Why first-party data is critical to the success of your business

Why first-party data is critical to the success of your business

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The internet today is a very different place from the one we knew just a few years ago. 

And I’m not just talking about the great social media takeover, digitally native brands becoming household names, and every media company in the world pivoting to video.

Not long ago, brands online could create a hyper-detailed picture of potential buyers using the data they collected from third-party cookies.

Today, those cookies have been trashed. Privacy regulations and the rise of tracking prevention have made it necessary for brands to offer a personalized experience for buyers without invading their privacy.

The solution to making that switch? First-party data—or information about a potential customer you collect from them directly. 

In this article, we’ll walk you through why first-party data is the future of personalized marketing online and how to start using it to reach customers and grow your business.

How we got to a first-party data world

It all started with the death of the cookie. Third-party cookies have been a staple of ecommerce websites seemingly for as long as they’ve been around. 

It made sense—collecting third-party data on things like what your visitors have been shopping for elsewhere online, the websites they frequent, and where they’re located helps paint a vivid picture of the products you offer that they might want.

Collecting that third-party data was happening without user consent, though. As a result, consumers wanted change. First, that came in the form of privacy regulations like the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) that made opting-in to cookie tracking a requirement. 

As support for greater consumer privacy protections grew, major tracking prevention changes like the iOS 14 update which introduced opt-outs for all third-party tracking on iOS devices meant the majority of users were now opting-out of being tracked entirely.

How to future-proof your business in a post-cookie world

All this change doesn’t spell the end of personalization and customer profiling, though. We mentioned first-party data is the path forward, but how does it work?

A few ways, actually. Because first-party data is collected in various ways, it requires a few different strategies—and the right apps to implement them. 

Collect data directly

One of the most common places to start collecting first-party data is simply by asking potential buyers to tell you about themselves. Often, brands do this by asking you to create an account in order to make a purchase or sign up for an email newsletter or text promotions in exchange for a discount. You might even send out a survey to existing customers and ask them for more information that way.

Server-side tracking

Another method is to track website visitor behaviour server-side instead of client-side. That means collecting data from a cloud-based server instead of through a visitor’s web browser (aka the “client”). 

Using server-side tracking has several advantages—the main one being that you can collect information about user behaviour on your website, referral source and medium, and revenue among other metrics. It’s also more secure than collecting data via the web browser client.

Server-side tracking respects the privacy of your website visitors while still giving you valuable insights into their behaviour.

As we mentioned, you’ll need the right tools in order to implement things like server-side tracking. While you can set up a tracking system yourself or use Google Tag Manager to set up individual tags for events, the most time-efficient and simple way is to add a script to your website using a platform like Littledata.

Cookie banners

You can still collect third-party data, provided you ask your website visitors for their consent first. To do this, you simply need to set up a cookie banner that complies with privacy regulations.

Keep in mind that tracking cannot begin before a visitor opts in. So, it’s common practice to have the banner appear right on the home page.

Direct chat

Adding a direct chat feature to your site allowing customers to ask a question not only helps build trust by giving them answers quickly, but it’s also a great way to collect first-party data.

Have your direct chat widget ask for a name (or an email if you’d like) and you already have a method of contact for a website visitor that you can add into a drip campaign or promotion flow.

Advertising with first-party data solutions

As you can imagine, one area that has experienced some of the most significant changes in the move to first-party data is advertising—especially social media ads.

While old advertising setups on Facebook, Google, and elsewhere allowed hyper-targeting of potential customers based on browsing history, first-party data advertising is still personalized, though a bit more reliant on the advertiser to make it so.

Fortunately, Google, Facebook, and others have already adapted to the first-party world and offer ways to still serve targeted ads by relying on privacy-compliant tools.

Facebook Conversions API

If you’ve ever set up a Facebook ad campaign for your business, you’re no doubt familiar with Facebook Pixel. For over 10 years it’s been the standard for tracking website visitors and serving highly personalized Facebook ads.

Now that ad blockers and privacy regulations block its third-party script from sending a ping to a visitor, Pixel is another casualty of the first-party data revolution.

To make sure businesses had a way to track marketing attribution from Facebook Ads, the company launched its Conversions API (CAPI). The tool is a server-to-server data connection which means events linked to a visitor from Facebook can be sent independently of their browser sessions.

CAPI actually holds a few advantages over the old Pixel as well, including:

  • Linking delayed conversions back to the original campaign
  • Allowing almost 100% of purchases from your store to be shared with Facebook
  • Capturing user identifiers like email address, physical address and phone number even if a customer has opted out of marketing cookies

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Google Analytics 4

If you’re running Google Ads—or really any web ads for that matter—you’ll want a single source of truth to track their effectiveness. As the most used analytics reporting tool in the world, Google Analytics (GA) is a great place to do it.

Of course, an analytics solution like GA had to make some changes to adapt to cookie blocking, and that comes in the form of the new GA4. 

While the look and feel are a change from the classic Universal Analytics look, GA4 actually packs even more functionality than previous editions. This includes explorations features that allow you to build custom reports based on the metrics you want, centred around user behaviour.

Reporting in GA4 is faster and comes with no collection limits, more custom dimensions, and streamlined audience building. Even better, GA4 comes out of the box with features previously restricted to Google’s paid GA360 service—things like an analysis module, custom funnels, and the ability to track mobile app events alongside web events.

If you’re running ads and want deep insights on attribution, customer lifetime value, return on ad spend, and revenue from specific campaigns—GA4 is your first-party data reporting solution.

Conclusion

Things have definitely changed in the world of online marketing for ecommerce businesses since privacy regulations and ad blockers became the norm.

Fortunately, the biggest players in the industry have embraced first-party data and have rolled out solutions brands can incorporate into their marketing mix right now.

If you want your ecommece brand to be a success, it’s crucial to know how your campaigns are performing and if you’re reaching the right type of buyers. 

Get ahead of competitors by moving to server-side tracking, using ad platforms like Facebook CAPI, reporting tools like GA4, and leveraging creative first-party data collection methods, and you’ll set your brand up for success today and well beyond.

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Why first-party data is critical to the success of your business
Littledata
Ecommerce data platform for modern DTC brands

Littledata is an ecommerce data platform tracking the whole customer lifecycle, and unifying these touchpoints in the most popular data destinations (i.e. Google Analytics & Segment). Thousands of brands use their platform to get the most accurate data and to make informed decisions.

Download our free whitepaper and gain important ecommerce and marketing insights, directly from Juni.

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