Demystifying first party data

This blog post aims to demystify first party data and help businesses prepare for the end of third party cookies. This is the first blog in a three part series - the next two will address: implementing a first-party data strategy and a detailed view of the FT’s approach.

Firstly, it’s important to understand what first party data is. Simply put, first party data is the data that is unique to your business. It is data that you collect directly from your customers through their interactions with your website and touchpoints. First party data includes contact information (name, email address, telephone number etc), account information (purchases, subscriptions etc) and web activity on your sites (what people are reading / watching, the channels they are coming from etc).

First party data underpins the critical growth engines within media businesses (whether that is news publishing, video on demand or broadcasting):

1. Advertising - demographic data allows you to increase your advertising CPM.
2. Subscriptions - first party data allows you to do predictive modelling in relation to acquisition and churn.
3. Engagement & Product Development - first party data allows you to personalise the user experience and make valuable recommendations - in 2015 Netflix estimated “the combined effect of personalisation and recommendations save us more than $1bn a year”.

To evidence its importance - a study that FT Strategies carried out this year (in collaboration with industry partners and over 400 news organisations) found a relationship between profitability and developing first party data assets. The average percentage of logged-in users (a building block for first party data collection) for very profitable organisations was 11% compared to just 5% for loss making businesses.This is because these organisations have direct relationships with their audiences that they can leverage for their own commercial success. As you might have noticed, BBC News are now making (from the 28th July 2022) all of the users of their iOS app to login before being able to access articles as a way of developing their first party data assets.

The importance of first party data is growing because of changes in the ecosystem. The three main drivers are the following:

1. Browser changes - in light of increasing regulation, the major browsers (including Safari, Firefox and Chrome) have been limiting online tracking within their platforms. Although this started many years ago, it has escalated significantly since Chrome (a browser with 65% market share) announced that they would be phasing out third party cookies by the end of 2023. Limitations on third party tracking put the power back into the hands of media owners that build direct relationships with their audience.
2. Privacy regulation - GDPR raised the bar in terms of obtaining consent for the collection and use of personal data. This has reduced the amount of information that is distributed to the ecosystem (especially ad-tech vendors). This encourages marketers to go direct-to-source (i.e. the publisher, broadcaster or streaming platform) to access unique publisher audiences in a premium context.
3. Consumer behaviour - audiences are increasingly reluctant to give up their data and are apathetic when it comes to the plethora of consent notices on every website. Research from the Reuters Institute found that only 32% trust news websites to use personal data responsibly (compared to 33% for online retailers and 25% for social media platforms). As customers become more discerning, media businesses need to be thoughtful about their first party data strategies (such as exchanging value for data) and make the most out of the data that they are able to collect.

If you want to understand how first party data fits into your commercial strategy, we recommend taking these steps:

1. Set up a cross-departmental team (covering advertising, subscriptions, editorial product & technology, data)
2. Evaluate how the loss of third party cookies will affect each area of the business (e.g. targeting anonymous visitors with marketing or measuring ad campaigns). This should not only assess what is impacted, but also the estimated commercial value.
3. Understand how first party data could help to mitigate the impact - this should involve assessing how first party data is currently being used across the organisation - which data points, how they are used and estimated commercial value
4. Create a set of principles that will underpin your first party data strategy, for example:
   
   A) Data value exchange - we only collect first party data if it is mutually beneficial to both our customers and to the FT. It is also important to communicate the value that customers get from providing us with their data.
   
   B) Quality data collection - where data was integral to our business, we would focus on data quality. Specifically, that means collecting data in a structured, consistent manner - and providing mechanisms for keeping that data up to date.
   
   C) Valued data - we understand and measure the commercial benefit of first party data and communicate that across the business. Decision-making is made with data implications in mind (rather than just immediate commercial outcomes).
5. Design a first party data strategy with clear key performance indicators this will be a written, living document that is collaboratively put together by departments and endorsed by senior management. Key performance indicators could include the percentage of logged-in readers or growth in CPMs.

At the end of the day, it all comes down to executing your strategic vision. But first you need to be clear on what to do, how to do it and be familiar with learnings from the industry to speed up the process. I'll talk about all this, and more, in my next blog post of the series.

If you want to find out more, feel free to reach out directly via george.montagu@ft.com