In this digital world, our data is everywhere, and it relies heavily on how ethical companies are with our data privacy. We're starting to see a trend of stronger regulations behind collecting consumer data. Still, as technology continues to evolve in the digital world, it has left us with a few questions: How will companies collect their data responsibly?
The answer is first-party data. First-party data plays an essential role in maintaining strong consumer trust, as well as strict compliance standards when it comes to data privacy.
Companies that fail to implement first-party data and have weak or nonexistent policies for data privacy run the risk of a public relations disaster, so here are five key points about why first-party data is the future of data privacy.
What's worse than a company having weak data privacy policies? One filled with inaccurate user information. That's why first-party data is so important — it helps ensure accuracy when collecting, storing, and processing user data.
According to the 2018 State of Consumer Trust study, 16.2% of respondents don't trust brands due to inaccurate information used in marketing strategies, and 35.9%don't trust them because they ask for too much information.
On top of providing accuracy, first-party data helps limit the amount of data collected from users by only collecting necessary pieces. Companies can establish strong data governance strategies to keep track of their collected data and regularly review it to ensure that only relevant information is being gathered.
That's why companies should focus on only collecting necessary user data and have defined timeframes for when the data will be stored. If a company has a practice of purging old data at set intervals, it further increases accuracy and allows companies to understand up-to-date customer behavior.
When it comes to data privacy, nothing is more important than the relationship of mutual trust between a business and its consumers.
That's why first-party data eliminates potential issues that could put off potential customers when collecting their personal information. For example, ensuring they don't feel uncomfortable with far too intrusive questions or experiencing "creepy"advertisement tactics that follow them around the internet after visiting a website.
Additionally, data privacy policies are also simplified — clearly indicating what types of first-party data is collected as well as why and how it's being done.
Using a single source of first-party data as the foundation for analysis and decisions is important because companies can use this source of truth across multiple departments for consistent understanding.
Having access to a reliable piece of information about your customers increases accuracy and allows for more meaningful insights that go beyond simple demographics.
With proper governance practices in place, the risk associated with data privacy violations is decreased when an organization uses its own first-party data.
When it comes to data privacy, countries like the United States and European Union have been setting stricter laws in order to protect consumers' privacy. Regulations like the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA), which seek to regulate how businesses collect and use personal information, prefer companies that utilize first-party data versus other types of data like second- or third-party data.
That's because first-party data makes it easier for companies to prove that user consent was given when collecting their data, making compliance with regulations a breeze for those businesses who use first-party data responsibly.
On top of this, GDPR and CCPA also make sure customers have the full right to opt-out of having their information sold without being penalized for doing so. Another positive factor that highlights why it's so important to use first-party data.
We've all heard the stories: social media scandals, reports of leaked medical information, or unauthorized access to user accounts. Let us tell you — none of these outcomes are appealing to any business, and they can be easily prevented by utilizing first-party data.
By practicing strong data privacy, companies can ensure they're avoiding potential public scandals. Having clear documentation around why it was collected and the store protocol of user data helps ensure that any unwanted outcome is avoided — all while abiding by data privacy regulations.
After the 2018 Cambridge Analytica scandal, where personal data was collected from 87 million Facebook users, companies have had to revise their data privacy and security policies, double down on transparency with consumers, and revamp how they collect user information.
Not only is it necessary for businesses to protect their users' sensitive information, but it's also important that they be proactive in monitoring any security issues so potential problems can be taken care of before it gets out of hand.
An honest policy of only collecting first-party data also helps build trust with customers that their information won't be inappropriately used or misused by the company. Otherwise, they know who ultimately holds responsibility.
Third-party cookies have been invading our privacy for years, and it's time to take action against them. Third parties typically rely solely on advertising tactics or cross-site tracking — but that doesn't mean this practice is beneficial for users who don't know their information is being collected without their knowledge.
That's why browsers such as Google Chrome and Apple Safari are taking the initiative to block third-party cookies, which takes away their monitoring power and puts a stop to any "creepy" tactics.
Having first-party cookies means users have an understanding of what data is stored with the company they are dealing with — ensuring they don't will be tracked by surprise across the net.
We live in an era where people are increasingly protective of their privacy. It's important that companies look towards the future and start making the switch to first-party data, as it will help them remain compliant with data privacy regulations while also protecting their customers.
By doing so, businesses will be able to build stronger relationships with their customers and have them trusting them with their personal data for years to come.