Concept of First Party Data
While gathering and using first-party data — that is, data that an organization has gathered from its own customers — is very common across most industries, it is far less common in healthcare due to the very tight constraints put on the use of personal health data by provisions like HIPAA in the US and the EU's GDPR.
FIRST-PARTY DATA DEFINITION
- First-party data is information collected about a company or other organization's own customer base, e.g., purchase activity, website behavior, search terms used, etc.
- It contrasts with third-party data, which pertains to people that the company has no preexisting relationship with, usually through companies which specialize in gathering and disseminating such data.
- First-party data "is considered the most valuable, accurate and reliable data," in addition to having the benefit of being essentially without cost to collect.
- Currently, momentum is shifting away from using third-party data, with "85% of brand marketers in the US and 75% of those in Western Europe" stating that increasing use of first-party data is a high priority in an April 2018 survey.
SOME WARNINGS ABOUT USING FIRST-PARTY DATA
- Interestingly, while 80% of marketers make use of first-party data, there are two industries in which first-party data is not used for media targeting purposes: financial and healthcare.
- Part of the reason may be that first-party data is subject to the data protection laws of the country the individual to whom it pertains resides in; for example, any company doing business with a customer in Europe is subject to the EU General Data Protection Regulation (GDPR) while any data pertaining to healthcare in the US must be kept in compliance with the Health Insurance Portability and Accountability Act (HIPAA).
- In a healthcare context, it is particularly important not to send advertisements to potential prospects based on prior search patterns: "You never want to appear insensitive by reminding patients of their medical condition or make them feel tracked."
- But more than that, it is actually illegal under HIPAA to use first-party data "to link known identifiable individuals to their medical conditions." In other words, a healthcare company can't use data that John Doe suffers from erectile dysfunction and use that information to directly market Viagra to him.
- This is why many healthcare providers prefer to use third-party data to indirectly target potential customers.
GATHERING FIRST-PARTY DATA
- First-party data "must be properly collected, cleaned, normalized, stored, analyzed and deployed through tech platforms" in order to be successfully used in a branding campaign.
- A company should conduct a data audit to "understand the scale and depth of the first party data available." A data-poor company or marketer will need to supplement with third-party data.
- However, collecting customer data requires patience and deftness: A recent survey shows that 35.9% of smartphone users will distrust a brand that asks for too much information about them.
- In fact, 28% of customers distrust brands taking their personal data due to recent public data scandals.
- It is less obtrusive to gather data "via tags on an advertiser’s digital assets" or by using cookies to track movement on the internet.
INTEGRATING DATA INTO A BRAND OR STRATEGY
Typical ad initiatives that use first-party data include:
Other findings on the use of first-party data in a company's branding strategy:
- First-party data is best used with a customer-focused strategy rather than a product focused one.
- Andy Monfried, founder and CEO of Lotame, a data management platform, agrees: "With first-party data, marketers are playing the long game. They are fostering an ongoing relationship with their customers and prospects by better communicating and serving them."
- Consequently, it is often more effective to look for patterns, sometimes called "audiences" or "buyer personas," among a company's customers which "are much better described by their interests and attitudes" than simple demographic segments like gender, age, and geographic location, though these are also important to targeting an audience.
- Most brands use a data management platform (DMP) to pull all of their customer and prospect data together, but this is not always needed up front; e.g., most demand side platforms (DSPs) have at least some data management functions built-in.
- First-party data can be used to determine not only who became a customer of a particular product, but how that purchase journey ties back into what is already known about the customer's audience segment.
We began our research by looking for a general overview of first-party data in order to ensure that we understood the concept properly. This led us to a recent series of articles from eMarketer which laid the foundation that we needed and provided many of the insights in our findings above.
Next, we researched how first-party data can be integrated into a company's brand or overall strategy, with a particular eye towards the healthcare and pharmaceutical industry. While it is nominally Wonder's practice to restrict ourselves to sources published within the last two years in order to ensure that we are providing our clients with the most up-to-date information available, in this case we made an exception: We found several articles written in 2019 which referenced a white paper published in 2016 on this very subject. Given that it is still being referenced today and that it provided a wealth of information on the topic (in fact, we recommend reading it in its entirety), we have included its valuable insights in this brief.