Marketers are always examining their data acquisition channels, looking for ways they could improve. More information means better insights, and better insights support better marketing strategy.
A variety of data is used in service of your business goals. Third-party market data serves as information available to the wider industry: brands may be getting the same data as their competitors, but they can combine this information with their first-party insights to improve the context of their own data while building a more comprehensive view of their customers and their strategy. Like third-party data, second-party can add depth to your precious first-party market data.
In a meeting about how to improve marketing data, both in terms of quality and quantity, you’re likely to hear suggestions like, “Why don’t we send out a survey at point of purchase?” or, “Let’s offer incentive for feedback on our website.” These are great ideas, and of course, you want to afford your customers every possible opportunity to provide you data, but first-party data can only tell you so much about your audience. Second-party data (essentially first-party data form another company) helps to fill in a more complete portrait of your customer. But, for years, marketers have failed to properly understand its role.
On the digital landscape, though, second-party data has been gaining steam and relevance, and brands are starting to realize the importance of filling this information gap. Here’s a look at how to make second-party data work for you.
Why You Need a Data Management Platform
You’re going to want to invest in a data management platform (DMP). This marketing technology is the most expensive option for gathering and processing second-party data, but it is that valuable.
Image attribution: Pavel Badrtdinov
Identifying Strategic Partnerships
You can always contact a business directly to inquire about a second-party partnership. Think about one with whom you could strike up a symbiotic relationship. For example, a movie theater and a nearby restaurant might both benefit from learning about each other’s customers.
If you don’t have a specific company in mind, and a great argument for working with that organization, brokers and marketplaces might be your best bet. Data marketplaces and brokers are becoming more prevalent for second-party sources, which is making these partnerships easier to arrange. According to MarTech Advisor, 33 percent of companies with a second-party data strategy lean on brokers and agencies to handle these partnerships. These organizations are skilled at finding strong matches between companies, and they know how to structure arrangements in a way that is beneficial to both sides.
Keep in mind that it isn’t just relationships that need to be managed around second-party data: it’s also the data itself, including security, data validation, and transparency issues. Arranging the partnership is only part of the task at hand. You also need the right support structures in place to make this relationship successful.
Image attribution: Giulio Magnifico
Navigating Privacy Concerns
Among the many new challenges and responsibilities brought on by the use of second-party data, perhaps nothing is so critical to a company’s success—and its reputation—as its ability to manage privacy concerns.
Data is sensitive, after all, and so are consumers. If your partnerships make use of gathering data on digital consumers, you need to offer them informed consent and, in some cases, the ability to opt-out of certain messaging. At the very least, consumers need to know that they are being tracked by an outside party. Failure to provide this transparency could be a massive PR problem for any company, no matter how established or reputable.
You need a data transparency policy in place to make sure such problems don’t arise in the course of gathering your data. Again, this is a subject area where brokers and experienced experts can play a critical role in helping your company steer clear of disaster, ensuring that necessary parameters are in place before the data exchange begins.
As companies make full use of first- and third-party data opportunities, second-party data has emerged as a key differentiating factor that can help brands rise above their rivals. If you need any more incentive to start building a second-party strategy of your own, remember this: if your competitors aren’t already working on this strategy, it’s only a matter of time.
Featured image attribution: Pixabay
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BiographyMore Content by Jonathan Crowl