The Power of Data Sharing and Second-Party Data

September 16, 2015

New smart devices and consumer touchpoints have created an explosion of digital signals and data. To get closer to the customer, marketers need to zero in on the customer data that really matters: the data that will help them recognize their multi-screening customers, provide personalized experiences, and more efficiently target their media buys.

For two decades, advertisers have been heavily dependent on third-party data that’s collected and aggregated by vendors across multiple websites or offline sources. Third-party data is plentiful, so marketers can easily buy the massive data sets they need to fuel their campaigns. But it isn’t always fresh or reliable.

First-party data, the data brands collect directly from their customers, has long been a part of the picture, though a much smaller one. A brand’s own customer engagement data represents the closest version of “truth” about its customers: who they are, what they’re interested in, what devices they’re engaging with, and what makes them unique. Since it’s based on your direct interactions with customers, your own data is more accurate than third-party data, and you know where it came from and how recent it is. And it’s even more valuable because it’s exclusive—competitors can’t get their hands on it.

Now marketers across the board are keen to derive more value from their own data, and build broader scale. But unless you’re a very popular e-commerce brand, like Amazon, Walmart, or eBay, your first-party data will likely fall short of the scale needed for these sophisticated targeting and personalization strategies.

So, say you’re a forward-thinking brand without a giant digital footprint. What do you do? Fortunately, there’s a third alternative—second-party data. You’ve probably been hearing a lot of buzz lately about second-party data, which is another company’s first-party data that is strategically shared with your brand, in exchange, most likely, for some of your own first-party data.

This can be a gold mine of information—an incredibly valuable asset for resolving cross-channel identity and building out customer profiles. Second-party data enjoys the benefits of first-party data in that it is unique and high quality—not everyone can access it. Like third-party data, it can help you amplify and extend your limited supply of first-party data.

While data sharing and data co-ops have been around for decades, today’s emerging technologies are taking second-party data to the next level while addressing the safety and security concerns that deterred many marketers from utilizing these options.

A top priority for many marketers is accelerating their capacity to target real people –their known customers—at scale. To achieve this, two or more companies with related, complementary customer sets can create a trusted data and identity network for contributing and sharing anonymized information.

A secure, neutral platform can offer these trusted partners the ability to match cross-channel data using hashed identifiers—without capturing personally-identifiable information (PII)—thus providing a safe environment for collaboration. At all times, each participant maintains complete control over its data—what’s shared and with whom—and adherence to consumer privacy best practices.

There are many examples of possible use cases, but here are a few:

  • An apparel retailer and a sportswear brand might exchange data to supercharge their co-op advertising programs through better targeting and personalization.
  • A retailer might share data with a CPG and other suppliers so that consumer brands can understand their customers’ shopping habits.
  • Publishers within a premium ad exchange might share data to offer custom audiences to advertisers and command a premium ad rates.
  • Auto manufacturers and their dealerships might share data to create unique and tailored customer experiences.

With the right partners and right technology, the possibilities are limitless. Here are five reasons you should consider going deeper with the use of second-party data:

  1. Find customers across devices and channels. One of today’s most pressing marketing challenges is to recognize customers as they zigzag across smartphones, tablets, and desktops. Marketers can leverage second-party data to build deep, rich, holistic profiles at scale to resolve identity and fuel cross-channel marketing execution.
  1. Amplify your first-party data with the good stuff. Data quality is unparalleled by alternative pools. You know where the data comes from—your trusted partners’ interactions with your customers—and that it’s accurate and fresh.
  1. Know your customers. By sharing data, you can enhance people-based marketing efforts while keeping ownership of your data. You can use your first-party data to target customized audiences at scale, with precision and insights, without turning it over to walled gardens.
  1. Activate unique brand experiences. In today’s competitive race for consumer attention, memorable brand experiences are a must. Data sharing can help you add personalized elements and relevant messaging to advertising creative, product offers, email marketing and customized content.
  1. Monetize your data. Your data is an asset which is unique and valuable—not just to you, but to other companies. You can add new revenue streams by sharing data with trusted partners.

Take Data Matters into Your Own Hands

There is a great deal at stake here for data-driven marketers. The common approach today to scaling first-party data is to cede control of it to walled gardens like Facebook and Google. The problem is, brands want to engage audiences across multiple devices and channels, but can’t activate that data without buying media from the walled garden. And while results might seem good in the short-run, the long-term risks are significant: marketers give up control of their data and lose visibility into customer behavior. Campaign learnings aren’t portable—they can only be used within the walled garden and applied to a thin slice of your customer’s multi-channel journey: not much help for connecting data and identifying audiences across your other key channels.

True, people-based marketing requires a complete picture of your customer using the wealth of first-hand knowledge you have about them. By sharing this data in private, secure networks with intelligently-chosen partners, you can scale it without the downsides involved in turning your hard-earned data over to walled gardens.

Ultimately, data sharing with trusted partners will enable brands to build a real understanding of their customers, unify cross-device identities and create the robust personalization that gives your audience a reason to keep coming back.

Mike Sands is President and CEO of Signal.

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