Quality third-party data: The key ingredient for marketing effectiveness
GDPR and other similar privacy policies are changing the landscape for marketing data. Facebook, Google, AT&T, Verizon and Sprint all recently made changes to how they handle and facilitate third-party data, and sentiment quickly seemed to turn against third-party data.
First-party data has always been preferred, of course, but a new study from Research Now SSI and Econsultancy suggests that while third-party data may have temporarily fallen from favor, the need for it remains. In fact, Data: The New Oil suggests that, “Quality third-party data is becoming necessary to enable differentiation, targeting and personalization, which is critical for success in an era of high consumer choice.”
The practice of incorporating data from outside sources isn’t going away, but it definitely is changing. Before we detail that, let’s explore why it’s unlikely that marketers can rely solely on first-party data.
There’s no question your own data – the information about your customers, your transactions, your prospects – is the most useful and valuable. But even businesses that have successfully taken the digital leap can struggle to make it work for them. Aggregating all that data, unifying it and analyzing it presents multiple challenges. One study found that 54 percent of marketers can use less than half of their own customer data in their marketing efforts.
It can be complex to unify anonymous customer interactions (when the data can’t be attributed to a specific identity) with known interactions (such as where an identifier like a name or email address is associated with the data).
In addition, access to the data often requires some level of technical or IT expertise – potentially adding expense to your bottom line by necessitating staff or contracted assistance with this skillset. Or, increasingly this process can be automated, but again, that requires investment in systems to merge and prepare the data.
Even if your business manages to successfully activate its first-party data, there’s a solid possibility that additional details will be needed to fill in gaps and to give you the kind of insight your marketing needs to accomplish its targeting goals. And that is where third-party data comes into play.
“Data has arguably become the most valuable currency for modern marketers in today’s digital economy,” said Monica Savut, Head of Commercial Research Services at Econsultancy, one of the firms behind Data: The New Oil. “This research reveals that organizations are acutely aware of this reality, and many are exploring how they can make the most of the treasure trove of data at their disposal.”
Marketers are aware they need data, but privacy legislation has stirred new concerns about using third-party resources. Both marketers and the suppliers of third-party data are now accountable for compliance under GDPR. As a result, the relationship between vendors and marketers must evolve and trust will play a major role.
And trust isn’t as readily available as either side would prefer at this point. The Research Now SSI and Econsultancy study found only 41 percent of agencies are “extremely confident” in the quality of their data; clients were even less convinced, at only 17 percent.
One upside of the GDPR effects on third-party data is that it’s likely to weed out frivolous providers and clean up an ecosystem that had become notoriously filled with fraud and poor quality. In other words, with lower volume will come higher quality.
“People want to know how best to augment customer data with a broad spectrum of quality second and third-party data to improve targeting and extend campaign reach,” said Jared Schiers, SVP, Product Development at Research Now SSI. “As confidence in data quality becomes more robust, the industry will need to educate marketers on the availability of external data and how they can utilize it to drive campaign effectiveness and, ultimately, its measurement.”
To invoke an overused cliché, the demise of third-party marketing data has been greatly exaggerated. As Data: The New Oil indicates, it still plays a vital role in highly targeted digital marketing. GDPR and similar legislation may not be the end of third-party data as some suggest, but in fact may be the trigger to making third-party data more useful than ever.