Did you know that 85% of retailers and brands will have second-party data integrated into their overall marketing strategy within twelve months.
The new crop of DTC brands have relied heavily on social media platforms to attract and engage new customers, especially as the influencer industry seems to have reached peak levels. While there’s no denying that these platforms help boost brand recognition, there can be downsides. Platforms can be costly, not to mention that they act as a “middleman” for your brand, rather than allowing you to build a direct relationship with your customer.
At the same time, there’s been a lot of chatter in the industry about how brands and social media platforms are using data, specifically the pros and cons of first-party and third-party data. First-party data provides valuable audience insights but lacks scale. Third-party data is vast, but may not be the best quality. These factors, combined with the controversy around the Cambridge Analytica data leak through Facebook and the ensuing General Data Protection Regulation (GDPR) in Europe, have put this type of data usage under the microscope. This leaves brands looking to other forms of data to forge more meaningful and trusted connections with customers.
That’s where second-party data comes into play.
What is Second-Party Data?
I like to think of second-party data as information from trusted partners. It is not a financial transaction or selling of data, but rather the product of two brands working together to share information for their mutual benefit. After a customer provides consent, a brand can offer services, discounts, or special products to consumers of another brand that it has chosen to partner with. For example, a fitness clothing brand might partner with a gym chain. The consumer gets access to both brands while the brands grow their audience in a cost-effective manner.
Putting Second-Party Data to Work
Forrester predicts that 85% of retailers and brands will have second-party data integrated into their overall marketing strategy within twelve months. If you’re not among this 85%, here’s what you need to know about the value that second-party data can bring to your brand’s efforts:
It combines quality and precision
Because second-party data comes directly from the company that collects it, brands can feel confident that the data they’re collecting is high in quality. Second-party data removes the “middleman,” allowing brands to forge partnerships with other brands that they feel will offer the most relevant data to achieve their marketing goals. As a result, the data is more precise than if you obtain data aggregated from a variety of sources.
The result, then, is that second-party data provides information and insights that first-party data can’t always provide on its own. For example, rather than buying third-party data segment of “new mothers,” you could approach a publisher of a parents’ magazine to negotiate a deal to access this data.
It can help reach new audiences
Second-party data is particularly helpful in reaching an audience that isn’t your own or finding new prospective customers. For example, if you’re a cosmetic brand targeting women, your first-party data will likely come from women. But if you want to market a new shaving cream for men, you won’t have the right data to capture your new audience. By partnering with a men’s health or fashion website, though, you can access the data you need to target men.
It can provide insights into your existing audiences and predict future behaviors
Second-party data can be used to build out your current audience and predict future patterns surrounding customer behavior.
Want to know when someone is increasing their on-site search activity on real estate aggregators to determine if they are in the market for a new house?
Or maybe you want to know when someone has added a certain product to their shopping cart on an e-commerce site but then abandoned their cart.
By using these predictive behaviors, you can actually work to monetize insights down the line. And, because the data is gathered on a site that is not your own, you will receive additional insights into what your audience likes and interacts with most.
It adds a layer of transparency
Part of the current attraction to second-party data is that it offers transparency and accountability. By sourcing second-party data, brands can understand exactly how that data has been collected, and know how consent has been obtained, building more trust in its transparency. This is certainly a key advantage for brands that need to remain GDPR-compliant.
It can build mutually beneficial relationships
Using second-party data can reap benefits that extend beyond the data itself. Remember that accessing the desired data means forming relationships with brands that have it, which can yield partnerships to help your brand continue to grow. On the publisher side, in particular, providing second-party data creates stronger relationships with agencies and advertisers and adds a revenue stream. It also gives them other products to offer and makes them a little “stickier” in the long run.
With these benefits in mind, it’s critical to make smart decisions about which brands you want to partner with.
How To Find The Right Partners
Second-party data deals work best when there is a shared ethos between the partners and an aligned vision for delivering value to the customer. Yes, it’s about target audiences, but it’s also important to consider the ideological compatibility between brands.
Fortunately, there are a variety of useful tools in the marketplace to help brands find collaborative partners for the collection of second-party data and other content while optimizing their partnership marketing plans more broadly. Today’s technology can actually help brands work seamlessly with one another directly.
Advertisers can reach desired target audiences, while publishers can monetize their own audience with far less work and greater success than ever before.
The Future of Second-Party Data
Moral of the story: if you’re not already using second-party data to augment your marketing plans, you should be. Second-party data can provide the color and insights you need in regards to your target customers, as well as giving you the quality and precision needed to optimize your efforts and the transparency currently lacking in the market. As more and more brands understand the benefits that second-party data can provide, I predict that second-party data will get that second look it deserves.