In its “Next In Personalization” 2021 report, McKinsey & Company found that 71% of respondents “expect personalization” from brands and businesses and 76% “get frustrated” when this expectation is unmet.
However, in its 2021 Consumer Privacy Survey, Cisco found that 86% of respondents care about data privacy and want more control over how their data is collected. Axway similarly found that in a February 2022 Global Consumer survey, 90% of respondents wanted more transparency around what data companies collect on them.
Companies have a very fine line to tread: Keep customers’ trust through transparency and security all while collecting enough information to maintain a high level of personalization in ads, offers, and products. And to top it off, new privacy laws are affecting the data that companies are able to collect and use to provide this customization.
Enter partner data. Partner data, or “second-party data” is data that you share and receive from partners. Understanding how to leverage partner data is the key to weathering the shift in regulation and customer expectations.
In other words: Companies are facing a marketing crisis and partnerships people are uniquely positioned to offer a solution.
So to prevent you from feeling like this…
…we are covering:
The differences between first, second, and third-party data
First-party data is consumer data collected by a company directly from their customers. Some examples of how companies acquire first-party data include
- Customer surveys, feedback, and interviews
- Website traffic
- Email open rates and clicks
- Social media analytics
- Google Analytics
Third-party data is first-party data that is collected by one company and then sold (or given) to another company that does not have a direct relationship with the consumer. The data has historically been collected using cookies (small information files that companies send to your browsing device when you’re visiting a website) and sold to marketers by data vendors or aggregators.
First-party cookies come from the company behind the website you are on. Data that is collected through first-party cookies is considered first-party data unless that data is then sold to a third party. Third-party cookies come from third-party companies that have paid another company to host cookies on that company’s website.
Second-party data is first-party data that is shared, not sold between two trusted companies. The difference between data that is shared and sold is becoming increasingly important (more on that later). When you share data with your partners, that is second-party data.
The death of third-party data
Companies have historically relied on third-party data to inform their marketing strategy and lead aggregation. According to Statista, $22 billion was spent on third-party data in 2021, with $13.3 billion spent on data itself and $8.7 billion on audience data activation solutions.
Now, a series of privacy regulations are significantly impacting the ability of companies to use third-party cookies.
In the U.S., a collection of privacy laws have been passed at the state level. These bills include the California Consumer Privacy Act (CCPA) (which was later amended in the California Privacy Rights Act (CPRA)), the Virginia Consumer Data Protection Act (CDPA), the Colorado Privacy Act (CPA), the New York SHIELD Act, the Utah Consumer Privacy Act, and the Connecticut Data Privacy Law. There are efforts to pass federal data privacy regulations that would expand the Federal Trade Commission’s jurisdiction to include any collection or transfer of data. However, regardless of whether or not a federal law is passed, the patchwork of state laws has created a domino effect and more states are expected to follow suit.
The General Data Protection Regulation (GDPR) is the European Union’s law overseeing data collection on the continent. A recent ruling by the Austrian Data Protection Authority stated that Google Analytics violates the GDPR legislation. The National Law Review later wrote that “The ruling could have far-reaching implications in other EU Member States and result in a ban of Google Analytics across the EU.”
The GDPR has had an influence on the data privacy laws of other countries. According to the National Law Review, India’s proposed Personal Data Protection Law has “flavors of the GDPR”.
While the details of privacy regulations differ based on geographic location, the sentiment is the same: More transparency and control for consumers over how their data is shared and more liability for companies involved in collecting and distributing consumer data.
The effects of privacy laws on company data policies
As a result, big companies like Apple and Google are proactively anticipating changes in third-party data laws and are giving consumers more control over who can access their data. This has included Google announcing a 2023 ban on the use of third-party cookies on its Chrome browser and ad networks.
This is having a big impact on the marketing tactics and top-of-the-funnel leads of companies who rely on third-party data (which includes many SaaS companies). For example, when Apple shifted its policy to allow consumers to opt into application tracking in October 2021, Meta lost 30% of its accuracy on targeting algorithms overnight. In February 2022, former Meta Chief Financial Officer and current Meta Chief Strategy Officer David Wehner anticipated that this loss in algorithm accuracy could amount to over a $10 billion loss in ad revenue.
In its April 2022 “B2B Marketing In A World Without Cookies” report, Boston Consulting Group shared that 39% of marketers surveyed are already seeing negative impacts on their performance due to new data privacy trends. 56% expect to see negative impacts in the coming year. That means only 5% of marketers surveyed expect to either remain neutral or see positive impacts on their performance in the coming year.
Specifically, this downward trend will most impact advertising and top-of-the-funnel leads. As the availability of third-party data shrinks, companies have far less visibility into a target audience. This in turn reduces a company’s ability to do things such as target advertising effectively or buy cold leads.
“Businesses that wish to build sustained competitive advantage in a world without cookies need to act now,” Boston Consulting Group says.
In its 2022 “State of Inbound Marketing Trends” report, HubSpot recommended that marketers “future-proof [their] marketing” by “creating an incredible online presence that focuses on creating your own audience and connecting it to a robust first-party data collection structure.”
The second-party data solution
The feasibility and effectiveness of third-party data are declining and companies need new ways to learn about customers and would-be-customers. And partnerships people are uniquely positioned to offer a solution (and, lucky you, the tools to make it happen already exist).
Expanding your first-party data collection structure can be done in two ways: you can expand your data collection points or you can tap into another company’s first-party data through second-party data exchange.
Now if only you had a list of companies that you want to and feel comfortable sharing data with…
Enter partner data. Partner data is second-party data that you either share with or receive from your partners. Partner data is the primary way to expand your second-party data because
- You know that their audience is in some way relevant to your business goals (otherwise you wouldn’t be partnering with them).
- You trust your partners. The existing trust between you and your partner can help alleviate any apprehension or risk that comes with sharing data.
- The tools to do this already exist. You can use a PEP such as Crossbeam to securely push your partner data into your data warehouse.
According to Boston Consulting Group’s A World Without Cookies Report, companies should look for opportunities to “create a mutual value exchange with partners in order to accelerate data capture…they should boost their partnerships with second-party data providers and secure clean-room environments.”
This includes the creation of a “cross-functional team to evaluate available technology, launch pilots to assess new partners and identity solutions, and research potential big bets, such as new technologies for data collection and storage, new data-capture strategies, or third-party vendor partnerships.”
Here are two ways partner data can help you address gaps left by the death of third-party data:
The problem: Less third-party consumer data means less insight into how your user experiences can be personalized, something that consumers have grown to expect.
The partner data answer: Use your partner data to drive Account Based Marketing (ABM) motions. This includes segmenting audiences, targeting prospects with customized messaging, and offering each prospect a unique marketing experience tailored to them. With integrations from Crossbeam’s Partner Cloud, your ABM tools can be supercharged with new dimensions and optimizations that do not rely on third-party data.
The problem: A lack of third-party data limits your lead volume and SDRs have little to no visibility on a lead before spending time and resources on them.
The partner data answer: Utilize Crossbeam’s matching engine, a pipeline generator built on second-party data to map accounts with your partners, surfacing and prioritizing audiences of qualified marketing targets. Then ask your partner for a warm intro, intelligence, and context.
Our CEO and co-founder Bob Moore said it best in his Supernode 2022 Keynote speech: “Partner ecosystems will be the most prolific and efficient growth lever businesses can build in the coming decade” as third-party data dies.
There has never been a better time to tap into your second-party partner data and discover just how effective it can be. Get started by learning
Then, join Crossbeam for free today to unlock the power of your partner data.
And while you’re at it, make sure your partner-influenced revenue is being accurately attributed to your partner program. Partnerships could be key in re-focusing company-wide data collection strategy and you should get credit for that.
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