Key data differences in the post GDPR era
Key data differences in the post GDPR era
Andrew Masters, director at XCM, discusses the differences between first, second and third party data, and the impact on each of the new GDPR, which comes into force today to unify the approach of EU member states to data regulation.
Data is the petrol that keeps online gambling operators firing on all cylinders. It plays a significant, even critical, role in player acquisition and retention, allowing marketers to target consumers with individual offers and tailored promotions.
In a fiercely competitive market, it is the difference between success and failure.
But GDPR is about to change how operators gather and use data, and given the recent Facebook scandal, consumer confidence is at an all time low when it comes to how large organisations use information held on them.
This means operators must strike the right balance between the value harvesting data provides, and the “harm” perceived by consumers/players. Indeed, operators can gather information from several sources, specifically first, second and third party.
While first party data is undoubtedly the most valuable, the changing landscape of data collection and management means operators must consider obtaining data from elsewhere. In the post-GDPR world, this type of data may even prove more valuable.
Data at first party level is collected either online from your customers or offline through surveys/forms within your own CRM platform.
It includes customer names, addresses, registrations, transactions, behaviours, interests and social media accounts. If protected and processed accurately, it is the most valuable asset you will hold.
This data provides absolute facts about your customers, and you are fully in control of it. There are no processing fees, and the information is highly relevant and therefore offers the best return on investment.
But it lacks reach - there is a huge global consumer audience out there, so second and third party sources are used to access it.
Second party data: The real deal?
Adobe recently identified second party information as the new opportunity in the data economy, with retailers, brands, publishers and marketers gaining transparent access to data through websites of others doing the same.
In effect, second party data is not yours and is, in fact, someone else’s first party data. If this is done transparently and compliantly, it could prove to be hugely valuable to online gambling operators as they will be able to access key information on potential new customers.
Operators considering this approach should look to form business partnerships with trusted organisations targeting similar customers/demographics, but in non-competing industries. For example; Lottery providers have started to partner charity brands sharing the profit with the good causes and opening up new revenue streams for both.
However, it is important to properly explore the age and purpose of consent, and the use of data for third party release may have quality or privacy issues to be resolved.
These challenges are worth overcoming.
Just think of the advertising opportunities that come with such collaboration. If marketers get it right, there could be a major shift to second party marketing as it has the potential to be commercially strong and trusted by consumers, so long as a benefit to them prevails.
If processed and managed correctly, data gathered and used in this way falls between first and third party. Questions will always exist as the the quality of the data based on age and purpose of consent, but generally this is regarded as a good source for customer acquisition.
For second party data to work, operators and their partners need to take a deep breath and look outside of their own small universes and understand the options for incremental sales, whilst at the same time building trust with the consumer.
If they can do this, second party data will allow them to overcome the likely turmoil within the third party data camp.
Third party data: Can it survive GDPR?
GDPR is seen as the nemesis by many companies in the European Economic Area. On coming into force in May, it allows consumers or “data subjects” to control how their data is processed and used.
The lawfulness of processing data falls into six options: consent, performance of a contract, legal obligation, protect vital interests, public interest or legitimate interest. Third party data, however, must have explicit consent.
The issue here is defining explicit consent when it comes to obtaining the correct data permissions. In the post-GDPR era, this will be a major headache for data brokers, but will help flush out the bad actors with only the best remaining.
Third party data plays a major role in allowing organisations to gain access to new customers. It also helps marketers improve their existing targeted campaigns through an abundance of additional data variables beyond what first party data can provide.
The ability to append data accurately is essential, enriching the existing data with lifestyle, life-stage demographics and data suppressions. This strengthens database integrity and to the benefit of the consumer.
Third party data will survive GDPR, but in a reduced volume. It will also be more expensive to purchase, but the quality of the data will improve over time.
It is clear, then, that operators really need to leverage first, second and third party data in order to nail player acquisition and retention.
Sure, there are challenges ahead - particularly for third party brokers - but those that take a considered approach and understand how to overcome these hurdles will emerge in a much stronger position.