Not all data is created equal. Here's where third-party data is doing you wrong, and what you can do about it.
“A baby stroller?” you cringe in your head. You were just scrolling through Facebook on the subway home from work, when you notice the ad in your feed of a happy mother pushing two kids in the featured stroller. You have no kids, and definitely have never looked up information about strollers online. Putting this ad in front of you is completely useless. “Why am I seeing this ad?” you think.
Rewind about nine months: Christmas time. You were doing a lot of online shopping for gifts. You bought Mom a sweater, Dad that contraption for his car, and… that’s right. You bought your nieces and nephews all the light-up, song-playing, plastic toys that their little minds could fathom. So now someone, somewhere has decided that means you have kids and need a baby stroller? That’s creepy and, simply, incorrect. Isn’t there a better way to do this?
The scenario above has happened to everyone countless times—third-party data strikes again.
Third-party data is information that is inferred from a user’s online behaviors. For instance, User X bought children’s toys online, leading to the assumption that User X has children. This would be all fine and good if people realized that third party data is inaccurate data, however, advertisers spend millions of dollars purchasing these assumed “facts” about online users, and then use that inferred information to drive their marketing segmentation. This ad stalking is sloppy, wasteful, and let’s be real, pretty creepy.
Not only does third party data cost companies money to purchase in addition to the money lost in the inaccurately targeted ads, but it cascades out in ripples, impacting other companies when a skewed picture of User X takes shape based on nothing but assumptions. Assumptions are rarely welcomed – imagine if you assumed you knew what your friend was going to say before they said it? Even if you were completely accurate in your assumption, they’d be pretty irritated. Third party data costs the US economy more than $3 trillion every year. Like we said before… isn’t there a better way to do this?
First party data is a step in the right direction. First party data is information gathered by your own company about your users. This data can be demographic and deterministic data, such as consumers’ addresses, ages, and phone numbers; it can be their purchasing habits on your site; it can be any data that you have stored in your CRM. This type of data is much cheaper than third party data, because it’s data that your company is collecting yourself.
First party data can go a long way when you want to contact someone, or make assumptions that are more informed, such as the assumption that because User X has purchased kids’ toys in the past, she therefore has kids and needs a stroller. This is still incorrect, but is at least more informed than third party data.
So what’s the real answer here? Wouldn’t the obvious answer be to just ask the user directly why they bought a certain product? To sit down and have a conversation?
There’s a way to do this online.
It’s called declared data.
Declared data is any information that the consumer shares about their own motivations, intents, and preferences. Because it is coming straight from the user, it is the most valuable type of data.
Building a relationship with User X allows you to ask her questions directly, say, “Why did you buy this light-up kids toy?” and when she responds that it was for her nephew, you can maintain a good relationship with User X by remarketing to her only around the holidays, and not trying to sell her other baby-related items. You can offer her personalized recommendations based on her intents, motivations, and preferences that she shared with you, thus strengthening your consumer-brand relationship and her lifetime value.
It’s not creepy; it’s not inferred or assumed; it’s not wasting money. It is high quality data that the consumer is sharing with your brand directly.
Instead of buying third party data and basing your marketing strategy on a set of assumptions, think of it as the opportunity to have a conversation. You’ll be surprised who answers when you just ask.