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In the digital marketing world, people are constantly on the lookout for proving efficacy of data. Some feel first party data has all the answers but the others feel first party data can be restrictive as it does not give you a well rounded definition of your customer particularly when they are not in your line of sight.
However, there is another school of thought that still bats for reaching the entire pool by effective targeting, thereby minimising their cost per thousand impressions.
To go by the bookish definition, first party data simplifies to the information collected first-hand by organisations via SMS, e-mails, login information and more.
On the other hand, digital CPMs (cost per mille), also known as third party data, is the amount an organisation pays for every 1000 impressions on an ad.
Today, digital marketing stalwarts are steering towards first party data collection due to various benefits of it over digital CPMs.
Deepthi Karthik, senior vice president-marketing, Sleepyhead said, “Any digital metric that helps a brand identify their core consumer via the phone numbers, email ids, purchasing behaviour is the first party data. Being a D2C brand, we collect and make use of a lot of such data.”
According to ‘First Party Data Report’ of 2022 by Deloitte and Google, despite differences across geographies, 65 per cent respondents reported plans to evolve their data strategy in response to the rise of privacy. This is starting with an increasing focus on collecting more first party data as part of a trust-based relationship with their customers.
“It is our endeavour to help users make better choices in less time and hence personalisation, in a frequent use-case like ours, becomes critical for success. This is where channels like SMS, WhatsApp, in-app and emails come into play to deliver a superior experience,” shared Vakul Agarwal, vice president- growth, Licious.
Merits of first party data
One major benefit of first party data is, it is extremely cost effective as compared to digital CPM. Where an SMS costs 80 paise per text and an e-mail even lesser, digital CPMs in comparison cost way higher.
“Additionally, the marketing efficiency of a business is dependent on how much of the revenue is actually coming from existing customers versus acquisition of new customers,” she added.
Today, profitability of a business resonates with the percentage of repeat purchases which can be leveraged further with first party data collection and its efficient utilisation.
Further, repeat purchases also help in deepened user engagement through more personal and meaningful customer experiences. Higher acquisition and retention through tailored offers and more relevant decisioning is another aspect first party data facilitates.
Agarwal added, “Leveraging data enables us to understand the preferences of our users, allowing us to serve the right content to the right user.”
Karthik said, “In our case, with the use of right data, we could upscale and cross-sell innerwear customers outerwear as well and that is the optimum efficiency when you can make your consumer shift categories within your brand.”
However, where there are pros, there are cons as well. According to the Licious executive, while brands may leverage first-party data to know their audiences better, it is more important to know when to hold back.
Hyper-targeting at odd hours or any kind of over-communication can irk users, making them wary of the brand. The real trick is to not overdo it.
Moreover, any brand which does not capture first party data in a structured format is totally unaware of their core consumer. Therefore, marketing in such a scenario is equivalent to aiming in the dark.
“Brands need to realise the true potential of capturing first-party data in a structured format that will help them strengthen their retention and re-engagement strategies in the long run,” said Agrawal.
Karthik said, “If you lose out on first party data, you lose out on the chance of knowing and bonding with your consumer.”
Where does CPM take the lead?
But, when it comes to mass appeal digital CPM wins the race. Acquiring customers is like a funnel process, at the open-end digital CPMs help attract consumers and as we move down first party data helps in conversions.
According to Adobe’s latest research, In India 82 per cent of brands still rely heavily on third-party cookies, with 61 per cent of leaders expecting the end of third-party cookies will hurt their businesses.
In the future when marketing channels like Google go cookie-less, the re-targeting aspect will be a marketer’s biggest challenge. Then, digital CPMs would be the way to collect data, considering re-targeting is the most effective way of getting conversions.
Karthik believes for brands who want to scale, they cannot be dependent on just first party data because there is a threshold beyond which one can’t sell to the existing customers and new customers are needed to keep the funnel moving.
“We will have to partner with agencies who help us capture the consumers that clicked on our site but made no purchase, which are about 97 out of 100,” Karthik said.
The Adobe research found that 96 per cent of leaders surveyed in India are already using Customer Data Platforms (CDPs), simply called third party data platforms. Out of this, 57 per cent of India leaders who use CDPs have already gained more direct relationships with customers, a rise in customer loyalty (46 per cent), and an increase in the number and value of completed transactions (43 per cent).
CDPs also improve internal workflows, with 47 per cent in India saying it enabled better and faster work across marketing and IT and more efficient ROI production (36 per cent).
Brands should opt models unique to their business
Can brands channelise their dependency on one source of data completely? If not, then what is the right balance and which one is better?
According to Karthik, “If you ever ask a digital marketer how sure they are about their data attribution, no one would ever be 100 per cent positive about it. This is because there are multiple models that differ from marketer to marketer.”
All that matters is the model brands opt in should be unique to their business and not generic for the whole industry. Karthik shared, “Though this is still not done by many marketers but, in a cookie-less world a bespoke model to capture first click, last click, and other clicks in between will be the first investment brands make.”
In the end, if a marketer is smart enough, they would never limit their options to just first party data or just digital CPMs. It always has to be a healthy mix in order to power growth.
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