This blog explores how four organisations are implementing first party data strategies to grow their digital direct-to-consumer businesses. We hope it will provide you with some inspiration and help you gain value from companies in adjacent markets.
This is the second blog in a three part series: the first was aimed at demystifying first party data and helping businesses prepare for the end of third party booking, and the final blog will talk about the FT’s approach.
1. New York Times: deanonymising and engaging non-subscribers
In their recent Investor Day Presentation, the New York Times announced that they have over 135 million registrations and growing – an exceptional number when compared to other news organisations. Since 2016, this represents a four-fold increase in US registrations and an eight-fold increase in international registrations. The Times states that their first party data strategy was one of two “key drivers” that grew digital advertising revenue by $100m in the last 5 years and has also led to significant growth in its digital subscription business (registered users convert at rates 40x higher than anonymous users).
The primary tactic driving registrations has been the creation of a registration wall (users are asked for their email address in exchange for access to a set volume of content for free) and their free newsletter strategy. The Times now has about 50 newsletters (many of which are free), which are read by 15 million people each week. Newsletters have proven an extremely important first-party data tactic for publishers as they not only deanonymise audiences, but also provide a mechanism to grow engagement and repeat visits to the website.
Alongside growing their advertising and digital subscription business, the Times is also using first party data to encourage cross-pollination across their products - whether that is news, games, cooking, The Athletic or Wirecutter. This helps to reduce churn rates (Bundle subscribers churn at rates approximately 40% lower than News-only subscribers) and also improve average revenue per user. This promises to be a high growth area in the coming years.
The key takeaways from the New York Times’s success are:
- First party data is often integral to multiple areas of the business and can support multiple, synergistic revenue streams.
- Newsletters and registration walls are popular within news publishing as a means of collecting data and driving engagement.
- First party data can enable cross-selling across the organisation and growing customer average revenue per user.
2. Kia: collecting first party data to develop customer centricity
Kia, together with its sister brand Hyundai, have grown to become the fifth-largest automotive company in the world. Historically, Kia has considered car dealers as their primary customers, given that they do not sell directly to individual customers. However, in recent years it has placed greater emphasis on its first party data strategy to become a more customer centric organisation.
Kia has adopted a two pronged approach to collecting first party data assets:
- Partnering with regional car dealers to build standardised web templates that provide customers with a consistent experience and a way of uniformly collecting data on potential buyers.
- Building first party data collection into its existing channels and website. This includes: requesting data in exchange for information updates on new cars, downloading car brochures and “building your own Kia”.
This approach has provided Kia with greater insights on potential buyers and sales leads that can be nurtured through targeted marketing campaigns. By connecting these first party data assets, Kia was able to use CRM data for their paid media marketing campaigns using “Customer Matching”. This ultimately drove “a 4x better conversion rate, a 268% increase in click-through rate, and 55% new-user engagement compared with benchmarks” (Source).
The key takeaways from Kia’s success are:
- Collecting first party data can be a great first step for businesses trying to grow their direct to consumer offerings and gaining a deeper understanding of their end customers.
- First party data can be used within marketing campaigns to help reach target audiences. This leads to increased conversion rate, click through and new-user engagement.
3. Tesco Clubcard Scheme: deepening existing loyalty programmes to grow first party data
Tesco, the UK’s largest supermarket, can attribute a lot of its success to their Clubcard - first launched in February 1995. Tesco now boasts that their clubcard is used by 20 million households in the UK and has nearly 7 million regular users of its mobile app. As quoted within their 2021 interim report - “(our first party data assets) provide us with unique insights and allow us to respond quickly and effectively to changes in consumer behaviour. When this is brought together with our unrivalled physical network, it gives us a competitive advantage that is hard to replicate.”
Tesco has grown its first party data assets by further incentivising Clubcard registration. Whilst Tesco has always offered promotions for Clubcard holders, the company took the critical step in May 2019 to offer these customers lower prices at in-store checkout. As reported by The Grocer: “With shoppers needing to use Clubcard to access many of its promotions, penetration in large stores has increased from 67% to 80%, and across all stores it has gone from 57% to 70%.”
Tesco’s first party data is also opening up additional B2B revenue streams, with plans in place to provide suppliers with the opportunity to market their products in more targeted ways.
The key takeaways from Tesco’s success are:
- Loyalty schemes are a great way of building first party data assets and increasing the average consumer spend.
- These schemes should be regularly updated to deepen the value to existing registrants and grow uptake.
- First party data can allow businesses to personalise offers which can encourage additional spending.
4. FT Live: leveraging events to grow first party data assets
When the pandemic struck in 2019, FT Live (the media events arm of the FT) was forced to rethink its strategy as the world went into lockdown. Realising that there was an opportunity for digital events, FT Live launched “The Global Boardroom”, a three-day event that was free to attend (in exchange for registration) that achieved over 50,000 sign-ups. Whilst this was a commercial necessity for the team, it also highlighted the value of events as a means of deanonymising audiences and growing first party data assets.
As Journalism.co.uk reported: “Fast forward to September 2020 and FT Live had put on 200 digital events with a combined reach of 250k delegates. That is a tenfold increase from the 25k that physical events used to fetch annually.” This data has proved invaluable to FT Live by: helping to drive conversion for paid events, demonstrating value to event sponsors and deepening understanding of their audience. At the same time, many of these delegates represented a subscription opportunity for the Financial Times (of those 250k delegates, only a quarter were subscribers), providing essential warm leads to B2C and B2B marketing teams.
The key takeaways from the FT Live’s success are:
- Events are a great way to collect first party data whilst providing a positive customer experience (as opposed to blocking access to content or promotions).
- Digital events allow for greater scale than physical events given the lower variable costs and fewer limitations on capacity.
Wrap-up
There are various ways of executing the perfect first party data strategy, and it often comes down to your specific context. Businesses should avoid developing strategies without the customer in mind - as the examples above show, a mutual value exchange is vital to success. In the next blog post in this series, we’ll deep-dive into registration strategies and how to execute them in practice.
If you’d like to find out more of discuss anything mentioned in this blog, feel free to reach out to me directly via george.montagu@ft.com
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