"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Nishat Mehta, executive vice president of global partnerships at dunnhumby.
In all the talk about big data, we have largely ignored the most valuable source of that data: the consumer.
As technology enables consumer-collected data at scale, often referred to as the quantified self, first-party data has become a misnomer. First-party data needs to be defined from the perspective of the true first party -- the consumer -- who is collecting the data, not the publisher or the marketer.
One of the biggest promises of big data is a deeper and more personal conversation between marketers and consumers that drives loyalty. But that’s dependent on convincing consumers to share their own first-party data at scale. If done correctly, the world shifts from one where marketers use aggregate, modelled and inferred data to one in which the data come directly from the consumer, are more accurate and contain their permission to use these data to improve their relationship with the marketer.
I’ll give you a personal example of first-party data. I received my first FitBit Flex wristband last month. My wife probably thinks I’m crazy as I pace indoors on some nights to reach my 10,000-step daily goal, but the device has already helped me collect and organize data about myself, such as the number of steps I’ve taken every day, my sleep patterns, weight and food intake.
In the longer-term, sharing this quantified information with a doctor or personal trainer becomes frictionless and more accurate than a questionnaire. Passing this data to my grocery store and favorite restaurants enables them to provide suggestions based on my lifestyle and nutritional goals. If enough consumers provide nutrition data to the FDA, this could enable better research on the links between certain foods, exercises and outcomes, finally giving New York Mayor Michael Bloomberg the hard first-person evidence he needs to justify his attempted citywide large soft-drink ban.
Consumers Are Creating Their Own First-Party Data
Most marketers already conduct some sort of primary research in the traditional sense, including asking for consumers’ opinions or using sentiment analysis engines to examine user-generated content on social media and customer service websites. Every day, however, consumers everywhere are creating their own first-party data:
• Receipt Capture: Consumers upload pictures of their receipts to services such as InfoScout, Shopitize or Endorse, recently acquired by DropBox.
• Food Intake Data: Mobile apps, such as Lose It! or MyNetDiary, allow users to input nutrition from restaurant and in-home meals.
• Wearable Technology: FitBit, the Nike FuelBand and Jawbone’s Up technologies work with Internet-connected weight scales, such as Aria, to produce a view of consumers’ fitness. Google Glass collects photos, videos and location data from its owners. The Zamzee meter tracks the intensity of kids’ and teens’ activity.
Further, with the Internet of Things, consumer devices like the Nest thermometer or Google’s driverless car are built to speak to each other while collecting data about a customer’s environment. A recent Apple patent application may pave the way for smartphones to collect preference data about your preferred car seat position or room temperature, which can be communicated to your rental car or hotel room upon arrival.
This first-party data is highly accurate as customers collect or input it in an effort to learn something about themselves. While these data sources seem new today, with the growth of smartphones and trends in wearable technology, these data will likely be collected at scale in the future. The data will be quite personal, unlikely to be found anywhere else at this level of detail. Third-party credit card data providers can tell a marketer how much I spend at restaurants, but only I know what food ingredients I ate over the last 24 hours.
For the marketer, this data seems like the holy grail. Exclusive, accurate data at scale that helps marketers better understand their customers in order to build loyal relationships, minimize advertising waste and optimize ad spend? Sign me up.
Unfortunately, it’s not that easy.
Today, a retailer or service provider can successfully argue it owns, or at least has rights to, transactional data because the business processed the transaction through its POS system and is a party to the transaction. In the new world of first-party data, however, consumers rightfully feel as though they own this data as they either provided it actively, such as through a food diary, or they own and authorize the mobile phone, thermostat, refrigerator or FitBit to collect it.
A New Value Exchange
Second- and third-party data can often be ethically licensed or exchanged between companies for customer-first purposes, such as delivering relevant content or deeper insights that lead to customer-friendlier products. However, gaining access to consumer-owned first-party data will fail without a transparent value exchange between a business and the consumer.
Today, in the most obvious value and data exchange, companies provide coupons, discounts, loyalty points or even cash in exchange for consumer-generated data. More recent models, such as social media platforms, Internet sites and gamification, offer free services and entertainment in return for consumer data.
Facebook and Google, for example, give consumers a way to connect with friends and search the Internet in exchange for collecting data, but the actual collection of data is murky, at best, in the consumer’s mind.
With consumer-generated, first-party data, this value exchange needs to be more explicit, offering benefits that make everyday life easier, more convenient or more enjoyable for consumers. Newer models of the value and data exchange will encourage consumers to collect their own data for an obvious benefit. A company, for example, could easily develop a service that recommends appropriate food choices for my nutrition needs based on a nutrition data cooperative amongst consumers. My FitBit collects my data and then provides insights and valuable information about my fitness, nutrition and progress.
In this new world of consumer first-party data, the data itself is fleeting. On one hand, a marketer must constantly remind the consumer why they are sharing their data in order to maintain the flow of new data. On the other hand, the consumer removes the marketer’s ambiguity about how this data can be used. No longer must a marketer worry about what is allowed and what the customer finds “creepy”; the customer has given instruction in clear terms.
If there is a single feature of the FitBit that convinces me we are headed toward the world described above, it is the ability to post various pieces of my fitness and health record to my Facebook newsfeed for my friends to see. Technologies and platforms already exist to enable the sharing of first-party data. Customers have numerous incentives to do so. Marketers that embrace this massive new first-party data revolution will know their customers as well as they know themselves.