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First, Second and Third-Party Data

Altcraft Platform — Mon, 08 Aug 2022 15:46:44 +0000

Data is the backbone of marketing. 54% of marketers claim that success of advertising campaigns depends on data. Lack of necessary information about target audience results in loss of money. Businesses that personalize communication with their customers using data have ROI 5-8 times higher. That's why companies are switching to a data-driven approach.

Information obtained from several channels gives a more detailed picture of your audience, helps to personalize and scale your business and makes it possible to predict user behavior. There are several different types of data used for different tasks. By the way of obtaining and uniqueness, there are 1st, 2nd and 3rd party data. In this article, we will take a closer look at these types of data, learn how to use them in marketing and how to collect information about customers without violating confidentiality.

What is 1st Party Data

1st party data is data that companies receive directly from customers through registrations, pixels, cookies, CRM and other services. There are no restrictions on collecting information when it comes to this type of data. The only thing you need is user permission. Customers can refuse to provide data, although leaving a name, phone number or email address is usually not a problem.

1st party data that companies collect:

user behavior and time spent on websites and in apps;
results of email and SMS newsletters (open rate, clicks);
contact details: email address, phone number;
information about customer orders;
feedback;
demographic data;
user survey results;
behavior in social networks;
interests.

Advantages of first-party data: it's free of charge and reliable, you have full ownership of it because your competitors don't have access to company information.

Disadvantage of first-party data: it's not enough to scale your business.

Data collection is a priority for companies.

Why do businesses need first-party data:

It helps to learn about the needs of customers in detail and offer them products that they will definitely purchase.
It personalizes offers and content for customers.
It helps to launch advertising and retargeting campaigns.
It makes it possible to predict customer behavior.

Example. A customer purchased T-shirts of a certain brand in an online store. Six months later they visited the website and added the same ones to the cart. So we can conclude that a purchase is possible in the future. The company «anticipates» actions and pushes the customer: it offers them special conditions, a discount and reminds them about the product in a newsletter.

What is 2nd Party Data

2nd party data is the 1st party data collected by another company from its sources. Second-party data is bought from partners or third-party companies with a relevant audience.

Why do businesses need 2nd party data:

It helps to scale your business. It's difficult to broaden your audience only with 1st party data. If you don't have 2nd party data, you can make a mistake and take wrong actions when working with a new audience. With second-party data, it's easier to launch the first advertising campaigns.

Example. Let's imagine a company that specializes on women's clothing for fitness. The company made a decision to diversify the range and start selling men's clothing. The business doesn't have data on the new audience. But they have partners who are engaged in sports nutrition and work with their potential customers. Information obtained from this company is 2nd party data.

It serves as an addition to first-party data. With 2nd party data, you will see problems in the sales funnel.
It helps to track trends. Your conclusions will lack objectivity if you have only first-party data.
It strengthens partnership. When you exchange data, you increase trust between businesses.
It brings unexpected ideas to creative companies.

Example. A travel agency buys 2nd party data from an online store that sells suitcases and travel bags. According to the online store, 30% of their customers purchase dog carriers for airline travels. So the agency makes a decision to launch a new product and advertising campaign for travelers with pets.

Disadvantage of 2nd party data: you can't be sure that the data your company receives is 100% accurate and relevant. You don't know how and when this information was collected. If you buy 2nd party data, you should trust the seller and their data collection methods.

What is 3rd Party Data

3rd party data is data from multiple sources collected by aggregators. This includes 1st party data that were bought by outside sources and/or data collected through surveys, studies, interviews and so on. Examples of aggregators: Nielsen, eXelate, Acxiom, OnAudience, BlueKai, Oracle Data Cloud, Peer39, Google services, payment systems, etc. Social networks are also data aggregators that sell companies ready-made audiences for advertising. Third-party data sellers collect information and segment it into categories for searching by industry, by interests and so on.

Third-party data includes:

gender data;
interests;
income level;
geographic data;
professions.

How to use 3rd party data in marketing:

Use it to expand 1st party data, study your audience in detail and increase personalization.
Study and get ideas for business development. 3rd party data provides you with a larger audience reach that 1st and 2nd party data.
Launch targeted advertising for a potential audience.
Track global trends.

Advantages: third-party data is often collected automatically, so this information is always up-to-date and can be used for a quick change of marketing strategy.

Disadvantages: you can't be sure of the data accuracy; the same information is available to competitors.

It's important to work with all types of data because they complement each other.

Let's go back to the example of the company selling women's fitness clothing (see above), which decided to diversify their range and add men's sportswear. 2nd party data is the basis for the first campaign but the audience reach is not large enough. The company buys 3rd party data to supplement customer information and widen the audience.

If you have all three types of data, you have a comprehensive picture of your audience. The more you know about your customer, the easier it is to reach them and sell your product faster.

How to Collect Data

The current tendency in the world is to increase the privacy of personal information. Data collection is limited by legislation and by companies that collect data.

GDPR (General Data Protection Regulation) is a regulation that protects personal data of EU users and is valid for companies that work with EU citizens. A person can request personal data, correct and even delete it, revoke permission to its processing.

The Russian Federal Law on Personal Data prohibits disclosing user data to third parties without consent.

Google restricts cookies for 3rd party data in the Chrome browser. The company is planning to get rid of third-party cookies during 2022 to enhance user privacy. This approach is the obstacle to tracking customers’ interests and journey to conversion. It will become difficult or impossible for end-to-end analytics to find out customer journey through cross-devices.

Apple restricts third-party cookies (Intelligent Tracking Prevention) for Safari browser (from 13.1). The browser restricts the collection of data from third-party services. IOS 14.5 now requests confirmation to collect information via IDFA (The Identifier for Advertisers). If the user doesn't confirm, the accuracy of data decreases. Apple offers an alternative — anonymous aggregated data. However, it won't be enough to cover all marketing needs with such information.

Data Collection Rules

Prioritize 1st party data, collect 2nd party data to build your own data system and be less dependent on 3rd party data.
Notify users about data collection and ask their permission for its processing. You can't consider people whose data is collected secretly your target audience.
Follow the legislation on user data protection and the rules of the information market.

Conclusion

Marketing can't function properly without data. However, not all types of data are equally useful. There are 1st, 2nd and 3rd party data. First-party data is obtained directly from users. Second-party data is the 1st party data that companies buy from partners and businesses with a similar target audience. Third-party data is obtained from aggregators that buy information from companies or collect it themselves.

1st party data is reliable and easy to collect, but not suitable for scaling your business. 2nd party data expands your audience, but it’s difficult to test its validity. 3rd party data contains a lot of information, but you can't be sure of its reliability. Third-party data is also available to competitors.

Regulations of aggregators and state laws slow down the collection of information. Companies should monitor changes, create their own data collection and storage systems so as not to depend on third-parties.

The article was originally published here.

NFT: What is It and Why is It So Popular

Altcraft Platform — Mon, 01 Aug 2022 15:33:47 +0000

Today, there's a lot of buzz going around NFT. It's the word of 2021 according to Collins dictionary. And the popularity of the technology will continue to grow. The NFT market size reached $25 billion in 2021. According to forecasts, this number will reach $35 billion in 2022 and will increase to $80 billion by 2025.

NFT allows one to sell and buy digital objects for cryptocurrency. Digital property prices reach thousands and millions of dollars. The core target audience of NFTs are gamers, collectors and advanced investors. They tend to invest in NFTs rather than in stocks. The value of digital objects is growing, and NFT may soon replace documents in the real world.

In this piece you will learn what NFTs are, how they work, what they are for, where to create, sell and buy a digital work of art or a digital object.

What is NFT

NFT (a non-fungible token) is a technology that represents an entitlement its owner has to a digital object and confirms the uniqueness of a digital property. The concept came from the world of cryptocurrencies. Each NFT exists on a blockchain: a technology that records data in digital blocks in a certain order. Information on a blockchain can't be deleted or changed. Blocks are stored on multiple servers all over the world. It's almost impossible to hack a digital object on a blockchain.

A token is a blockchain element or a digital record that can be compared to securities and stocks in the real world. There are fungible, partially-fungible and non-fungible tokens (NFTs).

Let's look at examples.

Fungible token

If you borrow the US one-hundred-dollar bill from someone, and then recover your debt with another one of the same value, there will be no difference for the person from whom you borrowed. Although the bills are different (i.e. each one has a unique number), they are of equal value and can replace each other. Cryptocurrency works the same way in the digital world. Any bitcoin is equal to the same one because each has a fungible token.

Partially-fungible token

A train ticket you buy is not unique because other passengers have the same tickets that can be exchanged. However, each passenger has a seat number specified in their ticket. It distinguishes one ticket from another. In the digital world, this ticket would combine the characteristics of a fungible token (the passengers of this train can exchange their tickets with each other and still get to their destination) and a non-fungible one because each ticket has a unique seat number. Therefore, a train ticket with a seat number can be viewed as a partially-fungible token.

Non-fungible token (NFT)

If you buy a painting that is sold in a single copy, you can't replace it with a reproduction because it has its own characteristics. When a unique object exists only in the digital world, it is assigned a non-fungible token (NFT).

An example of an NFT that is adored by many people around the world is a game called CryptoKitties. There people buy digital pets with unique tokens. People breed NFT crypto cats and get new kittens. The blockchain code here functions as a genetic one: all new cats will be unique.

How the NFT Technology Appeared

The technology appeared in 2017 on the basis of the Ethereum cryptocurrency smart contracts. Smart contracts are agreement codes between a buyer and a seller and a way of using an object. In the digital world, a token performs the function of a signature.

Initially, the NFT technology supported blockchain art: it protected the copyright of unique content. It is difficult to find out who the real author is in the digital world. For example, a JPG image of a cat doesn't differ from its copy. When you copy an image, it loses its uniqueness and the author remains unknown unless users don't specify their name under each post. If an image has an NFT, the copying history is saved and each user knows its author and owner.

The first transition of a real work of art into the digital world became a performance. Injective Protocol bought Banksy's stencil «Morons (White)» created in 2007 for 95 thousand dollars. The work was burned, and only the virtual version in the form of an NFT was left.

Now, not only paintings, but also author's images, GIFs, music, photos and videos, game items can have an NFT. Even real-world objects can have it: cars, real estate. Perhaps in the future there will be no need for paper documents because NFTs will replace even passports.

How to Create, Sell and Buy NFTs

How to Buy an NFT

First, you need to choose a platform. NFT platforms trade digital objects in cryptocurrency, sometimes in dollars. Examples of platforms: Juggerworld, Treasureland, Blockparty, Nfty Gateway, Rarible, OpenSea, NFT STARS, NFT-X and others.

A buyer receives a digital certificate with unique blockchain data and stores an object on any device: smartphone, computer, flash drive. The object itself remains in IPFS (Inter-Planetary File System). Other users will be able to download and view the object, but only one user will have the private key (certificate). The owner has the right to issue public keys to users when copying to confirm the authenticity of the object.

How to Create an NFT and Sell It

You can use one platform for creation and sale. The user needs a crypto wallet to pay the platform commission (sometimes there's no commission) and the object itself. The owner uploads the content to the platform and sets the price.

NFT is created in one of the blockchain formats: ERC-721, ERC-1155, ERC-998, EIP-2309 and others that NFT platforms have.

An NFT author has the right:

To limit the number of copies.
To receive royalties from each sale (sometimes this process is automated).
Not to prove copyright, which is registered in the blockchain.

What are NFTs for

Authors can earn money from their content

Usually authors promote the platforms with their content. In return, they get advertising and virality, but not money directly. With NFT, the author will receive royalties when someone uses their content.

Copyright protection

Before NFTs, it was necessary to specify the author's name on their creations. The method worked poorly, the author's name was often lost. The creator of the object, the current owner and the resale history are recorded in the blockchain.

Replacement of digital documents and tickets

With NFTs, ownership of real estate or a car is confirmed with a token instead of a paper document. The technology is also used to sell tickets to events. The difference between ordinary e-tickets and documents and NFTs is in the degree of protection: NFTs can't be forged and stolen.

Content interactivity

NFTs make media content interactive allowing the user to take part in its creation.

Example. Creators of comedy series The Gimmicks distributed free tokens that users use to vote for plot development options. Also, users receive a unique NFT character from the series and even become assistants in the production team.

Investment

Buying digital objects is a profitable investment. NFTs are getting more expensive, digital objects are being resold for impressive amounts of money, but still it's impossible to say for sure the price of which NFT will skyrocket in the future. Not all NFTs are valuable: it depends on the author and characteristics. For example, Elon Musk put up for sale his tweet in the form of an NFT. The price of the item at auction exceeded one million dollars.

Examples of NFTs

Some NFTs become famous all over the world, not just among collectors. Such objects are sold at famous auctions Christie's and Sotheby's. Sometimes NFT art seems primitive, but even simple images can cost millions of dollars. Below you will see a few examples of digital objects that cost like millionaires' yachts.

CryptoPunks

This is an example of a very simple but expensive NFT. Only rich collectors can afford these unique pixel avatars.

A collection of nine rare CryptoPunks images was sold for almost $17 million at Christie's.

The First 5000 Days

Artist Beeple published a new work every day for 13 years and then combined all the images into a collage of 50000 thousand elements and sold as NFT at Christie's. The image is called The First 5000 Days because the author decided to create a new picture every day for the rest of his life. The collage with the first days costs $69 million.

World Wide Web source code

English scientist Tim Berners-Lee created a token for the source code of the Internet, which he invented in 1989. The cost of this NFT at Sotheby's is $5.4 million.

Campbell's Soup Can

Andy Warhol's famous painting of Campbell's soup cans also turned into an NFT. The work called «Untitled (Campbell's Soup Can)» was sold at Christie's for $1.1 million.

Transition by Pokras Lampas

Calligrapher Pokras Lampas digitized and sold for $29,000 an NFT photo depicting a projection of his work at the Chirkeyskaya hydropower plant.

Nyan Cat

Creator of Nyan Cat meme Chris Torres made a token out of the Internet-famous cat and sold it for more than $560 thousand dollars.

Conclusion

NFT (a non-fungible token) is a blockchain-based technology that confirms the uniqueness of a digital object, protects copyright and keeps the history of changes and resales.

It's impossible to support NFT, but it's easy to create one. A digital object is uploaded to one of the NFT platforms and the price is indicated in cryptocurrency (sometimes in dollars). With the technology, people sell works of art, images, music, GIFs and even game items. NFTs even replace paper documents when buying real estate or a car.

This technology allows content creators to receive royalties. NFTs are also an alternative to conventional investment. Digital objects are growing in price and are often sold at auctions for thousands and millions of dollars.

The article was originally published here.