It’s no wonder marketers are an anxious sort. The relevance of our brand to our customers means everything to us, but it’s also one of the hardest things to achieve and measure.
Recent advances in marketing technology have eased the pain considerably, with shopping cart abandonment offers and discounts; product recommendations based on purchase history; and offline point-of-sale data informing online re-targeting efforts. The best bit of all this has been the mutual benefits: increased marketing ROI for you and more timely, engaging and useful marketing for your consumers.
You know you’re probably still guessing
But there are still plenty of shortcomings, one of which is more potent that all the others combined. It’s this: 1st party data only gives you a narrow, artificial view of your customers. Basing any marketing activity on 1st party data alone—that’s the data on people who have directly interacted with you—feels disconcerting. That’s not to say it isn’t enormously valuable, because it is. But if we’re talking about achieving contextual and meaningful customer engagement, 1st party data is foundational work.
Relying on it alone means you’re forced to make up the difference with some guesswork, which is what causes disconcertion. You know you’re not seeing the full picture. Without augmenting your consumer data, you risk wasting hefty chunks of your budget while sometimes appearing as though you don’t really know your audience at all.
The need to zoom out
Carry on like this and your presence in the ever-broadening landscape of consumer choice will be diminished. Increasingly, your brand will just be noise. So all of us need a way to zoom out from our artificially narrow view of consumer behavior and start to piece together a truer picture of what they’re likely to be interested in at any given time.
This is where 2nd party data comes in. It’s how we zoom out. By sharing consumer data with other companies in a privacy-compliant way, you can start to fill in the gaps in individual interests and spending behaviors.
A 2nd party data sharing arrangement can only involve customers common to both parties. As an example, a global hotel chain is already partnering with a leading airline to increase bookings. The airline can only share data on people known to the hotel chain, but with that information the chain can target travelers with time-sensitive offers. By creating a segment of people who are:
- Frequent fliers to a given airport, and
- Who already exist in the hotel chain’s database, but
- On arriving at that airport, tend to stay in a different hotel for some reason.
The hotel chain can therefore target everyone in that segment with offers timed according to the flying history of each individual. This kind of 2nd party data sharing agreement means you’re suddenly able to dial up the nuance and precision in your marketing to a completely new level.
It means every engagement is much more likely to find its target as and when it was designed to, rather than being your best guess based on limited 1st party data. And the potential doesn’t stop there—more partnerships mean more insights and an exponential broadening of your single customer view.
Seizing the opportunity in the right way
In theory, there’s no limit to the number of partnerships you can forge, making this an unprecedented opportunity for marketers. But when it comes to seizing this opportunity, it’s critical to your success that you comply with the regulatory framework. The bad news about the framework is that it’s in near-constant flux; the good news is there are secure mechanisms and environments for sharing data in the cloud that automatically ensure regulatory compliance, no matter its twists and turns.
The best data intermediaries will go one step further and help you anonymize personally identifiable information (PII) before sharing it with your partner brands. Ultimately, this is about mutual benefits—between brands, and between brands and their consumers—that will allow us to yield far greater marketing ROI and eventually make all our marketing relevant.
What is 2nd party data?
To help make this vision a reality, we’ve published an eBook called ‘What is 2nd Party Data’? Read it for more detail on why it’s going to change the way you do marketing, and how to get it right.