There is much being written these days about the importance of first party data. And the consensus is that first party data, while lowering our reliance on third party data, is critical to the long-term health of brands. But another dimension of data, in my opinion, is just as critical – anonymous versus known data.
Let’s start with some basic definitions:
• First party data is data that a brand has acquired over time from their own efforts and is owned exclusively by them.
• Third party data is purchased from an outside, third-party vendor and is typically sold broadly to everyone including a brand and its competitors.
For example, a brand’s click stream data from their own website is first party data. Audiences purchased from a DMP based on cookies, for example, is third party data. Both of these are forms of anonymous data.
As noted, there is much being written these days about how first party data creates a unique, owned corporate asset for brands that can differentiate themselves from other competitors – and that this creates a more effective means of targeting than one can get from third party data. I whole-heartedly agree.
Here are a couple of more definitions:
• Known data is individual level and contains PII such as name, address, email, and transactional/behavioral information tied to that individual.
• Anonymous data is, well, anonymous. Data that is gathered about an unknown individual and their behaviors, typically online, and stored under an anonymous temporary key which has most often, up until recently, been a cookie.
I find that people often use the term first party data to mean known data. But, in my opinion, they are two different yet related definitions, both being very important.
Is all of this making you uncomfortable?
Marketers often comment that marketing is about creating a relationship with the customer. Have you ever had an actual relationship with someone who was anonymous to you? Would you say you have a relationship with someone whose name you don’t know, nor their cell number or email, nor even where they’re from?
Yet, many clients and agencies these days deal almost exclusively in the anonymous world, having little expertise and poor capabilities in the known universe. In fact, they become visibly uncomfortable when discussing known data. I’ve been around long enough to remember when acquisition marketers focused deeply on the known universe (i.e. direct marketing). Then over the last decade or more, most attention has been on techniques and platforms targeting the anonymous, such as SEM, digital look-a-like modeling, retargeting, etc. Meanwhile, they leave their known data muscles to stagnate and atrophy.
Changing times ahead
From Pragmatic’s view, we are seeing many brands struggling with their acquisition efforts. Much of this can be traced to their heavy reliance on anonymous digital efforts to drive volume and efficiency. Many of these efforts have reached scale and are declining in efficiency. There are many reasons for this, but two primary ones are:
1. Much of the anonymous world has become so competitive (for example, SEM bidding) that only the few large brands can compete. Walled gardens like Facebook and Google have painted brands into a corner competing for finite scale at rising prices.
2. Privacy concerns are turning the anonymous world upside down. Google recently issued a death warrant for third party cookies announcing that they will eliminate them from Chrome by 2022. Many pundits predict this will just lead to more walled gardens, further choking marketers.
Given this, we now see some brands quickly turning their attention to the known universe. They are waking up atrophied muscles or using new ones. And there are actually exciting things happening in the known universe. While direct mail and email are essentially the same, modern platforms are now allowing us to target known prospects not only in those channels but in combination with media like Connected TV, streaming audio, on mobile and more. You’ll see the buzz phrase, People-based Marketing, often used to describe this. (See Jay Dillemuth’s blog on People-based Marketing.)
In fact, at Pragmatic, we view a great part of our success for our clients is helping them drive a prospect from the large vast, anonymous universe to a very well-known customer.
A diversified approach
The reality is that we recommend clients have a diversified approach, spanning first to third party and anonymous to known data. Many brands have invested so heavily in anonymous strategies in recent years that a slowdown in their portfolio was inevitable. We recommend some self-reflection now to ensure you’ve invested enough in maximizing your efficient scale in the known universe.