Facebook crisis shows value of first-party data
This is a pivotal moment in digital marketing, one that underlies the value of reliable data in targeting.
The Cambridge Analytica story involving Facebook was the canary in the coal mine. It could have happened to any social platform which offers third-party data targeting. As Facebook discontinues its partnerships with third-party data providers, it is signaling a shift in online data practices that will likely prompt competitors to take similar actions.
That’s because the root problem cuts across the digital universe: Most digital companies work with third-party data brokers, which are not required to disclose how they collect and share data. That not only threatens consumer privacy, as in this recent example, but it also raises questions about how reliable that data is for use in marketing.
SmartBrief raised this issue in a report last fall. “Marketers are often targeting audiences with precise parameters that are unable to reach their ideal buyers because the underlying data itself is not accurate,” it notes.
It is significant that a major player like Facebook is distancing itself from this practice. Facebook has announced plans to discontinue its Partner Categories program. For years, that program let advertisers target Facebook users with information gathered from third-party data sources.
The feature seemed to improve Facebook’s targeting capabilities initially. Marketers could target Facebook users based on data that goes beyond what the social platform is able to collect itself. Household income, browsing history, and location are valuable categories for an advertiser who is trying to reach a specific audience, but not if the data backing them is unreliable.
Facebook advertisers will lose 50% of the targeting categories currently available through the site when Partner Categories is phased out in October. But the move will also make the remaining options more valuable. Marketers can rest assured knowing that those draw from Facebook’s own data sets and those of its Custom Audience partners, including SmartBrief, that relies on first-party data (Our data comes directly from our newsletter subscribers who choose to disclose it.)
The shift is coming just in time. The European Union’s General Data Protection Regulation is about to go into effect, limiting how consumer data is collected and shared in that region. All social platforms and digital players are changing their practices to ensure they comply with those new rules, not just Facebook. And Facebook CEO Mark Zuckerberg’s first-ever testimony before a Congressional committee this month also signals a mounting interest among American lawmakers to consider regulating this space.
As they do so, first-party data is becoming an even more critical to marketers that seek to reach their audiences online. Many industry watchers are advising marketers to “put your first-party data first,” and know that, soon, “targeting may become less precise for brands lacking robust first-party data.”
Brands may need to adjust, but the change will make “audience targeting more specific and appropriate, not less,” Scott McNealy writes. He highlights Air New Zealand as one brand that uses first-party data customers have knowingly provided to personalize user experience while also upholding privacy.
Successful brands have long known that first-party data is the most reliable. It may soon also be the most accessible, if this trend away from third-party data sources continues.
Download the report from the fall to read more about data quality and its value in digital marketing.
Ambreen Ali is a freelance writer and former editor for SmartBrief.