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With third-party data quickly becoming a thing of the past in response to consumers’ increasing demand for privacy, there is a growing need for businesses, particularly brick-and-mortar retail stores and consumer packaged goods (CPG) brands, to adapt and find alternative ways to reach potential customers. 

Recent controversies over the improper handling, selling, and usage of consumer data by large tech firms like Facebook and Tik Tok mean it is more important than ever to know where your customer data is coming from and where it ends up. In addition, with the introduction of GDPR in 2016, Apple’s recent privacy updates, and Google set to phase out third-party cookies used for cross-site tracking by 2022, we not only see a restriction in access to data, but the competition for third party advertising has increased. 

With the competition tightening on customer acquisition, you might want to join the herd and fight for scraps. But, here are just a few reasons third-party data can be more harmful to your bottom line and your customer loyalty and how first-party data collection is the way of the future.


Disadvantages of third-party data:

  • It’s Expensive: Decreased access to third-party data and increased competition for mainstream digital advertising platforms means inflated prices.
  • Limited data lifespan: Industry reports are not provided in real-time and cannot keep up with sharp industry pivots.
  • Unpredictable: Third-party sources can change access at any time. Legislation can also be disruptive.


Benefits of first-party data:

  • Cost-effective: You don’t need expensive infrastructure to build quality lists and create targeted advertisements.
  • Accurate and Up-to-date: You can have access to the latest customer data relevant to customers at the right stage in the buying cycle and know what meets their needs.
  • Sustainable & Scaleable: Building customer relationships and nurturing these lists can keep your revenue going and create evangelists of your existing clients.
  • Substantial: Your lists have actual value to your company beyond just sales numbers.

“Third-party data will be so restricted — if not nonexistent — that it may as well be useless.” (Forbes)


Cost of Third-Party Data - Customer Retention vs. Customer Acquisition 

With digital ad spend set to grow to over $526B by 2024, and online ad costs rising as much as  200%, the competition for ad rankings and PPC campaigns will only get tighter. Retailers operating brick-and-mortar stores have recently taken a massive hit, and for many, it will be some time before marketing budgets can catch up. 

Customer acquisition has always been an uphill battle, but fortunately, it is not the only or the best way to increase revenue. For example, it costs 5- 25 times more to acquire new customers than to retain new ones. Not only that, but repeat customers are 50% more likely to try new products and spend up to 30% more than new customers. 

“The best time to ask for the next sale is right after the first.” (Fast Company)

If you can target customers just before, during, or right after their purchase with relevant offers, you can increase revenue, create new avenues for data collection, and delight customers simultaneously. See how Fobi does this through personalized notifications.


Regain Control & Reliability of Data

Third-party data insights don’t efficiently help businesses to plan and predict in-store purchasing patterns and habits in real-time. Collecting transaction data directly from your POS and aggregating it across properties and channels (in-store, online, in-app) ensures your data is accurate, up-to-date, and relevant. With these tools, you can reduce your investment and resources dedicated to marketing and operations based on outdated reports or incorrect predictive models.


Nurturing Relationships to Generate Lists

If done right, first-party data collection works through building relationships with your customers and offering them value in return for valuable information through tools like loyalty programs and personalized promotions.

In contrast, marketing techniques based on third-party data can be disruptive to consumers and create a negative brand image for your company. In fact, these advertisements result in lower conversion rates, with  84% of consumers aged 25-34  reporting that they have left a favorite website over intrusive advertising. Why waste time targeting customers who may not be at the right stage in the buying cycle when you could be notifying customers in real-time with offers that resonate? 

“Most users are willing to trade personal data for value, whether that is a well-designed app, guest Wi-Fi access in a store or venue or offering premium content to website users.” (Forbes)

Enabling your customer to share information directly builds brand trust. It provides a seamless journey that will keep them coming back for more and convert them into evangelists for your business.  In addition, you will have access to the right information, relevant to how your customers interact with your brand and learn which products or services customers prefer and to which they are most likely to respond.   

You can cut out the guesswork and save time by focusing on information that matters to your brand.


The Future Potential of Your Customer Relationship Management

Customer relationships can build in value as you develop loyalty. Nurturing existing relationships allows you to maximize the value each customer adds. We know that increasing your customer retention by as much as 5% can lead to sales increasing by anywhere from 25%-95%. Failing to leverage your existing customers and relying on third-party reports and insights may harm your future earning potential and leave the door open to your competitors.



The decline of third-party data opportunities only serves to accelerate what big brands already know. Third-party data sources don’t translate well cross-channel and can’t support the fast-paced changes facing the retail industry from customer behavior to supply chain and operations.  

Direct, real-time access to your customers through loyalty and engagement is far more lucrative in the long run and stands apart as the most sustainable growth tool for businesses of all sizes.

While third-party data doesn’t need to be abandoned entirely, its usefulness lies in its ability to supplement existing data to inform a more detailed and robust picture of your customers and industry. The same goes for customer acquisition; while it is an essential function of company growth, a more sustainable path to that growth is through nurturing existing customers into loyal advocates for your products and services.

Customer lists and in-house data are not equitable to social media and third-party platforms as these can change without notice. From algorithms lowering your reach to incoming legislation, having a direct line to your customers offers you the immediate potential to generate revenue. From there, all you need are the tools to optimize and action the data. 

Click here to find out how Fobi can help you collect more first-party data, develop insights on it, and then engage directly with your customers using all of your first party data.

Post by Fobi
September 23, 2021