In a world where user experience is becoming increasingly important, the use of first-party data is a step in the right direction for companies aiming to enhance their efficiency and success in digital advertising. Changes are the only constant in digital advertising, but one aspect remains crucial—how to reach the right user at the right time with a relevant message. First-party data has become an essential element in delivering more personalized and effective advertising campaigns, especially for targeting and nurturing existing customers. Why is it essential for companies to store this data in private data warehouses, like iPROM Private DMP, and how to utilize this data for more effective digital advertising is explained in detail in this blog.
Why is first-party data crucial for marketing?
First-party data is the data companies receive directly from their users. For example, it includes information that users voluntarily provide while browsing the company’s website, subscribing to newsletters, participating in surveys, making purchases, or registering, as well as during digital advertising. This data is collected directly through customer interaction, making it more relevant, reliable, and precise than data gathered from third-party sources.
By using first-party data, companies can better understand their customers and tailor ad messages and campaign targeting to meet their needs at the right moment. This leads to more relevant and personalized messages, which increases the effectiveness of advertising campaigns.
Collecting and securely storing first-party data
As first-party data represents new value, it is important to store it securely and protect it from competitors. Private data warehouses, like iPROM Private DMP, are designed precisely for this purpose—to securely store this data, specifically information about the media clients’ users, and enable its efficient use in marketing and digital advertising. iPROM Private DMP allows companies to store data in compliance with privacy laws, such as GDPR, while providing easy access and analysis of this data for more precise user targeting.
Using first-party data for targeting and personalization in digital advertising
Companies that collect first-party data can use it for more precise ad targeting. This data can be analyzed to create advertising campaigns tailored to users’ interests and behavior. Customizing ads based on first-party data makes ads more relevant, which increases the chances of user engagement.
Research by iPROM in October 2023 confirms this. The study found that ad campaigns based on first-hand data are, on average, 18% more effective than those relying solely on third-party data. This means that users with a stronger purchase intent are more responsive to ads tailored to their personal experiences, leading to higher click-through rates (CTR) and better conversions.
Comparison of reactions between targeting based on first-hand and third-hand data
Comparing reactions between first-party and third-party data targeting
Why is first-party data critical at the bottom of the sales funnel?
In digital advertising, we often discuss the sales funnel, representing the path from brand awareness to purchase decision. At the bottom of this funnel, users are almost ready to purchase or have a strong purchase intent, so it’s crucial for companies to attract them with tailored messages that further motivate action. Using first-party data at this stage is especially important, as companies gain valuable insights into the behavior of potential customers. This data allows them to create extremely precise and relevant ads tailored to the purchase phase, increasing the chances of conversion.
Using advanced ad formats combined with first-party data targeting
At iPROM, we also investigated how using different ad formats impacts user responses. Research on the effectiveness of advanced formats showed that the response to ads targeted with first-party data is 12 to 62% better than ads targeted only with third-party data. This means that advanced ad formats, when targeted with first-party data, are up to 62% more effective within ad space purchases through iPROM Private DMP and iPROM Programmatic Platform. Additionally, comparing responses between mobile and desktop formats showed better responses on desktop formats, though first-party data strategies positively impact all formats.
Better results on desktop formats are attributed to the fact that desktop users browse more deeply, leaving more digital traces, which allows better user profiling and, consequently, better targeting. Thus, companies can achieve even better results using advanced formats and data technologies, regardless of the device displaying the ad.
Comparison of reactions to ad formats between targeting with first-hand and third-hand data
Comparing ad format responses between first-party and third-party data targeting
Long-term benefits of using first-party data
First-party data not only enables companies to improve the effectiveness of ad campaigns immediately but also brings long-term benefits. As companies better understand their customers, they can build long-term relationships, leading to greater customer loyalty and repeat purchases. Additionally, using first-party data allows for better measurement and tracking of ad campaign effectiveness. Companies can, using independent analytics solutions (Piwik PRO, iPROM Private DMP, Adobe, etc.), precisely monitor user reactions to ads and adjust their strategy accordingly. This means ad campaigns are increasingly optimized, bringing more conversions and better return on marketing investment (ROMI).
In a world where user experience is increasingly valued, using first-party data is the right step for companies aiming to improve their efficiency and success in digital advertising. First-party data is becoming a crucial success factor in digital advertising today, and technological solutions like iPROM Private DMP enable secure and efficient management of this data. Its use allows for more precise targeting, personalized ads, and better results, especially at the bottom of the sales funnel. I will explain the role of combining first-party and third-party data to effectively reach customers at the top of the funnel in my next blog.
