fashion but won't have detailed insights into each user's specific shopping preferences or past purchase behavior.
This lack of personalization can lead to wasted ad spend, as agencies may target users who are not actively in the market for their client’s products.
It still has its uses
Third-party data can, when it adheres to privacy and consent regulations, can still benefit marketers, even without other data sources. For instance, it is still a necessary part of analyzing how your marketing tactics are performing and how much you are spending.
As mentioned, though, it’s best practice to start combining third-party data with sources that are closer to the business. And agencies should start requiring this diverse mix of data from their client’s ASAP. According to our recent research, 69% of in-house marketers don’t have a plan for a future without third-party tracking technologies like cookies.
The power of combining first- and third-party data
For agencies that have access to both first-party and third-party data, the scope of marketing possibilities expands considerably. It allows agencies to create more targeted and personalized campaigns while maintaining privacy compliance.
Enhanced personalization
First-party data is one of the most valuable assets for e-commerce brands, because it provides specific insights into customer behaviors and preferences. When marketing agencies can access this data, they can create highly personalized campaigns that drive conversions.
For instance, instead of targeting a broad demographic of users interested in fashion (via third-party data), an agency can use first-party data to create campaigns that target users who have previously purchased specific items like shoes or accessories, or who have abandoned their carts in recent weeks. This granularity increases the likelihood of converting leads into customers.
Improved measurement and attribution
Access to first-party data also enables agencies to better track the customer journey and measure the effectiveness of campaigns.
Just imagine a purchase pathway that spans multiple touchpoints like search, social media and email. First-party data allows you to track user behavior across these channels and create more accurate attribution models. In turn, this helps determine what tactic is driving the most value, leading to better budget allocation and campaign optimization.
The full potential: third-, first- and zero-party data
Marketers and their agencies can really get things going when they combine the power of first-, third- and zero-party data – providing a resource that’s greater than the sum of its parts.
Let’s break down those parts. You have privacy-compliant data from your marketing platforms (third party), internal sales and CRM data (first party) and data that customers intentionally share with you (zero-party). This last set of data is typically collected through surveys, quizzes, profile preferences and more. It can be incredibly valuable.
Deeper personalization and customer relationships
Zero-party data can surface insights into the specific needs and desires of individual customers. For example, an apparel brand might ask users about their style preferences or size choices through a quiz. This information, coupled with the brand's first-party data on past purchases and third-party data on broader trends, can help marketers and their agencies to craft hyper-targeted campaigns that speak directly to a user’s preferences.
This depth of personalization can dramatically increase customer engagement and loyalty.
Maximizing ROI and reducing ad spend waste
The trifecta of third-, first- and zero-party data also helps improve campaign efficiency. By using zero-party data to understand customer preferences and first-party data to track user behavior, marketing teams can significantly reduce ad spend waste by focusing on only the most relevant customers.
Just imagine any subscription-based consumer brand. First- and third-party data are used to customize targeted outreach, while zero-party data helps to curate the experience on the site or in the app. The result is a highly personalized experience that speaks to the exact desires of the customer.
Plus, with third-party data becoming less reliable in the long term, zero-party data provides a privacy-compliant alternative that still offers deep insights into customer behavior. Agencies that can tap into this data are able to reduce their reliance on third-party sources while maintaining or even improving campaign performance.
Overcoming the privacy paradox
While having access to all three types of data significantly improves campaign performance, brands must also be mindful of maintaining consumer trust. With increasing awareness around data privacy, customers are more cautious about the information they share with brands.
Marketers must ensure that the process of collecting zero- and first-party data is transparent and consensual. Brands should be upfront with customers about why they are collecting certain types of information and how it will be used. Offering value in exchange for data (such as personalized recommendations, early access to sales or exclusive discounts) can encourage customers to share their preferences willingly.
And collecting the data in a compliant way isn’t enough. In-house marketing teams must share that data with their agencies that are desperate for access to high-quality insights.
When it all comes together
When in-house marketers are able to provide their agency partners with high-quality data from first- third- and zero-party sources, it opens up a world of opportunity. Those agencies are able to craft highly targeted strategies that are designed to have a direct impact on revenue and profit margins while remaining compliant with increasingly strict regulations around the world. And while it may not be easy for in-house teams to collect, it’s worth the effort.
The difference in outcomes is clear. You can try to scrape by on third-party sources that deliver less value every year, or you can supercharge the power of your insights.
To be clear, too, agencies should be coaching their clients on these needs and highlighting the value it will bring to the partnership. So, even if you need to build bridges with IT and legal teams, the time is now to start working with data that delivers.