Anastasia-Nikita Bansal
Grigoriy MisilyukIn light of the changes in privacy policies and all the fuss over the last two years regarding cookies, there's been a boom in first-party data. And since we at TeqBlaze were preparing for transformations, we intensely studied the issue and are ready to say that the role of 1P data as a separate subject and its use is greatly overestimated. But the industry takes ad dollars out of its pockets and runs to negotiate for a better future, forgetting that manipulation and efforts to sell graphite at the price of diamonds are a classic of the data market. The greater the interest, the more passionate the speculation.
Let me break down the main issues publishers and advertisers face with first-party data: where we are now and when we took a wrong turn.
What is first-party data?
When discussing first-party data, people often mean 1P data + 0P data because it's easy to confuse them.
Zero-party data is information that a person voluntarily provides to the digital resource owner, such as when creating an account or subscribing to newsletters.
First-party data is information a digital resource owner collects from users' behavior and actions, such as page time, purchases, shopping cart content, etc.
The industry agrees to combine these two types into a "first-party data" title, and we will do the same.
What’s the problem with first-party data?
The only problem is that the industry has again found silver bullets called first-party data. Obviously, this is not a magic solution to all ad targeting issues, but only one of the tools. And this tool, to the surprise of data traders, works best in combination with other approaches.
I hope everyone already knows that instead of refusing third-party cookies and enforcing the Privacy Sandbox, Google has decided "to offer additional privacy controls and let people make an informed choice that applies across their web browsing." Well, that is, they backtracked. To avoid burdening you with excessive information, I recommend reading the TeqBlaze CTO's article on why cookies are not so easy to disable by default and my article on how to understand Google's play and prepare for its next move.
That's a long preamble, so let's move on. The next stop is a debriefing and unmasking.
Myth 1: First-party data provides complete audience insights
This myth has arisen because large publishers who keep users on their platforms for hours collect a fortune in first-party data about their behavior. At the same time, their analyzing algorithms are among the most advanced and progressive. They have data analysts and other resources to process the information they receive. Small publishers don't have all that; their users don't give them as much information about themselves, and sometimes it makes little sense to perform in-depth analysis.
But you have to admit, it sounds good. We know everything and understand everything, so we target them accurately — lovely words for advertisers and a half-truth, if not a lie, from an ad tech perspective.
True: While first-party data offers deep insights into user behaviors on a company's own resources, it inherently lacks the breadth that third-party cookies provide. This data is limited to interactions within the owner's domains and apps, thus providing a narrower view of a user's online behavior.
Myth 2: First-party data is easy to integrate and utilize
I'll say fast: this is not the case. I am familiar with dozens of small companies that manage several websites and have up to ten people in their teams, including content makers. They need more financial resources to hire data analysts and the expertise to find the right person. Sure, this problem can be solved by partnering with the right companies, but only some of such publishers think the juice is worth the squeeze.
True: The reality involves complex data collection, storage, and processing considerations. Companies must navigate various technical and compliance challenges, which can be resource-intensive and require new investments in technology and skills. Moreover, effectively utilizing first-party data demands advanced analytics capabilities. Companies need sophisticated tools and expertise to extract actionable insights from the data they collect, which is often an intricate and costly endeavor.
Myth 3: First-party data guarantees privacy compliance
Many believe that simply collecting first-party data ensures they fully comply with privacy regulations like GDPR and CCPA. However, this is far from accurate, as the data collection process directly from users is just as nuanced as other types of interaction. Just because the data comes from direct user interactions doesn't mean it can be freely used without legal consideration. Privacy laws still require companies to follow strict guidelines around consent, data usage, storage, and security. First-party data can only be one piece of a larger privacy strategy.
True: First-party data must be collected, stored, and used in compliance with local laws, often in conjunction with other consent-based mechanisms and privacy-focused technologies. Relying solely on first-party data requires integrating broader compliance measures to avoid costly fines and damaged reputations.
Next, to not be unfounded, I have to explain where the principal vulnerabilities can occur while processing and sharing first-party data.
Two ways to transfer first-party data
The first approach is complex, less effective, and insecure. The second is more effective, standardized, and secure. The choice seems obvious, right? Still, we should overview both of them. The 1P data is colored in red in the images.
OpenRTB
Transfer of 1P data through OpenRTB
When the digital resource owners understand OpenRTB protocols, they can transfer first-party data in the appropriate fields at the bid request. Together with the data, they also share the user's consent for further transferring personal information. And here is where the security vulnerability appears. An SSP can ignore the consent line and use transferred data further. Such a non-consensual practice. It isn't easy to detect, so some SSPs utilize this black-hat technique when processing bid requests.
Nevertheless, this approach has less priority because every participant in the advertising chain potentially obtains access to personal information. It's insecure. As said, three can keep a secret if two of them are dead.
Universal ID solutions
Transfer of 1P data through universal IDs
I recommend considering this way as the single appropriate approach to advertising targeting using 1P data.
Simple and user-friendly
Doesn’t require much publishers’ effort
Acceptable for use in the industry
Secure and scalable
Might be synchronized with other IDs
As you can see in the image, the publisher transfers first-party data only to the ID solution provider. This provider segments, hashes, and converts the data to a valid format, making it private and secure. Then, supply and demand platforms request this information from the ID solution provider in an anonymized form.
Advertising participants should agree to use the same universal ID solution for successful trading. We at TeqBlaze use the ID5 identity solution as a pre-integrated option in our platforms. Still, we are ready to add any extra solutions our clients need. It's easy to combine it with other universal ID solutions to connect with broader partners. For example, adopting UID 2.0 by The Trade Desk is a good idea because it's open-source and widely supported in the industry. Also, pay attention to the User ID Module by Prebid.org — it simplifies the usage of multiple ID solutions.
Regarding other choices, publishers should be oriented toward the technologies their advertisers prefer. It's not about a better or worse solution but corresponding technologies within the advertising chain. I think you get the idea of tuning in to one frequency.
There is no panacea, but a set of medicines will help
Advertisers spend lots of money buying first-party data, especially on tight budgets, and it's not the best way to spend their ad dollars. In addition to the initial cost, this data requires further verification and testing, increasing overall expenses. So what to do? Diversify, of course.
To succeed in advertising targeting and strengthen their relationships with demand partners, all types of publishers should follow the method created by large, well-known companies — "use everything allowed for precise audience targeting."
Collect 0P + 1P data and transfer it using universal ID solutions.
Consider categorizing your users and digital content using the SDA approach for OpenRTB. SDA (seller-defined audiences) enable publishers to provide contextual information inside the bid requests they send to auctions. By describing the audience and content, they increase the value of the advertising inventory on the auctions.
Use cookies and deepen cookie-based targeting capabilities.
Please do not believe in the fast abandonment of third-party cookies, but consider their role as regressing in programmatic advertising. We at TeqBlaze know many publishers, with users mainly coming from Safari browsers. This means that cookie-based targeting is useless. However, even if 80% of your audience blocked or rejected third-party cookies, you still have this 20% for successful cookie-based targeting. So do not waste this chance. There is no need to reject opportunities at your fingertips!
To grow our dominance, we have to broaden the launched strategies. Circumstances change as fast as the wind, and having more than one pillar to support your roof is better. That is nice and wise!
The last word: work hard to drink your juice in the hood
Publishers have to collect first-party data, folks, and they should gather it as hard and skillfully as possible. Invest new resources, technology, money, and time in that. If you're an advertiser and you know your publishers, you can help them. You can definitely share this article.
However, neither party should rely on this data type as the only way to solve the business objectives. It is just one of the diamond's facets.
That's all for now. I hope to maintain such inspiration for future posts and invite you to subscribe! If you want to discuss programmatic issues - contact us!
