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12/03/2021

Why first-party data is a direct retailer’s most valuable asset

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Josh Perlstein
Josh Perlstein is CEO of Response Media.

We have finally reached a moment in time where brands are driving meaningful revenue from e-commerce retailers and their own direct-to-consumer (DTC) channels.

In 2021 alone, U.S. consumers are projected to spend a total of $933.3 billion on e-commerce and $129.31 billion on DTC. But not all brands are equally effective within these channels.

A common thread among brands successfully leveraging retailer and DTC channels lies within their ability to use first-party data at scale. They are empowered to lead their own customer relationships and drive their consumers into digital purchases at various e-commerce retailers or their DTC storefronts. These brands are seeing their investments in digital pay off, which is creating a brand strategy revolution.

Conversely, brands not harnessing the power of first-party data have struggled to grow their digital sales. Despite investment after investment in digital, these brands see flat or negative returns from their DTC and e-commerce retail efforts. Add the evolving challenges brands are faced with today in new privacy regulations and the eventual elimination of cookie-based targeting (also known as the “cookie-pocalypse”), and first-party data is more valuable and critical than ever.

How is a brand’s first-party data the key to unlocking direct-to-consumer digital sales success? Here are just a few of the many ways:

First-party data enables brands to lead their own relationships with consumers
Gone are the days where brands solely lean on retailers to own direct touchpoints with their consumers. Now, best-in-class brands can market directly to consumers through intimate and impactful direct channels, such as email, SMS, and social media, with relevant and personalized messaging.

Consumers have overwhelmingly demonstrated they prefer to hear from brands via email, and the brands who do it well, and at scale, far outperform. Data suggests brands who embrace this strategy have seen steady gains in digital sales and attribute email as the number one driver of repeat DTC website traffic and repurchase.

First-party data makes media perform dramatically better
DTC brands using first-party data to target and personalize their paid media consistently see better ROI from their efforts. Building models from first-party data aids more effective prospecting and new customer growth, and brands targeting their consumers through first-party data drive better repurchase and loyalty.

Capturing first-party data with an email address empowers brands to unlock the identities of interested consumers and utilize it in more channels than just digital. Identity-based targeting and modeling can now be used across addressable TV, audio, and even out-of-home.

The right marketing technology stack enables efficient and seamless utilization of first-party data across media channels, delivering both personal and effective advertising to the right consumers. Findings suggest brands who have integrated first-party data into their media targeting have seen outsized gains in media efficacy KPIs.

First-party data creates leverage for brands
Imagine sales teams from brands can walk into their largest retailers and say, “What if I take my 5 million consumers and drive them into your website to purchase?” This gives power and leverage to brands like never before, which is particularly valuable when negotiating for digital shelf space, trade promotions, and co-marketing partnerships.

And it’s happening today more than ever. Brands that already have scale in their first-party data are using this leverage to drive incremental growth with both retail customers and partner brands every day.

First-party data empowers brands to identify and create ambassadors and advocates
It’s not uncommon for brands to employ their most engaged consumers from first-party data to promote the brand through social channels. Their permission to contact these consumers enables them to invite product ratings, reviews, and recommendations.

For example, some brands regularly use their first-party data to promote new SKU launches, driving social advocacy and product reviews on e-commerce sites. Others reward their consumers for content and product consumption through one-to-one personalized messaging.

First-party data gives DTC brands the ability to gain valuable consumer insights
Some brands with large-scale first-party databases capture valuable product and category purchase insights, product feedback, and R&D data from their consumers through surveys and DTC purchase behaviors. These insights can then be used for marketing and product development, enhancement, and evolution.

The above are just a few of the ways in which direct-to-consumer retailers are harnessing the power of first-party data. It’s a powerful representation of how first-party data should be seen as an asset that increases value over time when brands invest in its growth, management, and utilization. The question is this: are you sitting on the sidelines, or are you part of this revolution?

Josh Perlstein is CEO of Response Media.

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