6 Ways CMOs Can Harness Second-Party Data in a Marketing Strategy

Marketing Innovation

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6 Ways CMOs Can Harness Second-Party Data in a Marketing Strategy

Marketing Innovation

[Editor’s note: This article has been reposted with permission from AdWeek. View the original article here.]

Data is an influential and valuable asset for marketers, but responsible and ethical data stewardship is imperative for its success. GDPR has cast data practices even further into the spotlight, and many businesses continue to work around-the-clock to ensure and enforce data compliance and transparency.

There’s value in committing that time to data governance. When data is used and applied in a trusted, privacy-conscious and permission-based way, it has the power to drive meaningful connections and conversations between consumers and the businesses they support. In a digitally-noisy environment where it’s harder to capture consumers’ attention, companies must proactively seek out creative ways to get to know their customer better and, in turn, deliver enjoyable consumer experiences with significant consumer benefit.

Take second-party data, for instance. In the simplest of terms, second-party data is someone else’s first-party data. It has all the benefits of first-party data without having to collect it. For example, second-party data in practice may be a major department store chain pinpointing commonalities between their customer base and the customer base of, say, an airline company.

When a customer provides consent, the airline company will partner with the department store and grant them permission to then offer an elite reward status with certain purchases. Or the airline may also offer discounts to the department store as an added incentive to register prospective account members. In both instances, the consumer benefits from being a member of both companies that in return builds a competitive advantage by increasing customer acquisition and loyalty.

If we’re to advocate for the value of second-party data, an important distinction must be made. Second-party data is not the buying and selling of consumer data, which is a common misconception. There is no financial transaction, and neither company gets access to personally identifiable information (PII). When used with the proper safeguards in place, second-party data is an effective tool that improves the customer experience while also helping companies unlock incremental value and new revenue streams.

Audience planners, CMOs and other marketing executives who are interested in harnessing the power of second-party data in a privacy-conscious way can follow the below checklist to activate second-party data as part of a larger people-based marketing strategy.

Assess audience overlap
Compare CRM files to determine whether another company and specific audience segment provides strong overlap potential. This is the first step to determine how an overlap or underlap of common customers might benefit your partnerships. Sometimes finding out that there is little overlap between two companies’ first-party data can actually provide greater opportunity for new customer acquisition rather than additional customer retention use. Ensure you’re remaining privacy-conscious by tapping a trusted third-party partner to avoid exchanging PII data and sharing raw data files.

Glean audience insights
This can involve layering in segment data from a trusted brand partner or overlaying a third-party audience to a combined segment. By overlaying first-party audiences on top of third-party audience, marketers will have a snapshot of how that data looks across demographic data. In this instance, by not specifically combining data segments, but rather learning how a segment would perform, can provide valuable insight on future third-party data purchases in the future. Understanding customers from both brand participants in a second-party data campaign is a crucial element to obtain additional demographic insights.

Conduct audience planning
Second-party data sharing can be a crucial part of your co-op media planning by either suppressing overlapping audiences or modeling a campaign to only include overlapped audiences. Overlaying data from two different brands allows marketers to suppress segments or create lookalike models. Simply put, you’ll be able to more accurately predict and target customer behavior by leveraging two data sources, and as a result, will be better prepared to find customers that are similar to existing ones.

Apply audience segmentation
If you are a marketplace with numerous vendors or a vendor who sells on numerous marketplaces, you can create audience segments to target your products within one marketplace or across numerous ones. If brands want to suppress an overlapped audience, they can go even further to target and create a personalized ad experience based on de-identified attributes. For example, a makeup brand can change their campaign to effectively target a consumer who only shops across a single channel and suppress that same user from their ad spend across other marketplaces. This therefore eliminates overexposure for the consumer and allows brands and marketers to maximize their ad spend dollars by focusing on their unique shopping habits. Once a specialized audience segment is created, it can be distributed for use in targeting, personalization or measurement across various channels in a shopper’s journey.

Measure and attribute the marketplace
Attribute conversions on distribution sites or other point-of-sale locations to a brand’s digital marketing efforts. By sharing impression data with in-store transactions across two brand partners, both brands are able to measure the full customer journey.

Ingest and optimize
Apply campaign learnings for future activation to optimize performance and audiences, and then start the cycle again, leading to improved ROI and efficient marketing spend.

As customers continue to split their time and attention across devices, mediums and channels, brands and marketers will need to place a premium on people-based marketing techniques that adapt to the preferences of the omnichannel consumer in a privacy-conscious way. When sourced and activated in a secure way, with the proper controls, permissions and measures, second-party data holds the key to unlocking data silos and prioritizing the holistic customer experience.

For more ways to use second-party data and other people-based marketing ideas, download our IdeaBook: 300 Ways to do People-Based Marketing.