Driving results from first and second-party data

2018 was a big year for everything data. With the EU’s General Data Protection Regulation (GDPR) coming into force and the Cambridge Analytica scandal still fresh in people’s minds, both the conversation and legislation around the way data is collected and used is shifting.

According to Mark Parsons, partner at the Hong Kong branch of international law firm Hogan Lovells, privacy restrictions are already starting to change in APAC, too. “Data protection laws are becoming more rigorous in the region and we are seeing more enforcement action.” He urges brands to undertake due diligence into third-party data sources, obtain contractual assurances from the third party and have systems in place to deal with opt-out requests. “We expect to see closer regulatory scrutiny of retargeting and other profiling techniques as the regulatory environment matures.”

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In reaction to these changes, it appears brands are already becoming less reliant on third-party data, increasingly shifting their focus to first and second-party data, which is collected with greater trust and transparency. We’ve seen leading brands like Nestlé starting to prioritise first-party data and last year Facebook cut off their third-party data for ad targeting.

“Third-party data serves a useful purpose – giving reach and scale – but its intrinsic opaqueness means it’s inherently counter to the core principles of legislation like GDPR,” says Patrick Milburn, managing director, Hong Kong, Mezzo Labs. “As digital matures across markets in the region, and ‘omni-channel’ becomes a reality, I think you’ll see the ability to collect and leverage first and second-party data as the differentiator for brands in providing unique experiences to customers.”

The switch towards activating more first-party data is good news for brands, says Vijay Chittoor, co-founder and CEO of Blueshift, not only for establishing trust and privacy but also for helping brands to build a competitive advantage. “While third-party data is equally available to all bidders, first-party data is an exclusive asset that can be nurtured. It’s also more reliable and timely.”

Chittoor says that recent changes in data privacy restrictions offer a great opportunity for brands to learn how to tap into first-party data that they already take in across their systems and channels and leverage it to build trusted and personalised relationships with customers. “First-party data captures customer behaviours, interests and intentions. Being able to turn customer behaviours into timely, relevant marketing actions is how marketers win in today’s connected world.”

The key to activating more first-party data is to invest in systems that enable “marketer-controlled” data access, such as customer data platforms

But how can brands start getting more of their data from first or second-party sources? And what will it cost?

Chittoor says that unlike third-party data that is already scrubbed and packaged into segments or audiences for multiple buyers, first-party data must be unified, analysed, and activated before it can be of value to marketers. He says the key to activating more first-party data is to invest in systems that enable “marketer-controlled” data access, such as customer data platforms, that help with data unification, accessibility, analysis and real-time segmentation.

Yean Cheong, head of Cadreon APAC, suggests that brands first need to think about data strategy, and that there needs to be some form of ‘meaningful connection’ with consumers in place. “Consumers need to understand that by sharing their information they will get something meaningful in return.” But underpinning all of this, says Cheong, brands need to make sure that they are actually assuring the security, privacy and permission levels that they seek from the consumers and that they are explaining to the consumers what is going to happen to their data.

Although this ‘value exchange’ idea has been around for a while, Milburn says the end use of the data hasn’t really been expressly called out: ‘sign up to make checkout easier’, for instance, could in fact mean the consumer is signing up so brands can collect their email address and use the data for something else.

“I do foresee, with the impact of GDPR, that this value exchange will become more explicit and transparent – both what’s being collected and why,” says Milburn.

Scale is also an issue when it comes to first-party data. Brands continue to look for pockets of data to complement and enrich their scarce first party digital footprint. “If provenance is in question, second-party data can be a perfect solution for a fully transparent means of getting more specific origin-known data sets,” says Evgeny Popov, VP of Data Solutions APAC Lotame.

To that extent, second-party data sharing is becoming more common, including in APAC.

“Not only is it between two brands, we’ve noticed it’s also brands and publishers who are starting to share their data with each other more freely,” says James Sampson, VP and General Manager, APAC at Dataxu. “I think there is a thirst for data and brands are looking for ways where they can find higher quality data sets to use in their marketing or analytics.”

I think you’ll see a slowly growing trend away from [the walled garden sites like Facebook, Google, Amazon, Tencent] in 2019 (and beyond) in Asia.”

With regards to costs, Sampson says second-party data is always going to be more expensive because it’s a higher quality and you know where it’s coming from. “Most likely a marketer or brand is going to have to pay more for it but ultimately have more trust in it.”

While brands are already upping their first and second-party data game and are looking to collect and own more of their data, it doesn’t necessarily mean the big 'walled gardens' will go away anytime soon.

“I think Facebook, Google, Amazon and Tencent are just too embedded in people’s lives,” says Milburn. “However, I think you’ll see a slowly growing trend away from them in 2019 (and beyond) in Asia.”

He foresees brands will be increasingly reticent to spend ever increasing amounts of media dollars in the walled gardens and will want to own more of the experience, and structure themselves to provide this, rather than rely on the ‘black box’ of third-party platforms.

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“I hope 2019 is the year that brands get serious about creating a genuine enterprise-wide data vision and strategy for first and second-party data,” he says. “I’ve seen this discussed many times by clients in the region, but often it’s been confined to one team or limited in scope. It feels like 2019 is the year proper budgets, resource and c-level backing will be put behind it to fundamentally put first and second-party data at the core of everything brands do, rather than rely on third parties.”

Given that new data restrictions are in place; is it possible brands maybe don’t need as much data as they once thought? Can they still market effectively within new data restrictions?

“Relevancy is far more important than an infinitely large pool of knowledge about a customer,” says Milburn. “You can drive incredible performance by just latching on to one or two data points, even anonymous ones, and changing an experience based on that.

However, he adds that there is an obvious need for brands to get their house in order. “If they want to become genuinely transparent, open, data driven organisations, which leverage the emerging power of AI to drive efficiency and uncover new patterns at speed, then they need a wider, deeper and cleaner pool of data to power the process.”

He says this will allow the thought process to change from ‘hey this worked, but we have no idea why’ to ‘let’s predict what will work, and test it’. “You can build trust and credibility with customers by being open with them about how you’re using their data – the key principle of GDPR.”