The Importance of First-Party Data

James Lawrence: Welcome back to the Smarter Marketer podcast. I am joined today by my brother, David Lawrence, my partner in crime. Dave, how are you?

David Lawrence: James, I'm good. How are you?

James Lawrence: Yeah, very, very good. Very excited for our conversation on a very, very exciting topic. First-party data. If data and privacy can't get you going, what can? 100%. This will no doubt be the most listened-to pod of the year with a title like why you need to collect first-party data.

David Lawrence: I think it will, but can I say one thing before we get started, always get worried whenever we put data into a title that a lot of marketers tune out straight away. I want to stress that as much as we've got data in the title, this is not a deep dive on, on data or even the specifics of a whole bunch of the changes that happening because of privacy. This is a general chat about what marketers, um, and in particular non technical marketers should know and should do.

James Lawrence: I've just gone into Chat GPT and said, can you rework this title to not include the word data? And so it's now being called why prioritizing first-party insights is crucial for marketers. That's an incorrect headline. Now we can go deep on data. Okay. No, we joke, but it is a surprisingly, well, not surprisingly, it's a very, very important topic for marketers. And I think with all the changes in the landscape over the last kind of a couple of years, Most marketers, even those that shudder at the idea of data insights and the tech side of things kind of know to be important. So I think let's just start super top-level. Um, what is first-party data versus third-party data?

David Lawrence: Yeah, it's a really simple difference. So first-party data is the data that you. Go out and collect directly from your users. So if someone's on your website and they fill in a form and that goes into your CRM, that's first-party data. If someone fills in a survey form or a feedback form and you collect that, you put that in your CRM, wherever you store it, it's first-party data. So literally, it's your dealings. One-to-one with your users, not even one to one necessarily, but there's no one in between. The third-party data, as you would expect, is when another organization or a platform has gone out and collected that data from a user, and then you're tapping into that data. So you didn't collect it. You didn't have a direct relationship necessarily with that user, but you're going to use something they've given someone else for your marketing efforts.

James Lawrence: Yeah, exactly. Bang on. And so for marketers that might not have dug as much into this topic. Continuing to look. Well, I guess what a way that we have historically relied on third-party data and why is that becoming problematic?

David Lawrence: Yeah, so digital marketing in general was built on the miracle of third-party data. So, so often in traditional marketing, you know, it was a relatively data-free space in many ways, whereas the beauty and the power of digital was that these platforms like Google and Facebook now matter. We're able to look at huge amounts of data across a huge numbers of users and either aggregate or even use personally specific bits of data. Um, and then as marketers, we could tap into that. And so we could say, Hey, you know what, we want to take a message out to. Women in a certain age group in a certain location with certain interests, no problem at all. Third party data was able to find that really specific group of people amongst the masses of data that are within Facebook.  So obviously that's great. Not the sort of thing you could effectively do with TV or radio or billboards or newspapers. Sure, you can find publications that liked a particular, attracted a particular demographic or, um, a particular interest, but it was, it was very, it was a blunt instrument, right? Whereas digital, allowed third party data to become just the fuel that fed our actions in our campaigns and and dictated where the money flowed.

James Lawrence: Yeah, that's it. And change is now afoot where Google, for instance, is we're recording this pod in February 2024. Um, last month it started to basically take cookies out of Google Chrome. Um, and it's basically saying that, you know, within a short period of time, Chrome will be cookie less. So therefore, This will massively impact the ability for us as marketers to tap into data, which we once were able to kind of richly get, get our hands on.

David Lawrence: Yeah, that's it. From day one, cookies have been the tool that the internet has used to track a user on a device as they move through different websites and take different actions. So, literally, the entire internet and the marketing that's been built up around it relies on it. So, it's pretty huge. Google. I'm making this change in a vacuum and obviously they're following on from things like GDPR in Europe. Um, some really powerful legislation that's been happening in Europe and in other territories as well, which is taking the privacy and the data of individuals really, really seriously and Google, like everyone else has no choice but to follow.

James Lawrence: That's it. It just feels like it's a, it has been a move by the, the platforms. To either self correct or it was going to be done for them. So they've kind of taken that, that leap themselves. And I think it's also worth noting that it doesn't mean that as marketers and as digital marketing practitioners, that we're not going to be able to target users based on a whole range of different traits and behaviors and different targeting capabilities, but just relying on cookies and relying on a lot of the granular segments that cookies have given us is [00:06:00] starting to kind of dissipate.

David Lawrence: Yeah, that's it. And I think, you know, the whole follow the money principle, but if you look at Google and you look at Meta and you look at dozens of other platforms around the world, they make their money off advertising. So there's some extraordinarily smart people in all those organizations, spending an awful lot of time and money trying to figure out how How they can still make advertising profitable for the advertiser as well as for themselves. So yeah, the easy path is being taken from all of us, um, but there will be other paths. There's paths that are already appearing now that look promising. And there's paths that we can't even dream up yet that will come up to allow marketers to be targeted with, with where they're spending their money. Yeah. It's just not going to be like it has been in the past.

James Lawrence: That's it. That's a nice segue into why first party data and how first party data like what, what are we recommending to our clients? What are we seeing ourselves in terms of first party data and kind of the why of it?

David Lawrence: Yeah. I mean, I love this topic and not because of the legislation side of the privacy staff or the technical nerdy stuff around cookies and consent and all the rest of it. I love the topic because it's such a good example of how marketing keeps on forgetting some of the basics. Like, I think as digital marketers, we were all allowed to be quite lazy with the way we could get great results, um, through all this aggregated third party data. But good marketing. Has for many companies always meant getting as close to your customers as is possible. And so often that's meant having access to really good quality data about them and maintaining that data and treating it like a pride, like the prized asset price, bit of IP that it is in your company. So the question of why first party data. Let's forget all these privacy staff or the consent staff or all the cookie stuff. Let's just say if your consumer, um, that you're targeting, isn't going to come to you to buy one product, one off never to return, then there's a strong business case. And there has always been a strong business case for knowing. Who they are, why they behave the way they behave the different bits of information you might want to know so you can personalize how you deal with them so you can segment them properly. So yeah, the wife of first party data is the same as it's always been, which is it allows you to make great decisions as a marketer and send out the right message to the right person at the right time in the right place. It's just that it's become a little bit more important now, or even a lot more important. Um, Because of the fact that third party data is simply no longer going to be as good as it has been.

James Lawrence: I think that's a good point and there's been this trend over the last 10 years where the platforms have gradually kind of, they've kind of eroded, particularly I think smaller businesses, they've eroded businesses ability to control and own assets where You look at the social platforms where at the very beginning, you know, it used to be kind of you have a 100 followers, you pump a post out on Facebook and 20 of those people would see it very quickly. We got to a point where, you know, less than 1 would see it and you had to basically pay to be in there. We've seen the steps that TikTok, Instagram, Facebook have taken to keep users in platform. They just don't allow you to kind of get out back into company websites. The rise of zero click searches in Google where Google has, you know, scraped information and serves up those results before users can actually go to someone's website and over time, it's been very, very difficult for people Businesses to have control because that these kind of behemoths have come in and that's not going anywhere different when we look at, you know, large language models and and the rise of platforms like Tik Tok.

James Lawrence: But this is a way where you can have control and I think we saw it so obviously. During COVID when clients would often a lot of clients cut media budgets initially, but there were those that had invested in good organic search for a long period of time, but then those that had a huge database, right? A well maintained, well kept up to date database and, you know, email marketing is only one thing you can do with first party data. But. Time and time again, it is the most cost effective channel, digital marketing channel for basically all businesses. Um, and so if you've been relying on paid media or relying on platforms, whether organic or paid to kind of do your heavy lifting, I feel in a more macro sense, it also is a counterpoint to that and those trends aren't going anywhere, right? So I think first party data is a way for you to, And I maximize the value you get from every touch point, every prospective customer, every past customer, every existing customer. Um, and we say it, right? The clients that do the best at Rocket are the ones that, yeah, they might have a great search strategy, they might have a great social strategy, awesome website, but they also then have, you know, A belief and an investment in data and CRM and it's not just email and phone, it's segmenting on data points that allow for different emails or different SMSs or birthday messages or whatever the use case might be, maybe it's kind of, if you're not doing that. You kind of got one, one hand tied behind your back when you're fighting your competition in whatever segment that might be.

David Lawrence: Yeah. Oh, that's so true. And as you were going through the, through those points, I sort of felt it's the, it's the age old argument between strategy versus tactics. And, and I think so often people are playing around with tactics and confusing them for a strategy. So if you're putting everything into paid media, sure, you're going to have a strategy within paid media of how you're going to execute, but you're Paid media is the only thing you're doing as a marketing team that shows a lack of strategy as far as I'm concerned.

James Lawrence: Um,

David Lawrence: and, and yeah, when we do start as marketers putting together great strategies for how we're going to genuinely make a difference for the organizations we're working for, then that strategy typically requires you to get close to your customers more, more than more now than five years ago or 10 years ago, but probably no more now than 30 or 40 years ago when this kind of stuff would have been absolutely required.

James Lawrence: That's right. I had, um, Kat Warboys on the pod. The point that she was making around first party data was that, I think it's interesting. I think we've gone from this kind of batch and blast approach to things like email marketing, say from 2000 to 2010. And then it feels we've kind of gone on this segmentation route from 2010 to 2020 where You know, send lapsed customers or customers that have bought product X, this communication and send customers that have bought that, this different piece of communication. And she was kind of talking about how one of the big use cases for HubSpot is that whole integration of sales and marketing together in a platform and where it's going to be really, really powerful is in. I was going to say five years, probably less than that, but the big thing around AI and tech is going to be hyper personalization and the personalization piece to do it truly effectively will require awesome quality data and really, really high quality maintenance of your first party data, the idea being that right, you know, customers across the board, um, The expectation around marketing comms will go to such a high level that you, you know, if you're interested in digital marketing, you won't be just expecting some generic EDM from Rocket. You're going to be expecting something hyper personalized to where you're at in your particular journey, whether that might be a particular channel or a particular industry or whatever it might be. I look at. Businesses that have kind of gone, it's too hard. It's too hard to, to build out a, you know, a system within our organization that truly captures data or, you know, our sales team is just a bit lazy or they, they all like to do it their own way, or we've been running it this way forever, but you just won't, you won't exist in five years time in terms of having a successful marketing function. If your competitors are doing that and you're not.

David Lawrence: Yeah, it's true. It's an interesting angle that opens up as well because most marketing teams have less budget than they would like and often budgets get squeezed every year and we're expected to do more for it. Now the, the changes in consent and privacy and the pressures of AI, they really mean that mediocrity is easy to get to, but he's completely not a competitive advantage. So mediocre is no good. So if you do have a limited. Resources and you have to get closer to your customers and you have to have great data and you have to segment and personalize. And, um, you need great creative because AI is going to average creative worthless. Then again, it comes back to that strategy thing. What are you going to say no to? Because you shouldn't do five or 10 things. If doing five or 10 things means you're going to do them all pretty poorly. It's pretty poorly. It's not going to work. I've been forced into an arena of doing things better and better. So smart marketers are smart. literally going to have to figure out which of the channels that they can be good at are most important to their customers, which of the activities that they can be good at are most important to their customers. And, and again, it just keeps coming back, doesn't it? To, to great first party data and, and how can you make that decision about what's going to be the right way to communicate with someone if you don't know enough about who they are and what they're going to respond to.

James Lawrence: A hundred percent. Any recommendations you have on how marketers can get buy in on this topic. I think cause we've got a pretty diverse base of listeners to the pod. You've got some people operating in kind of one, one person marketing teams, sort of people in big marketing teams, complex organizations, hard to get things moving and data is something that I think sits, can sit across a whole bunch of different teams. Sometimes it'll be sitting in marketing, sometimes sales teams will have a kind of kind of ownership or kind of control over the narrative around data in a business. Other businesses will have it kind of on the customer side. And then you've kind of also then got tech teams, you know, sitting maybe more in IT. How do you get by in that collecting this information, you know, it might not pay dividends. And I think so many marketers are under pressure to, to win the month and win the quarter that the idea of taking a whole bunch of stakeholders on a journey to invest in the future can be quite difficult.

David Lawrence: I mean, a model that I like to use with people, and it's really simple. It's a really old model. It's the pyramid, the concept that, you know, depending on your industry, perhaps only 3 percent of your potential target market are ready to buy right now. So if you're relying on third party data and you're running ads that are targeting particular groups, they're only going to come across you when they're in that. 3 percent of the market ready to buy kind of situation. And we all know that that's the most bombarded part of journey, right? Like they're the people that are seeing the most ads. They're the ones that have got the most choice. They're probably speaking to lots of companies that can provide the service they're looking for, the good of service they're looking for. So with third party data becoming more challenging, it's going to be harder and more expensive to get to those 3%. And there'll be lots of average marketing teams throwing even more money into that part of the pyramid. If you want to convince stakeholders that you need to invest in first party data, Show them the other 97 percent and say, this is a long term play. If people only buy our product to our service, once every three years, then there's only going to be a certain percentage of that market. That's coming into the tip of the pyramid. We have to make sure that we are consistently. Filling up our database with more and more people that will one day be in that 3 percent so that we can talk to them on a regular basis. And before they even go out to market and start clicking on ads or finding stuff in social or whatever it is they use to complete their by journey. You want to be disruptive, get that message in front of them. So it's a little bit slower. It won't give you short term results. And most of them, some stakeholders can't tolerate that, but the long term plays there, the long term plays 100 percent there. And the best way to do it Really great, healthy first party data used in a really clever and considered way to speak to people regardless of where they are.

James Lawrence: That's it. And I think it's important to kind of communicate that it's not, we're talking about data, but it doesn't necessarily have to be used for just email marketing and SMS. Messaging, like it's, as we've seen our ability to do less in some of the platforms in terms of targeting, we've also seen the ability to do a lot more and huge amounts of work is now done in terms of custom, custom audiences, right? Where you're taking segments of our customers databases, feeding them into the platforms, having the platforms make a match. Google over the last kind of 7 to 10 years has basically gone from users had a. A pretty, um, anonymous relationship with Google for such a long period of time where you weren't logged in, you were kind of just doing your thing in search and maybe in Maps and in YouTube, but over time, they've kind of forced us to have a Google account for us to search and access YouTube and, you know, Use Google Maps and use Gmail and whatever else users are logged in users are logged in on Facebook. These platforms have an incredible ability to kind of match mobile numbers and phone numbers, but saying clients who have adopted that type of approach getting more and more segmented, I guess, in the way that they're using those cohorts, cohorts of data.

David Lawrence: Yeah, yeah, that's it.

James Lawrence: Yeah.

David Lawrence: The platform, like I was saying before, you know, these platforms make their money off data and advertising and, and they're going to continue to be really clever, but you have to stay logged into Google now for using it to log into third party sites. There's a million reasons why we stay logged into all these platforms. Um, even though I remember when the original privacy concerns [00:19:00] came out many, many years ago about what was happening when you stayed logged into Google and to Meta. And I think everyone was shocked and started logging out when they weren't actively on the platform. But I suspect that most people have relaxed that now because the convenience factories.

James Lawrence: Yeah, 100%. There's a good case study, I think, with Google, which is a website that some of you might know about. They've got a great website. A case study in partnership with HubSpot, I think it was published early last year. Embracing first party data, three success stories in partnership with HubSpot. That's a good one, just looking at how three different brands across different segments are kind of using first party data to kind of effectively market both within Google, but also direct. I think it's worth talking a little bit about how we at Rocket Use it ourselves. Cause I think we've gone on a journey there and a lot of what, when you were talking about that kind of pyramid, it's really changed the way that we've shaped our own marketing strategy as well.

David Lawrence: Yeah, it really has. And you go back long enough in the rocket journey. And we probably like a lot of other agencies were putting a lot of our [00:20:00] efforts and our marketing budgets into bottom of the funnel paid search. You know, we're happy to meet those 3 percent of people when they're ready to buy. Just a really competitive space. And it's an unreliable space to a certain extent as well. So not only is it hard to get what you want. From a marketing outcome, but when you're then having a sales conversation, it's also really challenging because that that customer has no loyalty to you. They've only ever heard of you a week ago, and they're going to be talking to other people as well. So, yeah, we've been changing our marketing over a long time and we love the leadership. This pod's a great example of it, but we love getting out there and trying to help people and share the things that we know and challenge people's understandings of what marketing is. Uh, in a, in a digital sense. So yeah, the backbone of that for us is first party data and we love it now. We have a really great database and if we have something to say on a webinar, we have something to say in a podcast. If we have something to say in a blog, we know we can go straight to our database and promote it and we can segment it and we can personalize it. And it's, it's been fantastic for marketing in general, but it's also great. I know, I know when the team go out to speak to. Companies who are thinking of working with us, it's just a transformative experience because they feel like they already know it. So, so this whole first party data thing, people really shouldn't think about it as a begrudging thing you do because Google and Meta are changing the rules. It really is an opportunity to think much more deeply about your marketing, what it's trying to achieve, who your customer is and what you need to know about them in order to have the relationship that's valuable for them, which then becomes valuable for you.

James Lawrence: It's so true. Like, I think you have to do it because of the practical, tactical situation that we find ourselves in, but you're bang on right, which is it all ties back into good old fashioned marketing and the long and the short of OpenAI and fields, which looks at, uh, Long term marketing activities versus kind of short term more kind of burst paid activities designed to kind of get a short term outcome The most businesses have the the balance wrong, right? Which is generally you kind of you know 70 or 80 percent should be long term and the rest should be [00:22:00] short term and and we have found that which is People don't change digital agencies every month. You know, you might be in it for 12 months, you might be in it for two years, three years, four years with, with an incumbent. And we are meeting marketers, not when they're at that pointy end, but just talking to them, you know, when they're just going about their business, but inevitably, and we probably are in that 3%, you know, market where most people are pretty happy with the current status quo. But when they do come into market, everything you learn about the long and the short of it's true, which is you have a much better chance of closing. An opportunity, if you've been influencing someone prior to them coming into market, the trust is there, the credibility is there, and kind of, they've almost self, self identified that they want to work with you. And for us, yeah, it is, we've got more and more sophisticated over, we use HubSpot, but it doesn't mean that, you know, you have to use HubSpot, but more and more sophisticated with segmenting and personalization and, yeah, taking segments of, you know, People we might have spoken to that we might have put a proposal forward to at some point being able to show them certain communications or showing them an ad on YouTube or LinkedIn, whatever it might be, but I'd hate to think if we hadn't have kind of gone down that path, you know, 2, 3, 4 years ago, how hard it would be now to be winning that kind of. Bottom of the funnel search type space.

David Lawrence: Yeah, that's it. It's always really hard to know how things are going to end up, but, but certainly speaking for our own marketing, you know, we assume that remarketing is going to become a bit more expensive and a little bit less effective because of privacy changes, we assume that some of our kind of top of the funnel awareness campaigns can become a little bit more expensive and a little bit less targeted. Maybe not expensive in terms of. Each impression, but more expensive overall to find the right person. But you're right. If we relied on the effectiveness of those third party data driven campaigns, if that was the only thing we did, we would be very, very nervous, but because the primary driver of marketing success for us is already first party data and these other channels just supplement it and feed it [00:24:00] to a certain extent, it's, um, I guess it's an annoyance more than a massive concern. And like I said before, you know, If you have customers who have, you hope have more than one interaction with you and need to actually think about a purchase, then you're going to get a return on investment from doing first party data well, and the more complex the buy journey is, the more complex the relationship becomes. Is the harder people have to think before they make a decision. And it doesn't matter whether it's B2B or B2C. It doesn't matter whether the aim of your marketing is to generate a lead or trigger a sale on your website. None of those things matter. The benefits of still knowing your customer and being able to talk with them in a personalized segment way directly and extract data from them and store that and use that for insights and actions. It just is so powerful.

James Lawrence: Yeah, it's not, it's not going anywhere. So I think in terms of practical takeaways, like. Obviously looking at your own business, right? Like how is data being stored? Are we taking it seriously? Is it kept up to date? Are we then actually using it effectively as we did with clients? With GA4, like we're kind of on that, you know, well and truly 12 months before the change took effect, we're moving all of our clients across, you know, have already done or are doing so Google consent rules need to be done by March. I think it is. Is that

David Lawrence: right? Yeah, and that's a, that's a really important one. So if you have any customers in the EU and I think maybe in the States, EU. If you haven't implemented the Google consent controls, your right to use GA4 and Google ads can be taken away from you. So it's, it's pretty powerful stuff. There's also a couple of other integrations that are really important, both for Meta and Google that allow you to access more data, I guess, um, and some more powerful marketing options. Even in a cookie less, consent driven world. So if you don't do those things, things will continue working for you, but you won't be getting access to some of the cool data you can still get access to. Yeah,

James Lawrence: and that's like all these things, I think you can hang on looking back, but the reality is that your competition won't, and you're never going to have more power than the platform. So just do it and do it quickly and move on. I guess any, any other talking points, uh, around first party data? The who, the why, the what.

David Lawrence: Look, for me it always comes down to the business case. Understanding the value that the thing you're marketing actually delivers to people. And then understanding who those people are, where they hang out, what they value. And just, you know, you should never jump into this saying, we're going to do first party data and it's going to be huge. It should be, you know, We're going to explore what's most powerful for our marketing in the current environment. And we're going to understand what the options are. So if you don't understand what first party data is, I hope you understand it more after this chat. But if someone didn't understand it. It'd be problematic and damning for us if, uh, if you've listened to it and don't. It would be very problematic. Got to understand it. And then you got to work out where it fits in for you. But I guess all I'm saying is I would be very surprised if the majority of people listening to this. Didn't have significant value that was being left on the table in, in the area of first party data and all the marketing options that you get as a result. It's a, it's a, it's an asset your marketing [00:27:00] team and your business as a whole can own as opposed to things you simply rent when you're doing targeting options through third party platforms.

James Lawrence: That's it, isn't it? It's kind of the crux of it. Good point. As, as listeners know, we always finish the pod with what's your best piece of advice for an in house marketer. A bit more difficult given, you know, you're, you're a, uh, repeat guest on the pod and you've already given that answer. So it looks like Hayley's changed the question. Which AFL team is going to No, it doesn't say that. Uh, what's your one piece of marketing

David Lawrence: advice going into the new year? Oh, yeah, that's a good soft one. The good thing with this is though, as a repeat offender, I can't remember how I answered the original question previously. So I would have happily just answered it again, probably the same way. And I suspect that my bit of marketing advice is going to be maybe the same as my overall advice that I gave in the past, which is make sure you genuinely understand what the business metric is that the marketing team can influence. And understand the differences between the really important metrics that we all look at as marketers that matter to us. We care about impressions and [00:28:00] clicks and views and time on site. Those things matter, but none of those ever are an actual business metric that the business will genuinely care about. So businesses care about revenue and profit. And retention and new customers and average sale values and all that kind of stuff. So find out for your business, what's the one you can genuinely influence. And then whether it's long-term planning or day-to-day work, think about, whether are you about to do something that might positively influence a marketing metric. But do nothing to the business metric, in which case it's time to rethink it. So why bother improving your conversion rate? If the people you're converting are never going to be good fit customers, they're not going to influence the revenue line. So you would rather have a lower conversion rate. If the people you brought in more high quality, um, as an extreme example, but that's kind of my advice. Just go back to the business metrics, and understand how you can influence them.

James Lawrence: It's a great one. And I think That is something that whether by design or not, the best senior marketers that we deal with that have kind of smashed [00:29:00] their careers, uh, in charge of big teams and big budgets and big salaries, they're the ones that do that, right? They have a seat and that then means you get a seat at the table, right? You end up getting promoted and having business conversations rather than kind of being dictated to and given budgets that you don't think are realistic or can achieve what needs to be achieved.

David Lawrence: Yeah, that's it. I mean, in a well-functioning world, it's the only way to have a seat at the table. Like marketing is a business function. It's there to change the future, um, when it comes to revenue and outcomes. So yeah, if you don't get that connection, you're going to struggle.

James Lawrence: Love it. David, always great to have you on the pod. Look forward to the next one. Great fun. Loved it too. Thanks for listening to the Smarter Marketer Podcast.