The emerging use and function of second-party data

For marketers, creating the best omnichannel experience can feel a bit like putting together furniture.

Even with an instruction manual, the do-it-yourself approach can feel a bit scattered. As brands try to create the best omnichannel experience, they often find disjoined performance data and lack the ability to bring it all together.

This is where clean rooms and second-party data step in: With the deprecation of third-party cookies, data clean rooms are leveraging privacy-compliant consumer data and sharing it with partners, creating second-party data ripe with opportunity.

Second-party data: The new "it girl"

Historically, many brands have viewed first-party data as the best alternative to third-party cookie depreciation. While collecting first-party data from consumers is vital, reach can be limited. Second-party data, which is first-party data another publisher, retailer or brand collects, helps solve for this. Purchasing second-party data from another entity enhances a brand’s own first-party data while also enabling marketers to future-proof their strategies.

If second-party data is the new “it girl”, the rise of data clean rooms is her hottest accessory. Data clean rooms have enabled brands and publishers to access a privacy-centric environment to use first-party data from partners without relying on third-party cookies. Essentially, these entities can partner to share anonymized second-party data, resolving identities without exposing them. Clean rooms provide a vital space for flexibility around data access permissioning.


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Kelley Maves, senior vice president of Product and Data at Epsilon, says the clean room category is a natural evolution when it comes to second-party data.  “It’s become a conversation about how do brands gain access to other companies data but in a controlled, privacy safe manner.  And beyond access controls — how often the data is refreshed, is it segmented audiences or transaction level data, what use cases are allowed, are just some of the nuanced considerations,” he said. 

These second-party partnerships come to life in the form of mutual exchanges of information. Each party combines known and anonymous data–which can include user-level, historical and transactional data–into customer profiles for activation and enters their first-party data into the clean room. This data then has various security and privacy measured applied to it, such as pseudonymization and restricted access. Once this is complete, anonymized matching takes place in the clean room.

Major brands are turning to this model. Dick’s Sporting Goods announced late last year their new integrated loyalty program with Nike in a move to drive better personalization and online sales. Dunkin’ and navigation app Waze partnered together to develop an in-app promotion when travelers are near a Dunkin’ Donuts—which also allows customers to order ahead.

Putting together the pieces

Activating second-party data has a slew of useful applications, spanning measurement, attribution, and audience insights.

By resolving identities without exposing them, not only do marketers have access to better audience targeting, but with increased demand for greater privacy protection these strategies help cement privacy at the center of first-party data strategies. Companies can now deliver personalized experiences without customers feeling that their privacy has been compromised—creating loyalty and trust with consumers.

In augmenting first-party data, marketers have a better understanding of their customers. This aids marketers in sending the right message to the right people at the right time. Maves emphasizes that second-party data helps fill a void that’s not just about media and addressability.

“There’s a lot to learn about your customer: attributes, strategies, behavioral components,” he said. “What are they doing in the wild? You can use that info to define durable marketing and overarching campaign strategies.”

The other side of the coin is understanding customers for those brands that don’t have a lot of signals on customers in which case they can work with a retailer, which is where the rise of retail media networks becomes so integral to this story. Not all data owners are retailers per se, but when they are brands can typically get access to value their investment and understand outcomes that they’re actually driving.

“In the cases where brands are getting access to retailer transaction data and especially where they’re able to do that in a self-service clean room environment, they’re able to interrogate and ask questions about the data that they’re never going to get out of a basic study,” Maves said. “You can do really advanced and novel measurement with that data.”

Bolstering your customer understanding in this way and forming second-party partnerships also allows brands to divert more of their ad-spend away from walled gardens. This is in line with the overarching trend of brands moving their spend choices in favor of open ecosystems over closed ones. Brands that want to use second-party data in context of media are demanding more transparency.

Effective marketing starts with knowing your customer and with the security data clean rooms provide, second-party partnerships are increasingly attractive in the race to understand your audiences. 

At Epsilon, our clean room solution powered by CORE ID allows for an identity solution that is privacy safe and resolves back to pseudonymzed person-based identity. 

"The richness of Epsilon's data footprint allows you to get a deeper view of your customers and our open ecosystem in terms of activation allows that data to be used across your marketing vehicles to drive meaningful outputs," Maves said.