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Guide | February 22, 2021

Life after Death of Cookies: Use 1st, 2nd & 0 Party Data

With the imminent phasing out of third-party cookies, it’s more important than ever for marketers, internet startups and C-suite execs to know how to leverage the different kinds of data they can use.

All organisations generate huge amounts of data, but too often much of it goes unused and unanalysed. The trick to surviving in a cookie-less world will be to synthesise all customer data into a smart system that will provide an even more rounded customer view than just third-party cookies.

But first it’s important to understand what the different kinds of data are. There are 4 generally recognised types of customer data based on the source, or where it comes from:

It’s also worth mentioning the distinction between raw data vs. structured data and their cloud storage models, and how there’s one computer system on the market that business organisations are increasingly seeing as key to solving this mystery…

Types of Data

Zero-party Data

This refers to the type of information a user willingly provides to an organisation themself because they want to. This can be done by completing a customer survey, poll or questionnaire, or exchanging their details for some advantage they can get like discounts or special treatment.

Zero-party data is useful for building the brand-customer relationship and getting rich insights that benefit both sides because users are only giving you the data they’re comfortable with and your company gets valuable information it otherwise wouldn’t have had access to.

First-party Data

First-party data is collected directly from the user’s own behaviour, be it the links they click on your website or app, the pages they visit, the purchases they make or the notifications they sign up to receive.

An important step when collecting first-party data online is to make sure users have accepted the cookies directly on your site and given their permission for their actions to be tracked while they are browsing and interacting with your services. You can also collect first-party data about consumers offline, such as when they buy one of your products in store, use your app or service at the point of sale (POS), or if they call your helpline, to name but a few examples. In short, any time someone has any kind of contact with your company, you should be able to note that and record as much information about them and the transaction as possible.

It’s important to have a first-party data strategy to continue to learn about your customers after third-party cookies are eventually rendered useless. This includes analysing the data using Google Analytics or your preferred data analytics tool, and creating a single-customer view so you can follow each individual user across the entire customer journey across all touchpoints with your brand. Unfortunately, an eMarketer survey estimates that only a quarter of marketing decision-makers believe they used more than 61% of their first-party data in 2018, showing that leveraging of this data type is still too low.

first party data stats

[Image source]

Second-party Data

Second-party data is just first-party data that has been shared. It often comes from trusted partners who have collected the first-party data themselves, but it only refers to data about people who both brands have as a common customer. You cannot get second-party data about someone unknown to your company. This sharing for secondhand use is private, and the data cannot be sold on to third parties.

An example of second-party data is the way hotel chains and car rental companies form a strategic partnership with airlines, who share the flight data of passengers that book hotel or rental services in order to provide a rounded, complete travel experience.

Second-party data is just as valuable as first-party data, providing you trust the source. Reach out to partners you already have and others who could be beneficial to you to see if you can buy their first-party data or use it in exchange for providing them with your own. Then use the second-party information to complement your existing data-driven marketing strategy.

Third-party Data

Surely the most controversial data type and the one you have heard most about. Third-party data is collected by another organisation about people who are alien to your services. They haven’t interacted with your brand before, but you are able to get information about them by buying from the first-party source, or from third-party cookies.

Third-party cookies are tracking cookies that a company uses to collect data about users from a different website than their own. As a user, if you accept the third-party cookie policy on a website, you give your permission for other non-affiliated companies to gather data about you and what websites you visit. Third-party cookies are not inherently bad, and they underpin the common internet model of paid, personalised ad content that marketers have been using for years, but some web users find it annoying to have their browsing history invaded.

Third-party cookies are going away as of around 2022 because of the growing consumer demand for more privacy among web users and more transparency about how data is used. Big tech companies like Facebook and Alphabet, which owns Google, are obliged to get consent before using customer data for targeted advertising, data analytics and more. Part of the challenge facing tech giants and data companies is to regain public trust by being open and honest about data use, as Apple CEO Tim Cook has come to understand.

What Will Replace 3rd-party Cookies?

Instead of relying too heavily on third-party tracking cookies to get insights about what potential customers are interested in, modern marketers will need to use a balanced combination of all four data types in their targeting strategy.

Customer data can be pulled from various sources in this way to create a 360-degree single customer view to understand each person individually and what specific kind of marketing techniques would be best suited to them.

This advanced level of transparent marketing personalisation is only possible with the help of a Customer Data Platform (CDP). A CDP is a powerful tool that brings together the different strands of data from many sources in a multichannel data integration, and segments it according to customer profile. Where there is a gap in the customer journey, a CDP is able to use predictive analysis and probabilistic matching to complete the dataset.

Not only that, but some CDPs go a step further by recommending specific targeted marketing strategies that will work for each audience segment, and have an implementation platform from which to control and deploy those personalised customer interactions.

The CDP Institute points out that traditionally CDPs have been used to integrate zero-, 1st- and 2nd-party data while Data Management Platforms (DMPs) were used to process 3rd-party data. The impending decline of 3rd-party cookies will make CDPs more valuable and sought-after than DMPs by forward-thinking companies, although CDPs certainly are capable of handling any 3rd-party data they are fed too.

Raw Data vs. Processed Data

What’s more, a CDP is capable of ingesting and handling data in its raw, uncleaned form, whereas other customer data management systems like DMPs can only work with data that has previously been processed and stored neatly.

  • Raw data, or source data, comes directly from the origin point without being modified in any way, and enterprises normally prefer to store it in a data lake cloud storage architecture. Data lakes can hold vast quantities of unprocessed data ready for extraction at a later date.
  • Processed data, or cleaned data, has generally gone through a sorting process to filter out anomalies and outliers, and to convert it into a form that’s easy to manage for human data analysts. The problem with processing data, though, is that it may lead to important details being discarded or ignored before they can ever be analysed. Processed data is more often stored neatly in data warehouses, so it can be easily retrieved for later use.

See also: Data Warehouse and Data Lake: How is Data Stored in a CDP?

The good thing about a CDP, in comparison with other types of consumer data platforms, is that it can use raw data from a data lake so that no details are lost and every datapoint and dataset is fully taken advantage of to create a true and complete single customer view.

How to Get the Best CDP for Your Needs

With the death of third-party cookies, more and more business leaders are coming to see that a CDP is the unifying tool that solves all their customer-facing data management problems. That’s just the first step, though. Once resolved to use Customer Data Platform technology in their business operations, the question becomes, “Which CDP is right for me?”

The first step to deciding which CDP to use is to work out your CDP use case, including such detailed information as what you want to achieve with your CDP and how you will do it.

Next, you’ll need to know what different types of CDPs exist on the market, what each one can do, and what kind of CDP you will need that fits into your already existing tech stack to complement and enhance your other data systems.

Finally, it’s also worth looking into whether you’d be better off building your own CDP or buying and adapting a readymade CDP from a software provider.

The death of third-party cookies is by no means the end of data-powered marketing. This new legislation, which protects all our rights as consumers and internet users, simply demands a fresh and forward-thinking solution to digital marketing that can protect user privacy while still offering valuable insights to deliver the best service to the customer. That’s the Customer Data Platform.

SmartOSC is an international development agency offering scalable, cost-efficient and world-class enterprise solutions. We help eCommerce retailers and non-profit organisations to improve their business processes with digital transformation of the technology stack.

To talk about how a CDP can benefit your company, or to learn more about data use and cloud storage, give us a call or send us a message. We’d be happy to hear from you.

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