Change is the only constant in digital advertising, but one core principle remains key: reaching the right user at the right time with a relevant message. First-party data has become a fundamental element in delivering more personalised and effective ad campaigns, especially when it comes to reaching and nurturing existing customers. But why is it crucial for companies to store it in private data warehouses such as iPROM Private DMP? And how can this data be used to make digital advertising more effective?

Why is first-party data crucial for marketing?

First-party data is data that companies collect directly from their customers. This includes information that users voluntarily provide when browsing a company’s online property, signing up for newsletters, participating in surveys, making purchases and registering or engaging with digital advertising. This is data that the company collects in the context of its own interactions with its customers and is therefore more relevant, reliable and accurate than data obtained from third-party sources (third-party data).

By using first-party data, companies gain better insights into their customers and can tailor their advertising messages and targeting to address the right needs at the right time. This leads to more relevant, personalised advertising messages, ultimately boosting the effectiveness of advertising campaigns.

Collection and secure storage of first-party personal data

As first-party data is the new gold, it needs to be stored securely and protected from competition. Private data warehouses such as iPROM Private DMP are designed to do just that – securely storing this data about users of a company’s own properties and using it effectively for marketing and digital advertising. iPROM Private DMP ensures data is stored in compliance with data protection legislation like GDPR, while also allowing companies to easily access and analyse this data for more accurate user targeting.

Beyond security and compliance, private data warehouses offer companies better control over their data. With their own data, companies can foster long-lasting customer relationships and nurture their relationships with existing customers by providing content tailored to their specific needs and preferences.

Using first-party data for targeting and personalisation in digital advertising

Companies that collect first-party data can use it to target ads with more precision. This data can be analysed to create ad campaigns that are tailored to users’ interests and behaviour. Ad customisation based on first-party data makes ads more relevant, boosting the likelihood of a response.

iPROM’s research from October 2023 confirms this, showing that ad campaigns based on first-party data are on average 18% more effective than those relying solely on third-party data. This means that users with stronger purchase intent respond better to ads that are tailored to their personal experience, leading to higher click-through rates (CTR) and better conversions.

Comparison of response rates between first- and third-party targeting

Why is first-party information key in the bottom of the purchase funnel?

In digital advertising, the purchase funnel refers to the user’s journey from brand awareness to the purchase decision. At the bottom of this funnel, users are almost ready to buy or have a strong purchase intent, so it is crucial for companies to reach them with tailored messages that encourage action.

First-party data is particularly valuable at this stage, providing companies with valuable insights into the behaviour of potential customers. Based on this data, they can create highly accurate and relevant ads for each stage of the purchase path, increasing the chances of conversion.

Using advanced ad creatives in combination with first-party targeting

At iPROM, we also investigated how the different ad formats impact user response. Our research into the effectiveness of using different advanced formats revealed that responsiveness improves by 12 to 62 percent when targeting using first-party data, compared to targeting based on third-party data alone. This means that advanced ad formats are up to 62 percent more effective when targeting using first-party data to buy ad space using iPROM Private DMP and iPROM Programmatic Platform. Additionally, a comparison of mobile and desktop formats showed that, overall, responsiveness is higher for desktop formats, although first-party data strategies are positively affect all formats.

The fact that desktop formats yield better results can be attributed to the fact that users browse more extensively on desktops, leaving more digital footprints. This allows for better user profiling and more accurate targeting. As a result, companies can use advanced formats and data technology to achieve superior results, regardless of the device on which the ad is displayed.

Comparison of ad format response rates for first- and third-party targeting

Long-term benefits of using first-party data

First-party data not only improves the effectiveness of their advertising campaigns in the short term, but also delivers long-term benefits. By developing a deeper understanding of their customers, companies can build long-term relationships, leading to increased customer loyalty and repeat purchases.

In addition, the use of first-party data enables better measurement and tracking of advertising campaign effectiveness. Using independent analytics solutions (such as Piwik PRO, iPROM Private DMP, Adobe, etc.), companies can track exactly how users react to ads and adjust their strategies accordingly. This means that ad campaigns can be increasingly optimised, resulting in higher conversion rates and better return on advertising investment (ROMI).

In a world where user experience is becoming increasingly important, the use of first-party data is a step in the right direction for companies looking to improve their efficiency and effectiveness in digital advertising. As a result, first-party data has emerged as an increasingly important success factor in today’s digital advertising. Technology solutions like iPROM Private DMP make it possible to manage this data securely and efficiently. Their use allows businesses to target customers more precisely, deliver more personalised ads and get better results, particularly at the bottom of the purchase funnel. I’ll discuss the role that combining first-party and third-party data plays in effectively reaching customers at the top of the funnel in my next blog post.