Get Started with Advertising and Data

Learning Objectives

After completing this unit, you’ll be able to:

Explain why digital advertising has recently moved away from third-party data and toward first-party data.
Define what first-party data is and how it benefits advertisers.

Before You Start

Before you start this module, make sure you complete Data Cloud Basics for Marketers. The work you do here builds on the Data Cloud concepts that you learn in that module.

Data and Advertising

Data is at the core of every successful marketing strategy. Data is how you find new customers, engage with your existing customer base, and improve your campaigns. Data helps you understand your customer’s demographics, behavior, interests, personal identification information (PII), and more.

Data for advertising is usually categorized as first-party or third-party. First-party data is directly collected from a company’s own customers, such as transaction data and website behavior. First-party data is more accurate and relevant, but it’s often less abundant. Third-party data is bought from data vendors, who collect it on external sites. Third-party data offers a broader reach than first-party data, but it’s often less precise, can raise significant privacy concerns, and isn’t exclusive.

In the past, most of your data for advertising was likely third-party data. Since third-party data isn’t from your own site, it gives you access to new people who aren’t your current customers. While third-party data can lead to opportunities for business growth, the world is changing. Regulations are cracking down, and compliant third-party data sources are getting harder to access. Third-party data is quickly getting replaced by first-party data.

In this module, we explain why first-party data is important, how Data Cloud helps you take advantage of the value of first-party data, and how you can build a marketing strategy using Data Cloud.

Data Identifiers

Identifiers (IDs) link data, such as website behavior, to a specific user. Identifiers are an important part of both first- and third-party data. There are three categories of IDs: anonymous IDs, pseudo-anonymous IDs, and known IDs.

Anonymous IDs track users without linking to identity and protect privacy. Pseudo-anonymous IDs hide identity, but you may be able to reidentify the user with certain data. A hashed email, an encrypted email address, is an example of a pseudo-anonymous ID. Finally, known IDs explicitly tie the user to their identity, such as an email.

Each type of ID has its benefits. Anonymous IDs are best for privacy-first strategies, pseudo-anonymous IDs for broader reach with some personalization, and known IDs for precise targeting.

The Decline of Third-Party Data

Third-party data has historically played a large role in digital advertising. Third-party data is usually anonymous for regulatory reasons, since it’s more difficult to get consent to collect and sell PII from third-party sources. They might use anonymous or pseudo-anonymous IDs.

Marketers use third-party data to identify potential customers who are likely to be interested in your products based on their behavior on other websites, demographics, and interests. Third-party data helps you grow your audience beyond your current customer base, which is a key goal for marketers.

However, companies who use third-party data often don’t have users’ explicit consent. Recently, regulations, lawsuits, and fines are cracking down on the use of third-party data. For example, the use of third-party cookies, a common way to collect third-party data, has fallen dramatically. Back in 2015, nearly 100% of top websites used third-party cookies. In 2024, less than 50% of websites use third-party cookies. We’re quickly moving into a cookieless world.

Stricter Regulations and Industry Changes

As of March 2024, 137 countries have national data privacy laws, which covers around 79.3% of the world's population. This means that 79.3% of the world's nations have some form of data privacy law. Here are a few examples of these regulations.

2018: General Data Protection Regulation (GDPR): Requires organizations to create Data Processing Agreements and Data Protection Impact Assessments with third-party vendors. Applies to entities doing business in the European Union.
2018: California Consumer Privacy Act (CCPA): Requires organizations to establish agreements with third-party vendors that outline the purpose, scope, retention, use, and disclosure of personal information. Applies to entities doing business in the state of California.
2023: California Privacy Rights Act (CPRA): Expands on CCPA. Protects the right of California residents to limit how businesses use sensitive data. Requires organizations to update data security and privacy policies.

Industry changes are also making it harder to rely on third-party data, as more and more browsers block or limit third-party cookies.

2017: Apple’s Intelligent Tracking Prevention (ITP): Apple blocks third-party cookies by default in Safari.
2019: Firefox’s Enhanced Tracking Protection (ETP): Firefox blocks third-party cookies by default.
2024: Google introduces customer opt-in for third-party cookies.

In a cookieless world, what’s a marketer to do? Enter first-party data.

The Rise of First-Party Data

As anonymous and third-party data are being phased out, first-party data is rising to replace it. First-party data is the information you collect directly from customers on your company’s channels. This is data from people who directly interact with you, whether it’s through purchases or chats with customer service. With first-party data, you don’t need to go through a middle man, such as the data vendor for third-party data. Instead, you communicate directly with the customer.

First-party data is more likely to include known IDs, meaning that users are explicitly tied to their identity. To collect PII-based data, you usually need explicit consent. Customers trust you when they give you their PII-based data. With data tied to identity, you can precisely target customers with personalized campaigns.

Even though there’s less overall data compared to third-party data, first-party data is more accurate, relevant, and demonstrates a deeper understanding of customer behavior. As a result, ad campaigns based on first-party data perform noticeably better than campaigns using third-party data. Conversion rates, customer satisfaction, and customer spending all increase. Most importantly, you keep your customer’s trust.

Advertising with Data Cloud

If your ad campaigns depended on third-party data and anonymous IDs in the past, it can seem daunting to make the switch to first-party data. Advertising with Data Cloud is a first-party data solution that integrates easily with your data and campaigns housed in Salesforce.

The Data Cloud platform is a powerful tool for marketers, allowing you to create targeted segments for use across various advertising platforms like Meta and Google Ads. Beyond just organizing data, Data Cloud encourages collaboration throughout organizations, bringing teams together to focus on the customer and improve marketing efforts. By integrating with CRM systems, prioritizing a seamless customer experience, and remaining open and adaptable, Data Cloud stands out as a composable and extensible platform.

With Data Cloud, you can establish a reliable source of truth, seamlessly connect with external platforms, activate audience segments, and transform them into personalized experiences across all channels. This leads to valuable campaign and audience insights that can reinforce successful marketing strategies.

Summary

In this unit, you learned how the marketing world is shifting toward first-party data because of privacy concerns and industry changes. You discovered that Data Cloud is a powerful marketing solution. In the next unit, you see what you can do with Data Cloud, explore some advertising use cases, and learn best practices.

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