Embracing first-party data to enhance advertising efficiency
This article was based on the interview with Mitsunaga (Mitsu) Kikuchi, CEO of Shirofune and Rocco Baldasarre, Head of Business Development for Shirofune in the USA by Greg Kihlström, Marketing Measurement keynote speaker for The Agile Brand with Greg Kihlström podcast. Listen to the original episode here:
The conversation surrounding data privacy and advertising efficacy has reached a pivotal moment. With the impending phase-out of third-party cookies, advertisers are compelled to rethink their strategies and embrace first-party data as a cornerstone of their marketing efforts. This shift not only addresses privacy concerns but also enhances the efficiency of advertising campaigns, ultimately leading to better outcomes for brands and consumers alike.
First-party data, which is information collected directly from a brand’s customers, has been a valuable asset for years. However, its adoption has been inconsistent across the industry. Many advertisers have historically relied on third-party cookies, which offer limited insights and are increasingly seen as unreliable in a world that prioritizes consumer privacy. As highlighted in the podcast discussion, first-party data enables advertisers to create targeted audiences, track user behavior more effectively, and ultimately drive better performance in their campaigns. This is not merely a shift in data usage; it represents a fundamental change in how advertisers can operate more efficiently.
The benefits of first-party data are manifold. For one, it allows brands to foster deeper relationships with their customers. By understanding customer preferences and behaviors, brands can tailor their messaging and offerings to meet the specific needs of their audience. This personalized approach not only enhances customer experience but also drives loyalty and repeat business. In contrast, third-party data often lacks the specificity required for effective targeting, leading to wasted ad spend and missed opportunities.
Moreover, the podcast emphasizes that first-party data has consistently outperformed third-party data in terms of effectiveness. This raises an important question: why have advertisers not fully embraced first-party data sooner? The answer lies in a combination of complacency and a lack of understanding of the long-term benefits. As the digital landscape evolves, however, the urgency to adopt first-party data has never been greater. Advertisers must equip themselves with the tools and knowledge necessary to leverage this data effectively, ensuring they remain competitive in a market that increasingly values transparency and consumer trust.
The integration of artificial intelligence (AI) into data analysis further amplifies the advantages of first-party data. As noted in the podcast, AI can process vast amounts of data quickly and accurately, providing marketers with actionable insights that were previously difficult to obtain. This capability allows brands to ask critical questions about their data and receive instant feedback, enabling them to make informed decisions that enhance their marketing strategies. However, it is crucial to recognize that while AI can enhance data analysis, the human element remains irreplaceable. The podcast’s emphasis on “human technology” underscores the importance of combining AI’s capabilities with human intelligence to drive performance. This approach ensures that automated processes mirror the careful consideration and strategic thinking that a human would apply when analyzing data.
To navigate the complexities of consumer behavior and drive lasting success, marketers must adopt a mindset centered around lifetime return on ad spend (ROAS). While short-term metrics like cost per acquisition (CPA) and immediate ROAS have their place in evaluating advertising effectiveness, they should not overshadow the importance of understanding long-term customer value. By focusing on lifetime ROAS, brands can create sustainable growth strategies that prioritize customer relationships and foster loyalty. This shift not only benefits the bottom line but also cultivates a more resilient and agile brand capable of thriving in the future.
Embracing first-party data is not merely a tactical shift; it is a strategic imperative for advertisers seeking efficiency and effectiveness in their campaigns. As the digital advertising landscape continues to evolve, the question is not why a brand should focus on first-party data and lifetime customer value, but rather why it would choose to do anything else. By prioritizing these elements, brands can navigate the complexities of modern marketing and build enduring relationships with their customers, ultimately driving long-term success.
