3 reasons why using first-party data can regain your customers’ trust

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Marketing has undergone significant changes over the past decade. Most recently, the demise of third-party cookies has prompted marketers across industries to rethink their strategies and what to do when cookies are finally gone. But before we get into that, it’s important to understand how we got here.

Third-party cookies were introduced as a way for marketers to track what they thought customers wanted across platforms. If a customer searched for an item on one website, ads for that item would appear on every other site they visited. While it may have been a good way to better understand consumer behavior at first, it forced customers to lose trust in the brands they loved, while also making it more challenging for brands to get a good picture. getting what their customers actually wanted.

As a result, many brands started to switch to alternative communication methods when they realized they were losing loyal customers and audiences. They started reaching out to influencers and affiliate programs because they offered a more “authentic” relationship. However, such programs require significant time investment to deploy and high recurring costs to maximize reach. This approach has led many marketers to overlook one of the most untapped resources they have access to: first-party data.

First-party data is the data collected from a customer’s ecosystem. Collected via email, social media followers, app usage, and website traffic (among others), this data is generally what customers already indicate to provide. As marketers and brands continue to look for alternative methods to personalize customer experiences while maintaining engagement, first-party data is the key that many are missing.

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In 2021, research found that 71% of consumers expect businesses to deliver personalized interactions. And 76% get frustrated when this doesn’t happen. In addition, the same study found that faster-growing companies derive 40% more of their revenue from personalization than their slower-growing counterparts. As COVID-19 has shifted nearly all the ways marketers interact with customers, first-party data has the capacity to create the personalized experiences that matter most.

First-party data takes personalization to a new level

With the increased need for personalization, we have to keep in mind that third-party data is simply extracted from the cookies that follow you around the internet. It doesn’t track the items you buy in the same way it does first-party data. First-party data is the actual information from your devices, structured to fit what you’re looking for.

For example, suppose you are going on a trip and looking for the best suitcase to buy. As you do your own research, you’ll find out that the Away suitcase is the best to use for wherever you’re going. You can also book a trip to Italy with this. All confirmations will be in your email, so now you will receive recommendations for places to visit in Italy, local restaurants and cars to rent. That’s the power of first-party data: taking advantage of the information you’ve already provided to make smart recommendations about what to do and what to buy for it.

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Meanwhile, in the same scenario, when looking for the best suitcase for your trip, you click on different options and decide not to buy the Samsonite suitcase because it does not give you what you are looking for. Still, every website you visit, whether or not it’s relevant to travel, shows ads for the Samsonite suitcase that you don’t intend to buy.

Which of these offers more personalized? Not only does first-party data offer that kind of experience, but it’s also significantly less annoying for you while you search.

Look no further for reliability

We have seen for years that ubiquitous communication channels such as email newsletters are unreliable as inputs to marketing spend and performance. Yet we still see an influx of newsletters every day. The average email open rate is 20.81%. But we’ve already seen that personalization helps to increase ROI. Without personalization, email newsletters become just as unreliable to your brand.

Using first-party data means using inherently better and more efficient resources. As such, there is a chance for better reliability while achieving personalized recommendations. With both personalization and reliability so readily available first-party data and access to actual purchases and usage, marketers can be clearer and more concise in their messaging, value propositions and competitive differentiation.

Because marketing budgets are always shifting, first-party data makes for easier strategy and budget allocation

There are several challenges in linking output from multiple ad spend across social and digital interactions to inform future strategy and budget allocation. These challenges include understanding conversion rates across channels and identifying the most effective posts and content that drive engagement, clicks, and additional actions. In recent years and among nearly 400 marketing leaders, marketing budgets have fallen from 11% of company revenue in 2020 to just 6.4% in 2021.

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As mentioned, first-party data aids in reliability and personalization due to extensive resources. But more than that, first-party data helps marketing teams be more flexible with their budgets.

We know that first-party data helps brands and marketers prioritize personalization, reliability, and more strategic budget allocation, and yet many still don’t jump into the wealth of data at their disposal. It’s no surprise that at some point, third-party data will disappear. Google can push it as many times as they want, but at some point we’re all going to have to embrace something more sustainable. Now that we know what kind of benefits first-party data offers, marketers should jump on board so as not to miss out on this huge market opportunity.

Jyothi Swaroop is CMO of Nylas

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