It’s Time to Stop Relying on Third-Party Data and Prioritize Consent-Based Marketing

Opinion: A new era of advertising is here

First-party data is more reliable—and accurate—than third-party data. Getty Images
Headshot of Kabir Shahani

Marketing as an industry is at a critical juncture. What consumers want from brands is a personalized experience, one that mirrors the way they interact with peers, family and friends. But we as marketers are failing to deliver.

We talk the talk. We engage in industry chatter about targeting the “right” audiences, creating the most accurate buyer personas and implementing data-driven strategies. We go to great lengths to reach consumers. We fill our marketing stacks with countless new technologies, we conduct interviews and focus groups. We even create niche content to ensure no one is left out. And consumers are still frustrated.

Why? Because all the advanced technologies in the world can’t make up for the critical missing link: first-party customer data, the underlying asset that can act as a force multiplier across all personalization efforts. Instead, we resort to the quick-and-easy fix: third-party data.

Perils of the easy fix

Third-party data generally refers to data aggregated and owned by an entity like a government, data company or charity. These entities profit regularly from selling access to the data they collect and own. This is also the most restricted category based on privacy laws, commercial interests and characteristics of the dataset.

But this data is not your customers’ data, and the methods used to obtain it are often questionable. As recent events have shown us, like with the Facebook debacle, third-party data is less an elixir and more like a poisoned chalice that corrodes your credibility as well as your relationship with customers.

Third-party data isn’t even exclusive to you. If the data is for sale, your competitors are also buying and using it.

Let me explain this in practical terms. Generally, third-party data is seldom as high-quality as the data you can collect yourself. I recently looked up my own anonymous profile based on third-party browser data, and it revealed that I am both single and married, female and male. Useful? I think not. This means that if, for example, you’re using this data to target singles, you’ll be paying to reach me and a whole lot of other married people. Also, third-party data isn’t even exclusive to you. If the data is for sale, your competitors are also buying and using it. There really isn’t much more to say other than that your competitive edge lies in your own first-party data, not third-party.

But here’s the real problem. Consumers are frustrated and feel violated. The Facebook controversy and GDPR are both cases in point. But these two examples are mere catalysts for the inevitable and certainly are not the primary cause. This recent meltdown is a culmination of years of poor marketing practices—web scraping, over-reliance on third party cookies and retargeting, bots, etc.—with no regard for the end user and their right to privacy. The European Union is ahead of the curve with privacy restrictions, but with controversies like the Cambridge Analytica fiasco, the U.S. might soon see stricter laws surrounding people data as well. This is bad news for third-party data, which circumvents direct opt-in.

Am I using third-party data? 

The answer is yes. All marketers have used third-party data to varying degrees. When you think about your Facebook advertising program, do you think, “I’m leveraging third-party data”? No? Well, maybe you should. Every time you advertise on Facebook, you are leveraging the social network’s vast black box of user profiles. Those aren’t your users, they’re Facebook’s. And data about interactions with your ads doesn’t come back to you so you can better zero-in on the most effective campaigns. This information belongs to and remains with Facebook. Brands like Facebook are data-rich, and the more you use third-party data for marketing and advertising, the more data-rich they become.

A new era in consumer marketing

The days of third-party data are coming to an end. We’re now entering an era of consent-based marketing where first-party data is king.

Just think about it: First-party data is your brand’s data. It has been directly collected by your company based on direct interactions with your customers—not through web scraping or third-party cookies—and therefore has the fewest restrictions for use. It’s also the most relevant because it tells you about your customers as individuals and how they interact with your brand, not the world at large.

But it will take a drastic shift in mindset to get on the right path. Some companies will make it; others won’t. If you don’t want to be in the latter bucket, listen up. The time to act is now.


Kabir Shahani is CEO and co-founder of Amperity.
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