Privacy and first-party data: How to make ethical targeting possible

Marketers are increasingly turning to first-party data – data the company has collected directly from its customers, app users, site visitors, etc. – to inform marketing, advertising and media strategies. It’s table stakes. But so are data protection and data privacy. Can marketers put first-party data to work without compromising customer privacy? Can they do so without using second and third-party cookies?

Yes. It’s called ethical targeting, and it’s possible. Here’s how.

Choose your weapon

You’re going to need a powerful consumer segmentation tool that negates the need to reveal your customers’ information to your agency, media platforms, publishers, Google, Meta and more

This tool must provide you with sufficiently detailed consumer segments to act as valid proxies for your target audiences, without ever compromising the privacy of your customers and contacts.

(We use Roy Morgan’s Helix Personas.) 

Apply segmentation to your first-party data

Generally, 50% of your sales will come from 20% of your customer database. They are your heavy, loyal users or buyers. The other 50% of sales come from 80% of your database. They are the light, occasional buyers, the new buyers, and the lapsed customers returning to your brand. In terms of a target audience to which you can advertise your brand, there are more light buyers than heavy buyers available at any given time.

Targeting light buyers provides more and cheaper opportunities to buy media and enables your advertising campaigns to reach more people, more cost-effectively with less waste.

You’ll need to categorise your first-party database by heavy and light buyers or users. Then cross reference your customers against your preferred consumer segmentation tool and provide that list of personas (not your customer data) to your media agency to inform media targeting decisions. 

Provided they know how to best incorporate this into the over-arching media strategy, your media agency can use the persona information to define and buy the category and build reach into the category.

Guided by this information, your media buying strategy doesn’t need to be so broad that it targets people that will never buy your product. It doesn’t need to be so tight you miss the opportunity to reach people that might buy your product. This reduces advertising waste.

Protect your proprietary scoring systems

Many organisations score sales leads using custom and proprietary systems that involve the assignment of values to things like financial information, the propensity to convert, areas of interest, responsiveness to direct marketing, web visit activity and more. This is not the kind of information that should be shared with anyone outside the business.

Instead, you can cross-reference your scoring data with your chosen consumer segmentation tool to further develop the personas you will provide to your media agency for ad buying. This will enable ad buying strategies that yield better quality leads, higher value clients, and clients more likely to convert without revealing the secret sauce of your lead scoring system.

Buy media based on segmentation

Personas and segmentation can be used for traditional media buying strategies such as positive and negative targeting. 

We take our client’s selected personas, based on their first-party data segmentation, and analyse them to identify the heavy and light users of media channels. We generate insights such as Persona A is a set of heavy radio listeners or Persona B is made up of light TV buyers. This helps to identify the right media mix to reach our client’s target personas. That’s positive targeting.

That doesn’t always work for digital channels where the audience is too constrained. In these cases, we have found that by only targeting certain personas, we’d risk missing out on people that might buy the client’s product or service. 

Instead, what works best is to negatively target personas. That is, we design the media mix to negate those personas that we know will never buy our client’s product. In doing so, we’re still getting a broad enough reach into the digital audience to get the response we want, but we’re also eliminating as much waste as possible.  

We perform both positive and negative targeting with personas to ensure that our client’s media targeting is broad enough to work but not so broad that they waste their media investments. 

Measure and test

In terms of a case study example, we recently used Helix Persona targeting for a client’s first display advertising campaign. Not only did this campaign drive new sales for our client, but we had control markers in place that tracked the success back to our targeting tactic.

We practice evidence-based advertising, so we also tested the Helix Persona targeting against other methods. Compared to look alike targeting on a platform, the Helix Persona targeting was three and a half times more successful, delivering profitable customers to our client. 

Compared to the other third-party behavioural segments and targeting options that were available on the platform, the Helix Personas tactic performed between one and a half and four times better.

For another client, we used Helix Persona targeting for a video advertising campaign, where the result was nearly one and a half times better than broad targeting, no targeting or demographic targeting. 

Targeting when traditional targeting won’t work 

With the deprecation of cookies and the loss of third-party signals, trying to target on media platforms is going to become increasingly difficult. Using this targeting tactic as a match key will allow you to maintain that sort of targeting approach in this world without cookies.

As part of the media mix strategy, ethical targeting is vital for achieving advertising campaign success in a privacy-compliant way. 

James McDonald is the director and co-founder of Audience Group.