What the heck is first party data & why should I care?

If you are involved with advertising platforms, you have probably heard the term first party data thrown around. It has been the buzzword, along with AI, for the past couple of years. But what is first party data? And why should you care?

Let’s start by first talking about how advertising platforms work. Platforms like Google Ads or Meta allow advertisers to choose who sees their ads either by entering in criteria (such as keywords, demographic traits or interests) and then matching the ads to users.?

How do platforms know which users should see which ads? Great question! For search platforms (like Google or Microsoft’s Bing) the primary way the platform knows who to show an ad to comes from direct action from the searcher. They enter a query into the search engine and the search engine returns results to match that query, including some ads. Social platforms match ads to users not based on queries, but based on demographics and interests.

Things are changing...

And this is how it has been done since these platforms began. But things are changing. Primarily they are changing with regard to user data and privacy. There are different privacy and data laws around the world and across the United States that restrict platforms’ ability to collect and use individual’s data. This inhibits the ad platforms systems from being able to target ads as effectively. That is not great for the platforms, or for users either!

Enter first party data! Perhaps you have noticed that platforms are really, really wanting advertisers to share customer data with them lately? Google in particular has been pushing for advertisers to use their first party data (your actual customer and transaction data) to help Google target your ads. The way it works is you upload your customer data and Google (or other platforms) then match as many of your customers to profiles in their ecosystem as they can. That forms your base customer audience.?

How is first party data used by ad platforms?

Once a platform has an advertiser’s base customer audience available to it, it can do several things with the data:

1. Target those users directly
2. Find lookalike users for advertisers to target
3. Exclude existing customers from advertising campaigns
4. Bid more on customers that they think match your existing customer list
5. Show retargeting ads to audiences you identify as prospects

Adding your own data to the powerful trove of data that platforms possess can produce great results. But proceed with caution! The use of advertiser first party data represents a massive shift of data liability off of ad platforms and on to advertisers. Now it is not Google or Meta that is collecting user data - it is the advertiser sharing it with Google or Meta. Both have a checkbox when you upload customer data that essentially says “I have the proper permissions and consent to share this data.” That little checkbox is a big deal!?

Before you rush to get on the first party data bandwagon, please make sure you have your privacy policy and/or terms in order so that you clearly state how a customer or prospect’s data might be used or shared. Your lawyer and insurance agent will thank you for being diligent about this.

Is using first party data right for your business?

Not sure if you want to wade into using first party data? Don’t know if you even have data that you could easily use for digital ad platforms? I can help! I have advised clients about just these types of issues for many, many years. Message me to get started.?