Bob Gaito, CEO, 4Cite

Facebook cut off advertisers’ access to third-party data starting Oct 1.  Ad buyers will now have to get this data on their own, and they’re scrambling to figure out how much it’s going to cost since Facebook was less than transparent (Facebook’s third-party data program was basically a black box).  This makes it the perfect time for ad buyers to take a step back and think critically about how much they should be spending on third-party data.  Because in comparison, first-party data yields vastly better results.

Third-party data is like the frozen hamburger of the data world: it’s pre-packaged and easy, but the quality can vary drastically and the bad gets mixed in with the good.  Think of the E. coli investigation where the burger in question contained beef from multiple slaughterhouses (including one out of the country), plus a mash-like product treated with ammonia.  Okay, maybe that’s an extreme example, but with third-party data, you often have no idea when it was collected, how it was collected, or who collected it.

In contrast, first-party data is a retailer’s own proprietary data, so YOU control the data quality.  When properly captured and managed, this data can tell you exactly what each shopper is interested in—you don’t have to guess.  People-based first-party data is the filet mignon of the data world, but scarcity can be a problem.  This is because most brands are not capturing nearly as much first-party data as they should be capturing, perhaps lulled into complacency by the ease of using third-party data.

Another thing to consider with third-party data: growing privacy regulations.  On the heels of Europe’s GDPR, California’s Consumer Privacy Act requires that by 2020, companies collecting personal consumer information must disclose the data they collect and what they use it for.  Many pundits expect the rest of the country will follow suit with similar regulations.  With data that’s collected from multiple sources and handed over multiple times, it’s nearly impossible to ensure that privacy standards are adhered to.  With first-party data, you set the standards for how it is captured and used.

Where to get customer data

So, how can you build up your first-party data?  The richest source is your website.  Most retailer’s miss out on mountains of valuable data because they’re simply not collecting it properly.  The main reason is that they can’t identify the majority of their website visitors.

These anonymous visitors use search terms, browse categories and products, and cart items that they don’t purchase.  Often, if this data is captured at all, it’s linked to browsers and devices—not people—and it then becomes guesswork to apply it.  With the technology services available today, you should be identifying at least 60% of your website visitors using a people-based identification method with a persistent identifier. This alone will increase the quantity and quality of your first-party data exponentially.

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With this kind of first-party data available, you can create your own custom Facebook audiences to optimize ad spending.  Remember, you’re in a bidding war with hundreds of other brands, so you should bid the most on the people most likely to be interested in your brand.  Driven by insights from current and past activity, these audiences can be continuously updated in real-time to move individuals in and out of audiences with different bid caps based on their up-to-the-moment shopping activity.

These determinations are much more targeted than what Facebook offers through its pixel-based ad options, enabling complex layers of business logic that optimize ad spending.  And, as an added bonus, you can conduct testing to maximize results in ways that Facebook doesn’t allow.  When you determine who is in each audience and measure results against control groups, you gain visibility into the true performance of your ad spending—something sorely lacking today.

Now is the time to think seriously about the advantages of first-party data when it comes to ad spending. There may still be a place for frozen hamburger, but look for the places where you can have filet instead.

4Cite provides technology for personalizing email and website interactions with consumers and for identifying otherwise unidentifiable visitors.