How second-party partnerships will change the game for marketing strategies
Data has become central to all issues in marketing. It is a wide and complex subject, which still raises many questions for advertisers – even more so when we consider second-party datasecond-party dataSecond-party data is defined as first-party data owned by an advertiser or a publisher that is willingly shared with another advertiser or publisher. They stem from direct partnerships between advertisers, between publishers, or between an advertiser and a publisher.Learn more.
As a reminder, second-party data is defined as first-party datafirst-party dataFirst-party data refers to data gathered and owned by a company. Each company manages its own first-party data and uses it to improve customer knowledge. Learn more owned by another brand and willingly shared with a partner. It can take exactly the same form as first-party data, namely: audience data gathered on a brand’s site or app or during media campaigns, a client or a prospect base, social media audience data, etc.
Advertisers have extensively tested the use of their own data, though it is often limited in volume, via media or CRMCRMCRM (Customer Relationship Management) refers to the methods, services and tools implemented to maintain and improve the quality of a brand's relationship with its customers.Learn more campaigns, and seen a heightened return on investmentreturn on investmentThe Return On Investment (ROI) is a performance indicator measuring the efficiency and profitability of a project. It compares the costs of the project to its commercial benefits (generated turnover, generally). Learn more. As for the use of third-party datathird-party dataUnlike first and second-party data, third-party data is gathered by third-party specialists (retargeters, DMPs...). They provide this type of data to advertisers and publishers, to help them sharpen their targeting and increase their audience base. Learn more, it shows limitations as performances does not always meet expectations. What’s more, though considerable volumes are available, the price of third-party data can give pause depending on the type of data purchased. Marketing strategies that use second-party data, however, offer new perspectives and potentially important levers for growth for brands in the years to come.
Many brands base their marketing strategies on life milestones, such as births, moves, or career developments. It is thus fundamental for brands to identify the signals that these intentions reflect, in order to adapt marketing actions accordingly. In a move, for example, different players involved need data to optimise their marketing actions, depending on the stage of the move:
- Before purchase: real estate developers, property comparators, banks, etc.
- During the move: insurers, energy providers, telephone operators, furniture or DIY retailers, etc.
Advertisers in these sectors could thus pool their data to operate more efficiently.
Strategies based on the use of second-party data present interesting advantages on multiple levels:
- Relevance. Brands can complement each other when it comes to reaching the same targets or providing related products.
- Volume. The list of eligible partners for a brand has no limits, and tests and results will determine whether or not objectives are reached.
- Quality. In general, available data from each partner is more precise, detailed, and controlled than third-party data, since it is collected under less opaque conditions.
- Strategy. Partnerships established between brands can be exclusive; access to data would be restricted to a single brand and not open to all brands in a sector, nor to all advertisers interested in a type of data.
This type of partnership where brands share data with specific partners for marketing purposes is still in its early stages on the French market, and are still makeshift rather than fully-mastered end-to-end established processes. This raises several points for consideration:
- How should second-party data deals be framed? These exchanges must respond to very specific marketing issues, clearly stated and translated into use cases with measurable performance.
- How can the list of potential partners be identified? The brands that could respond to the defined issues should be selected by prioritising in terms of business impact and their strategic, operational, and commercial feasibility. These brands could come from different sectors, with various sizes and differing notoriety.
- What collaborative framework and business model should be adopted? Certain brands are primarily interested in monetising their data. Others, on the other hand, prohibit this practice due to either internal policy issues or the sensitivity of gathered information, and are more interested in purchasing data from partner brands. Some advertisers take a different approach: they agree to exchange data without financial compensation. The first initiatives in data sharing between brands have primarily been for learning purposes and for evaluating the added value of these exchanges. For these reasons, brands have not yet established fixed prices for data commercialisation.
- What scope should the project have and what terms and conditions should apply to second-party data use? The brand should clearly outline the selection of relevant data types for each partner (site audience, CRM files, social audiences, etc.), as well as the relevant length of time and exploitation methods (marketing campaigns, cross-brand analyses, profiling, etc.)
- How can these complex mechanisms be put in place while following the law and respecting user rights? The use of data for a brand is subject to clearly outlined regulations, dictated by the European Commission: users must be informed of the purpose of the collection and activation of their data. Exchanging data between advertisers often requires updating the data use policy of each brand, and an opt-inopt-inOpt-in and opt-out refer to the way a user's consent is collected, regarding the use of his data (for instance when signing up for a game or a newsletter).Learn more from clients.
- What technical solutions exist to facilitate these exchanges? Several options are possible for data sharing between brands, the simplest being to capitalise on what already exists: DMPDMPDMPs (Data Management Platforms) are platforms that centralise and aggregate all data related to a brand's campaigns and customers.Learn more, DSPDSPA DSP (Demand Side Platform) is a platform that allows advertisers and agencies to automatically manage their media-buy on multiple ad exchanges through a unique platform; it is mainly used to buy display advertising space through RTB (Real Time Bidding).
Learn more, Adserver, CRM solution in place. If existing tools do not allow for data sharing, complementary solutions should be rolled out to facilitate the sharing of data flows.
- What content should be proposed? For a brand, addressing clients is completely natural, but addressing clients or prospects of partners is much less so. Thus messages must be adapted for these audiences to treat them in a relevant and complementary manner.
Chances are good that these initiatives will be multiplied in the months and years to come, and that maturity on the subject will evolve. Technical platforms (DMP, DSP, Analytics) are ready, in a way, to manage these issues, but will do it primarily from a technical perspective (cookiecookieA cookie is a text file that is stored in the memory of a web browser by a web server when a user visits a website (it can also be stored by a third-party server allowed to do so: ad network, web analytics service...). It particularly allows to gather and store data about users’ browsing behaviour, in order to reuse it during their next visits (user' log ins, for instance).Learn more sharing, exchange between servers, connectors). With maturity will come new sophistication, as well as technical “wiring” financial management tools to calculate and display the ROI, analytical tools that can calculate brand synergy, etc.
In the meantime, we can imagine seeing the quick set-up of a parallel market between advertisers around data, platforms, partners dedicated to treating these problems, or even marketplaces where brands’ data can be bought or exchanged – anonymously or not – to contribute to and enhance marketing campaigns. We can also imagine that performance will lead to offsetting media budgets for the purchase of more qualified data. The American market is a few years ahead in this field and these movements are clearly already happening, and so other countries should quickly join in and adopt these strategies.