• by Finn Faldi , June 5, 2014

Big data continues to garner attention, and third-party data vendors in particular have enjoyed celebrity success these past few years  due to advances with third-party cookies. But the increasing mobile consumption across multiple devices, most of which do not utilize cookies, combined with a renewed interest in privacy, are bringing a multitude of challenges to third-party providers. To avert the increasing challenges of working with these vendors, digital marketers are activating first-party data and finding opportunity to engage consumers in more transparent, meaningful ways. 

What’s Going on With Third-Party Data?

While third-party providers initially blossomed because of their ability to create an efficient marketplace where buyers and sellers could better target and monetize audiences, their business model is crumbling rapidly (in the past year alone, there were countless articles like this that expounded on the shaky third-party data model). Here are the Cliffs Notes on why third-party cookies have fallen from digital marketers’ graces:

• Consumers have increasingly voiced concerns about personal privacy, spurring a wave of initiatives across the digital marketing community to protect their data. For example, a recent study cited by J.D. Power and Survey Sampling International found that 70% of consumers across the globe expressed concern about the erosion of personal privacy.
• Web browsers have embraced cookie-blocking policies (Safari blocks them altogether; Microsoft ships Internet Explorer 10 with Do Not Track on by default; and Mozilla recently announced a “Cookie Clearinghouse”).
• Security software (e.g., Norton, Symantec) automatically deletes third-party cookies on a regular basis, and, according to comScore, three out of ten consumers delete their cookies each month -- on an average of four times monthly.
• Cross-platform consumption additional challenges to the third-party cookie model. It’s no longer possible to solely track a person’s online activity on his desktop computer.

The above combine to paint a dim future for pure third-party providers: the depleting pool of cookie-based information essentially nullifies their value proposition. As for the cookies that are left standing, many brands constantly remain weary of data leakage to competitors. First-party data, on the other hand, is increasingly gaining traction in the marketplace.

First-Party Data, Ready for Prime Time

While the third-party model continues to be disrupted, first-party has always, and will continue, to stand its ground against the ever-changing advertising landscape. As MightyHive’s CEO Pete Kim recently noted: “first-party data represents a critical foundation for future marketing plans because it’s the only data that your competition will never have.” CMOs and top digital marketers reflect this same sentiment today. Let’s investigate why:

• Unparalleled quality. As first-party data is earned and owned solely by the brand (e.g., online/offline information, site analytics, registration data), marketers can see the exact data source and more effectively maintain data in their CRM. Third-party data providers cannot claim the same level of transparency and quality, because their data is segmented and farther from the source (e.g. not real-time).
• Cleaner measurement. By working with cleaner data, clients experience the most significant lift in measurement accuracy. For example, third-party data methods leave brands vulnerable to identifying the same user across multiple devices as multiple people. First-party technology solves for overlapping identification, and allows brands to identify users as a single, unique person.
• Consumer-centric security. First-party technology protects a brand’s first-party data within its domain, so that no third party can tamper with or broker the data to anyone else, thus eliminating any risk of data leakage.
• Multichannel persistence. Contrary to what people believe, first-party data is persistent across multiple devices, including mobile, a key point for marketers deepening cross-channel integration. This is possible because iOS and Android allow first-party cookies and reject third-party cookies.

Continuing the Dialog on Big Data

So where does this leave us? As big data continues to accelerate in this space, there will be infinitely new insights added to the conversation by existing and emerging stakeholders. To continue healthy dialogue, Joanna O’Connell, director of research at AdExchanger, recently articulated: “I think that the ultimate answer, complex and nuanced as it may be, must begin with openness with consumers.” I couldn’t agree more, and I implore fellow colleagues to keep open, honest dialogue about how they are tracking consumers and giving credit where credit is due.