The original narrative surrounding the emergence of big data was that vastly increased storage capabilities combined with advanced analytics would provide invaluable marketing and business insights, limited only by the volume of available data. More recently, this story has gained nuance in the form of various calls to make data analysis smarter, rather than just bigger. While this is a positive development, it still promotes the incorrect idea that a data strategy requires an investment in new sources of data before it can get off the ground.
Meanwhile, third-party vendors sell marketers on the idea that they can create highly relevant audiences by cobbling together massive amounts of data pulled from a wide variety of sources. One only needs to visit Acxiom's Aboutthedata.com to find out just how valid that claim is (hint: not very).
To put it simply: If you have data, you have a data strategy. It doesn't require massive collection efforts or major investments in third-party data sources with questionable reliability. You can leverage any amount of data you have right now to more effectively reach and retain customers. Here's why:
Money doesn't lie
There is no more important factor in a successful data program than relevance. Since the collected data will be used for predictive purposes -- delivering a personalized advertisement or adjusting business strategy -- it is essential that it accurately reflects the consumer or business it is targeting.
The easiest way to ensure relevance is to be 100 percent certain of the accuracy of the source. Third-party data vendors create audiences and individual profiles based on a variety of sources that more often than not fail to render an accurate depiction of reality. Social media platforms such as Facebook can give marketers a better idea of who they're reaching, thanks to the large quantity of personally identifiable information that the service has collected, but still rely on displayed behavior -- that is, behavior that consumers are aware will be observed by others and may be highly curated.
First-party data, on the other hand, will provide the most actionable consumer insights thanks to its high degree of reliability. Money doesn't lie, and very strong interest indicators, such as purchase records, give an extremely accurate idea of a consumer's true persona. This provides marketers with the intelligence they need to create relevant audiences while minimizing the inherent waste associated with spray and pray campaigns executed against third-party lists.
Storage is expensive
Businesses in the healthcare, retail, and banking industries, etc., store highly predictive data on consumer behavior as a standard part of business operations. This data storage, which is often kept for no reason other than record-keeping, costs a great deal of money. One way to reclaim this expense is to leverage stored data towards marketing efforts that drive revenue.
Targeting even a small percentage of consumers in a company database with personalized messaging and cross-sell offers can lead to outsized revenues, thanks to the high degree of relevance. Unlocking the potential of something that many businesses are already doing is both cost effective and highly efficient.
Retention costs are lower
There is undoubtedly a time and place for third-party data. A growing business, without much proprietary data, could expand its customer base by targeting massive audiences generated by a third-party data vendor. This, however, comes at a significantly higher price thanks to the greater costs associated with onboarding a new customer rather than continuing a relationship with an existing one.
Accordingly, businesses should seek to maximize the potential of their first-party data in order to cross-sell to existing customers, or attract ones that have exhibited very strong interest, before turning to third-party sources. Yet, marketers don't always capitalize on the data they have because of the misconception that they need big data for a data strategy.
The bottom line
Ultimately, the case for first-party data comes down to the factor that unifies all elements of a marketing organization: the bottom line. Increased relevance, less waste, offset storage costs and a focus on retention instead of acquisition all contribute to higher returns on marketing efforts stemming from first-party data. Marketers understand this. According to a recent eMarketer report, 62 percent of marketers have made creating a unified view of their customers a priority. This simply is not possible without a robust first-party data strategy.
Of course, barriers to the adoption of a first-party data strategy persist. For one, the continued siloing of data within organizations makes it difficult for marketing teams to assess the data that they have available. Secondly, there is still a gap between digital marketing aspirations and reality. Many companies understand the value, but simply do not have the technology available to effectively leverage their own first-party data towards marketing and communications efforts.
These barriers are not insurmountable, though. There is no reason why the vast majority of companies would be unable to better utilize their own data given an increased willingness to share data across silos and the implementation of a plug-in marketing platform.
First-party data has the potential to flip the claims of data vendors on their heads. Before launching your next digital marketing campaign, consider the data right in front of you before turning to an outside source.
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