Global Practices - The Transition from Third-Party to First-Party Data

Introduction

 

Data is the key to understanding behavior, patterns, and insights. Without data, it is incredibly complicated to gain the knowledge to decide the right actions to meet objectives. Therefore, collecting the right data is a crucial aspect of a data and analytics platform. But recent events show that the way organizations collect customer data and customer usage data for web applications will change.

Google announced that it will block cross-site tracking through third-party cookies by the end of 2023. This change means that using third parties to collect data will no longer be possible. With other browsers such as Safari and Firefox also working towards phasing out third-party cookies on their browser, the end of third-party cookies is here.

With privacy laws like GDPR coming into effect in recent years, how organizations can collect and use data is subject to many regulations. The privacy laws have also ensured that data privacy is at the forefront of the users’ thoughts, with notices for data usage requiring user consent. However, obtaining third-party data usage consent has become problematic because users are reluctant to share data when presented with information on its use.

Now that third-party data is more difficult to acquire, first-party data has become essential and needs to be a priority in an organization’s data strategy. But, first, let’s define the difference between first-party and third-party data before further discussing the situation.

The organization itself collects first-party data, and it has exclusive ownership of the data. However, external entities typically collect third-party data and then aggregate it for sale to different parties. Utilizing first-party data means more than just collecting data directly from consumers and customers. It also means first-party data needs to be secured and managed correctly with appropriate governance to ensure transparency and privacy across the whole data lifecycle.

Now, we’ll discuss the main pillars of an effective first-party data strategy to harness first-party data.

First-Party Data Strategy Pillars

 

Collection

First, organizations must decide what data to collect based on business objectives and user experience goals. The next step is to collect this data from users. Since there is friction getting consent for user’s data, earning the user’s trust through appropriate data collection channels is crucial.

For example, utilizing loyalty benefits or offers can help gain the user’s trust. It is also essential to provide full transparency on how the organization will use the data since users don’t want to receive irrelevant advertising.

Organizations also need to invest in new technology, applications, and websites to collect first-party data with user consent and move away from third-party mechanisms. However, organizations can retain the ownership of data and analysis, and strategic partnerships can develop technological modules. Additionally, customer data platforms can  help solve the technical puzzle of collecting first-party data.

Consent

It is essential to get consent from users to secure the use of the data. Organizations need to ensure transparency on how the data will be used and obtain an agreement from users or customers. Additionally, organizations need to adhere to the customer agreement to process and use the data and comply with laws and regulations.

Governance

Data governance means understanding the policies, processes, and structures applied to support data security, compliance, storage, management, data classification and data usage. Implementing the right data governance processes to ensure compliance with laws, regulations, and user consent is crucial to maintain the customers’ trust regarding their privacy and avoid potentially heavy fines.

Identity Resolution

Organizations must create customer profiles with appropriate data anonymization standards to protect the customer’s identity. Data stewardship and data governance practices can also help uphold the agreement with the customer. Additionally, organizations can tie customer profiles to channels and device-level identifiers to ensure there’s no violation of data collected from different channels. These processes are also crucial in case customers no longer want to share their data with the organization.

Data Platform

Organizations need a data platform to collect, store, analyze and process first-party data from different sources that can also provide analytical models. Additionally, the data platform should include modern data warehouses and custom data tools.

Data Use

The way organizations use first-party data is crucial. Obtaining user consent and adhering to the agreement builds trust not just with the user but also with customers. Additionally, the users are more likely to continue providing data as they see its value to the organization they built trust with over time.

First-Party Data Strategy with GlobalLogic

At GlobalLogic, we advise our partners on data strategy and implementation of data platforms, modern data warehouses, and data governance processes. These services can help lay the foundation for first-party data strategy and usage. If you’re ready for the transition from third-party to first-party data collection, please reach out to the Big Data & Analytics department at GlobalLogic to discuss data advisory and data platform implementation. In addition, we can help create the data governance processes and show you how to manage first-party data with relevant monetization applications.

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Rahul Barik

Senior Solution Architect, Technology

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