Shifting to a First-Party Data Strategy

The conversation around first-party data versus third-party data has been active for the past few years. However, a large percentage of the automotive retail world is still trying to understand why third-party data is less viable, how to effectively capitalize on first-party data, and what it all means for retailers.

What is First-Party Data?

When considering how auto retailers interact with their customers, a large percentage of customer insights, e.g., what the customer is interested in, has been from the use of third-party data. Whether it’s through cookies that track their online activity, affiliate networks, social media engagement, or other sources, auto retailers have traditionally worked with their digital advertising partners to tap into data garnered from outside sources to target consumers with their offers.

For years, that was the backbone of search-engine advertising, and even social marketing on platforms such as Facebook. 

For example, a majority of auto retailers used information that was collected when consumers visited various websites – or when they made certain demographic information and preferences known on Facebook. Auto retailers would acquire the browsing details and use them in their targeting for personalized offers. However, new privacy laws have been implemented, and companies are giving users the ability to block third-party tracking —making it nearly impossible for auto retailers to leverage third-party data for their advertising.

Like the rest of the e-commerce world, dealerships now find themselves needing to pivot to first-party data strategies. 

Creating a More Personalized Experience

First-party data is now essential to deliver more relevant and personalized marketing to digital-first consumers — and to better understand and serve their needs. Consumers today are much more digital-centric in their behaviors than they were even just a few years ago, so the importance of understanding them can’t be understated. 

Furthermore, in today’s increasingly unpredictable business climate, delivering an even more personalized customer experience is a basic requirement your customers expect. Consumers gravitate toward dealerships that pay attention to — and anticipate — their specific wants and needs.

A dealership’s first-party customer data has the potential to be a treasure trove of audience insights that can be uniquely segmented to strategically target customers with customized messaging. Dealers can make use of the data to reach customers on any outbound marketing channel, For example, dealers can identify higher-mileage vehicles and offer those customers a special trade-in credit to get them into new models.

'Don’t I Already Have This Data in My Current Systems?'

By now, you hopefully understand the importance of your first-party data and have an idea of how you can utilize it.  One question that remains: Where do you manage this invaluable information?

Your DMS or CRM may come to mind. However, in analyzing hundreds of dealership data sources, we’ve found that they are filled with inaccurate and/or outdated customer information. At times, as many as half of those customer records were affected.To top it off, using unreliable customer data leads to a significant waste of your marketing spend, either from incorrect customer contact information or from reaching out with irrelevant messages.

In addition, CRM systems don’t typically offer the flexibility and customization dealers look for when creating audience segments for their marketing. A robust CDP can help you target customers more effectively, and even automate the outreach —  saving you time and effort. 

Capitalize on First-Party Data With a Customer Data Platform

To put your first-party data to work for you, a CRM or DMS isn’t the answer. A Customer Data Platform is. A first-class CDP will:

• Manage your customer data and create specific audiences you can target for marketing outreach
• Clean and append the data to ensure your customer records are accurate and up-to-date
• Securely store your data and encrypt it when you transfer the information to a marketing platform or advertising channel, ensuring compliance with privacy regulations

Combining a CDP with a robust marketing platform allows you to efficiently put first-party data to work. You can then easily target customers with digital advertising, social media, email, direct mail, or text — in addition to outreach lists for a BDC.

When dealers can clean and take action on their first-party data, it offers limitless marketing opportunities. It also leads to improvements in metrics, such as costs per conversion and reductions in ad waste.

The future of automotive marketing will be reliant on ultra-targeted marketing with your secure first-party data. It will be essential to compete in crowded markets. Dealers that start today are going to have a leg up on their competition.

Aaron Sheeks, is president of PureCars, an Atlanta-based provider of digital marketing technology and services for automotive dealers. Before joining PureCars, he served as CEO of The AutoMiner, acquired by PureCars in early 2023.