Big data is big business in the modern economy.
In order to properly target their marketing efforts, brands rely on data– collected digitally from across social media platforms such as Meta (Facebook and Instagram) and LinkedIn, search engines, web browsers, and other software tools–to make key business decisions.
This massive reliance on data has translated into a market valued at around $260 billion globally[1].
However, concerns over data privacy and the invasiveness of digital advertising tactics are driving efforts to make significant changes in data collection practices. If recently introduced legislation passes into law[2], and if some of the largest digital software companies continue to prioritize consumer privacy across their platforms, big data faces big changes in the coming year.
Major changes in the work include Google’s plans to disable third-party data-tracking cookies in the coming year[3] and the Consumer Financial Protection Bureau (CFPB) push for the Fair Credit Reporting Act (FCRA) to be expanded to protect consumer data by regulating data brokers, aggregators, and alternative data sources[4].
These changing dynamics around data acquisition have concerning repercussions for marketing professionals.
In fact, our recent survey of 300 small business marketing analytics professionals found that 87% of businesses that collect 3rd-party data are concerned about the potential of losing access to this data due to these changing tides.
In this survey report, we’ll explore how SMBs are preparing for and responding to these changes through the lens of their data collection practices, concerns, goals, strategies, budgets, results, and more.
Most SMBs are concerned about losing access to third-party cookies and data
In our survey, we explored how concerned SMBs were about losing the ability to use cookies for third-party data, as it’s one of the easiest sources of valuable customer data to access. This data can come from websites, social media, mobile applications, and data gathered from landing pages and registration forms, and is often bundled and sold by data brokers to brands looking to define and refine their target audience metrics.
SMBs are concerned, regardless of staff size
The data collected in our survey reveals just how much SMB marketing experts rely on the data they acquire from data brokers and aggregators.
Overall, 87% of our respondents who use this type of data were at least moderately concerned about losing access to the third-party data stream due to legislative changes. This concern existed across the entirety of our respondent field.
- 89% of businesses with 100 or more employees are concerned about the potential loss of access to this data stream.
- 82% of businesses with less than 100 employees said that they were concerned.
Of course, larger businesses have more to lose when losing access to a previously reliable stream of data, while smaller businesses are inherently more nimble and likely have already had to learn how to do more with less.
Be concerned, start preparing, but do not panic
In order to protect user experience, you should make adapting and adjusting your data collection practices your top priority as legislative changes and growing privacy concerns alter the data collection landscape.
This pivot from third-party to first-party data acquisition should be your organization’s primary focus, as it helps in the creation of a more reliable data set that you have directly sourced and know to be trustworthy.
Because you’re asking users for their data directly, you’re also establishing trust and rapport from the onset that is absent from data purchased or acquired externally.
If you’re not quite sure how to make this pivot on your own, you can enlist a digital marketing expert in the form of a consultant or agency to advise and guide your organization on how best to collect data directly rather than relying on outside sources.
Almost all SMBs that collect third-party data are already working on alternative solutions
If you’re curious about what your SMB peers are doing in anticipation of the third-party data spigot being shut off, consider that 92% of our respondents who rely on this type of data are either already working with a digital marketing agency to collect more first-party data (56%) or plan to do so in the next year (36%).
Leveraging the expertise of consultants or powering up with software tools
Aside from agencies, SMBs are also turning to freelancers and consultants or bringing data collection in-house.,
- 89% have either already (47%) hired a freelance marketing analyst/consultant to assist with their data collection and analysis or plan to do so in the next year (42%).
- 93% have either already (61%) invested in business intelligence (BI) software[5] or plan to do so in the next year (32%) to improve their marketing data analysis.
Consultants and freelancers allow business owners to adopt new data collection methods and gain access to professionals capable of analyzing that data without having to maintain staff or resources capable of accomplishing this.
Alternatively, for marketing teams with the expertise to utilize them, BI software platforms are especially powerful alternatives to outsourcing that can be easily folded into your company’s martech stack.
Business intelligence software provides marketing teams with AI data-driven analytics tools adept at providing the insight necessary for leadership and owners to make informed business decisions.
Mitigating the loss of data streams through partnerships and alternative sources
Changes to Google’s policies for collecting personal data through the use of digital cookies and legislative limitations don’t mean that business owners aren’t seeking other means for gathering data that mitigate the impact of these limitations.
One method is similar to co-branding marketing in that SMBs are looking to collaborate with other businesses with similar audience demographics in order to share data and gain insight. According to our survey findings:
- 47% of businesses are already sharing customer insights and data with other businesses.
- Another 34% are exploring this type of partnership with plans to share insights and data
This data collaboration can open the door to insights SMBs might not otherwise discover. Fresh insight can foster innovation and allow both parties to grow and expand their sales in new ways, as long as the shared data is relevant for the organizations involved.
Forging this type of partnership can also lead to other opportunities beneficial to both businesses, such as negotiating volume-based discounts with vendors and forming event marketing partnerships.
Larger organizations are more inclined to partner up for data sharing
Among the one-third of our survey respondents who work for businesses with more than 500 employees, nearly 90% are sharing data and insights with business partners (55%) or plan to do so (34%).
Companies with 500 employees or fewer, on the other hand, aren’t quite as open to this type of partnership, with only 44% currently sharing data with other SMBs and 34% saying that they plan to do so.
This discrepancy presents an opportunity for SMBs that are trying to grow. If you’re not sharing data and insights with trusted business partners, you could be missing out on a golden opportunity for growth, especially once the third-party data flow is shut off by Google.
Be cautious with the data you integrate into your analytics
While collaboration can result in significant savings and an expanded data pool, it can also hurt your data analytics efforts if the partnership is poorly thought out.
Failing to partner with the right types of businesses can introduce data into your analytics that could muddy the waters and cause leadership to make poor decisions. Working with a digital marketing agency or consultant with experience in your industry can help ensure solid partnerships and reliable data.
You can’t afford to take a wait-and-see approach to alternative data collection
Exploring your alternatives to third-party data collection now will help your brand keep pace with the competition. Chances are, however, that even your most skilled analytics specialists on staff will need additional support.
So far, we’ve laid out several paths for your team to follow when looking to prepare for the inevitable transition away from third-party data:
- Leveraging business intelligence software to maximize the insights gained from your first- and second-party data sources
- Seeking out a qualified marketing analyst to guide your team through sustainable data-sourcing alternatives
- Forging collaborative partnerships in adjacent industries or with other local business owners to expand your data po0l
Rather than panicking in the face of impending changes to third-party data access, organizations can set themselves up for long-term success by using a combination of these tactics.
If your business is in this position and you’re not sure what to do next, you can explore how to introduce a more objective-based approach into your digital marketing strategy to guide your next steps.
Data Collection Goals and Marketing Strategies
Data collection serves a number of purposes across multiple business processes, especially those focused on providing services and products to customers, regardless of whether the focus is on business-to-business or business-to-consumer.
Our survey explored some of the most important goals around data collection and its role in supporting overarching marketing campaigns. We found that there were three primary goals businesses seek to accomplish through data analysis.
Data leads to better audience targeting
Our survey revealed that 70% of our respondents touted the ability to improve the targeting of marketing campaigns as one of the primary goals of their data collection efforts.
Being able to collect data from a number of relevant sources allows marketing experts to hone in on a more refined and focused definition of the ideal customer, which they can then use to craft extremely targeted and unique campaigns.
Data helps marketers understand and keep up with rapidly shifting trends in user privacy requirements
Tapping into both historical and current data flow allows SMB owners and marketers to better understand consumer trends in privacy concerns and anticipate changes in product or service demands. With 59% of marketers prioritizing improved market forecasting, our survey reveals that this is a crucial element of data collection.
User data allows marketers to further segment well-defined audiences
While targeting the proper audiences according to demographic data gathered, 57% of our respondents prioritize utilizing that data to further drill down their audience into targeted segments. Through more defined market segmentation, marketing teams are better able to craft campaigns around their products and services to audiences most likely to engage with lead conversion efforts.
SMBs prioritize maximizing the collection of ROI data
Data gathered from social media and digital channels is often focused on tracking consumer behaviors, their activity online, and the content they engage with the most.
When combined, this data can be used to reveal how effective certain marketing initiatives are in guiding potential leads through the inbound marketing funnel, and ideally resulting in conversions.
While third-party data can reveal the behaviors of your target audience segments across other platforms, it’s more effective to use tools to gather and track the behaviors of potential clients across your own platforms and channels.
This first-party data collection will offer more actionable insight and allow a better understanding of how your advertising efforts are driving sales, which is why ROI-focused marketing data is the priority of 47% of our respondents.
It follows that the other types of data cited by our respondents as most important to their business goals are also largely related to return on investment.
- While immediate ROI is important to understand the short-term effectiveness of your marketing data, CLV (customer lifetime value) has been prioritized by 36% of our respondents because long-term repeat customers help to build long-term profitability and help to provide stability over time.
- Profitability can be undermined if the CAC (customer acquisition costs) far outweighs the return. This is why tracking and understanding the costs of converting a customer are a priority for 34% of our respondents.
- Additional data points tracked and prioritized by respondents include conversion rates (31%), website traffic volume (29%), and engagement metrics (28%).
This emphasis on ROI data seems to indicate that first-party data–the type of data that fuels ROI and related metrics–is most valuable for SMBs, but third-party data is still profitable enough to be a concern.
As a quick refresher, here’s a brief overview of the three types of data and their significance to marketing teams.
- First-party data is data gathered directly from a customer on landing pages, social pages, registration forms, and other direct methods on your company channels. This data comes from established relationships with consumers and should be prioritized.
- Second-party data comes out of established partnerships and co-marketing efforts. This data carries a similar level of trust, as you’re ideally partnering with other companies that you trust.
- Third-party data is acquired as a product through data aggregation companies that purchase data from multiple sources and compile the disparate data into a unified product. While third-party data extends the scope of your marketing analytics, it’s generally the least trustworthy type of data simply because of the murkiness of its source.
Our survey revealed that, on average, SMBs are spending slightly more on first-party data sets than they are on second-party data, with 32% of our respondents reporting that they spend $700 or more per month on first-party data, and only 24% of SMBs hitting that spending threshold for second-party data.
This would make sense, as first-party data collection requires software tools and skilled labor, while second-party data is more of a passive resource earned through relationship building.
As for third-party data collection, our respondents reported a fairly even distribution of spending, from anywhere between $1-$300 per month (19%) to $800 or more (20%) and everything in between.
This seems to indicate that–like email marketing or PPC (pay-per-click) campaigns–SMBs can customize their spending on third-party data based on their business size, budget, resources, and analytics strategy.
We also asked our survey respondents about the return they’re getting from their data collection spending, and the responses seem to confirm that first-party data is indeed the most valuable.
More than 60% of our respondents reported an ROI of $30 or more for each dollar spent on first-party data collection. This well outpaces both second-party data collection (51%) and third-party data collection (49%).
On top of that, 10% of our respondents reported an ROI of $0 or less on their third-party marketing data, meaning that one in 10 businesses are actually losing money on their third-party data collection. In comparison, only 5% of businesses report losing money on second-party data collection and 2% of businesses report losing money on first-party data collection.
This paints an even clearer picture that first-party and second-party data are a much safer investment than third-party data.
Benefits of leveraging marketing data collection and analysis
As we’ve seen in this report, marketing data collection helps SMBs achieve the goals they set out to achieve. When we match up effort to results, the respondent data reveals that the most prioritized goal of data collection and analysis—refined and improved targeting in marketing campaigns—is also the most cited benefit of these data collection efforts.
In fact, an overwhelming 49% of our respondents said that “better-targeted marketing campaigns” was one of the biggest benefits of their marketing data collection and analysis.
Company size impacts results
Business size does seem to have an impact on the benefits of data collection and analysis. While better targeting is still cited as a key benefit by 49% of businesses with more than 500 employees, market forecasting is actually the most frequently cited benefit (52%) for these larger businesses in comparison to businesses with 500 or fewer employees (40%).
This would seem to indicate that larger businesses with more staff and more resources are better able to not only focus on current campaigns, but also to strategize and plan for future campaigns based on market projections.
At the other end of the spectrum, smaller businesses with fewer than 100 employees cite improved conversion rates (53%) above all other benefits.
One potential explanation for this could be that smaller businesses with fewer moving parts are able to more quickly implement changes based on data analysis, resulting in immediate improvements to conversion rates.
A strong first-party data strategy provides the best value for small businesses
Through data collection and analysis, SMBs are able to improve the targeting of their marketing campaigns, and this improved targeting seems to bring with it several related benefits like improved conversion rates (44%) and better ROI (43%).
Ultimately, better targeting helps drive revenue through conversion rates and improved ROI, and first-party data is the highest quality source for these insights.
SMBs should be more empowered to collect relevant, high-quality first-party data
Third-party marketing data comes from data brokers, while second-party marketing data comes out of partnerships with other companies. Many small businesses are already leveraging in-house resources to collect first-party marketing data, which should make the transition away from third-party data reliance somewhat less painful.
While we learned above that 92% of our respondents are either already using a digital marketing agency to assist with data collection or plan to do so in the near future, a significant portion of our respondents already have experience collecting and analyzing data with existing resources on staff.
- 68% of businesses rely on an in-house team (39%) or individual (29%) to collect and analyze marketing data.
- Only 30% of our respondents report currently using a digital marketing agency or consultant as their primary source of marketing data collection.
SMBs are confident in the data collection efforts they have in place
A combination of agency support and in-house marketing experts provides a majority of our respondents with a high degree of confidence in the analytics they’ve gathered.
- 83% of businesses rate their overall marketing analytics efforts as moderately (43%) or very (40%) effective.
Breaking down their efforts by types of data, we found that a large majority of our respondents were extremely satisfied with their ability to collect first- and second-party data. They’re accomplishing this through the use of digital tools.
- 80% of SMBs are moderately (39.7%) or very (40.7%) confident in their ability to collect and analyze first- and second-party data
- Roughly half of SMBs are already using data analysis software (55%), customer data platform software (51%), and/or data collection software (49%).
Our results revealed that while marketers are largely concerned about the impending loss of third-party data, the reality is that the majority of SMBs already have the tools and experience needed to pivot to first- and second-party data collection, which should also result in higher-quality data streams and more reliable insights.
Future-proof your data collection practices by making the pivot away from third-party data collection for a cookieless world
While there is no true need for marketing professionals to panic about the loss of third-party data, there is a need to pivot away from the reliance that 50% of SMBs have on third-party data. Filling the gap left by this pivot will be something that SMBs must quickly learn to navigate.
For those who don’t have the skills or staff to accomplish this pivot in-house, we suggest turning to digital marketing agencies and consultants to fill the gaps and improve the data streams from first-party and second-party sources in order to bolster channels that will improve overall ROI and profitability.
Sources
- Essential Data Broker Industry Statistics in 2023, ZipDo
- U.S. Data Privacy Laws to Enter New Era in 2023, Reuters
- Prepare for Phasing Out Third-party Cookies, Chrome for Developers
- CFPB Launches Inquiry Into the Business Practices of Data Brokers, Consumer Financial Protection Bureau
- Business Intelligence software Buyers Guide, Capterra
UpCity’s Survey Method
This survey was conducted using Pollfish in October of 2023 among 300 U.S. small business marketing analysts to learn about their data collection practices, strategies, preferences, and concerns. Respondents were screened for their role overseeing marketing information management and analytics.
Big data is big business in the modern economy.
In order to properly target their marketing efforts, brands rely on data– collected digitally from across social media platforms such as Meta (Facebook and Instagram) and LinkedIn, search engines, web browsers, and other software tools–to make key business decisions.
This massive reliance on data has translated into a market valued at around $260 billion globally[1].
However, concerns over data privacy and the invasiveness of digital advertising tactics are driving efforts to make significant changes in data collection practices. If recently introduced legislation passes into law[2], and if some of the largest digital software companies continue to prioritize consumer privacy across their platforms, big data faces big changes in the coming year.
Major changes in the work include Google’s plans to disable third-party data-tracking cookies in the coming year[3] and the Consumer Financial Protection Bureau (CFPB) push for the Fair Credit Reporting Act (FCRA) to be expanded to protect consumer data by regulating data brokers, aggregators, and alternative data sources[4].
These changing dynamics around data acquisition have concerning repercussions for marketing professionals.
In fact, our recent survey of 300 small business marketing analytics professionals found that 87% of businesses that collect 3rd-party data are concerned about the potential of losing access to this data due to these changing tides.
In this survey report, we’ll explore how SMBs are preparing for and responding to these changes through the lens of their data collection practices, concerns, goals, strategies, budgets, results, and more.
Most SMBs are concerned about losing access to third-party cookies and data
In our survey, we explored how concerned SMBs were about losing the ability to use cookies for third-party data, as it’s one of the easiest sources of valuable customer data to access. This data can come from websites, social media, mobile applications, and data gathered from landing pages and registration forms, and is often bundled and sold by data brokers to brands looking to define and refine their target audience metrics.
SMBs are concerned, regardless of staff size
The data collected in our survey reveals just how much SMB marketing experts rely on the data they acquire from data brokers and aggregators.
Overall, 87% of our respondents who use this type of data were at least moderately concerned about losing access to the third-party data stream due to legislative changes. This concern existed across the entirety of our respondent field.
- 89% of businesses with 100 or more employees are concerned about the potential loss of access to this data stream.
- 82% of businesses with less than 100 employees said that they were concerned.
Of course, larger businesses have more to lose when losing access to a previously reliable stream of data, while smaller businesses are inherently more nimble and likely have already had to learn how to do more with less.
Be concerned, start preparing, but do not panic
In order to protect user experience, you should make adapting and adjusting your data collection practices your top priority as legislative changes and growing privacy concerns alter the data collection landscape.
This pivot from third-party to first-party data acquisition should be your organization’s primary focus, as it helps in the creation of a more reliable data set that you have directly sourced and know to be trustworthy.
Because you’re asking users for their data directly, you’re also establishing trust and rapport from the onset that is absent from data purchased or acquired externally.
If you’re not quite sure how to make this pivot on your own, you can enlist a digital marketing expert in the form of a consultant or agency to advise and guide your organization on how best to collect data directly rather than relying on outside sources.
Almost all SMBs that collect third-party data are already working on alternative solutions
If you’re curious about what your SMB peers are doing in anticipation of the third-party data spigot being shut off, consider that 92% of our respondents who rely on this type of data are either already working with a digital marketing agency to collect more first-party data (56%) or plan to do so in the next year (36%).
Leveraging the expertise of consultants or powering up with software tools
Aside from agencies, SMBs are also turning to freelancers and consultants or bringing data collection in-house.,
- 89% have either already (47%) hired a freelance marketing analyst/consultant to assist with their data collection and analysis or plan to do so in the next year (42%).
- 93% have either already (61%) invested in business intelligence (BI) software[5] or plan to do so in the next year (32%) to improve their marketing data analysis.
Consultants and freelancers allow business owners to adopt new data collection methods and gain access to professionals capable of analyzing that data without having to maintain staff or resources capable of accomplishing this.
Alternatively, for marketing teams with the expertise to utilize them, BI software platforms are especially powerful alternatives to outsourcing that can be easily folded into your company’s martech stack.
Business intelligence software provides marketing teams with AI data-driven analytics tools adept at providing the insight necessary for leadership and owners to make informed business decisions.
Mitigating the loss of data streams through partnerships and alternative sources
Changes to Google’s policies for collecting personal data through the use of digital cookies and legislative limitations don’t mean that business owners aren’t seeking other means for gathering data that mitigate the impact of these limitations.
One method is similar to co-branding marketing in that SMBs are looking to collaborate with other businesses with similar audience demographics in order to share data and gain insight. According to our survey findings:
- 47% of businesses are already sharing customer insights and data with other businesses.
- Another 34% are exploring this type of partnership with plans to share insights and data
This data collaboration can open the door to insights SMBs might not otherwise discover. Fresh insight can foster innovation and allow both parties to grow and expand their sales in new ways, as long as the shared data is relevant for the organizations involved.
Forging this type of partnership can also lead to other opportunities beneficial to both businesses, such as negotiating volume-based discounts with vendors and forming event marketing partnerships.
Larger organizations are more inclined to partner up for data sharing
Among the one-third of our survey respondents who work for businesses with more than 500 employees, nearly 90% are sharing data and insights with business partners (55%) or plan to do so (34%).
Companies with 500 employees or fewer, on the other hand, aren’t quite as open to this type of partnership, with only 44% currently sharing data with other SMBs and 34% saying that they plan to do so.
This discrepancy presents an opportunity for SMBs that are trying to grow. If you’re not sharing data and insights with trusted business partners, you could be missing out on a golden opportunity for growth, especially once the third-party data flow is shut off by Google.
Be cautious with the data you integrate into your analytics
While collaboration can result in significant savings and an expanded data pool, it can also hurt your data analytics efforts if the partnership is poorly thought out.
Failing to partner with the right types of businesses can introduce data into your analytics that could muddy the waters and cause leadership to make poor decisions. Working with a digital marketing agency or consultant with experience in your industry can help ensure solid partnerships and reliable data.
You can’t afford to take a wait-and-see approach to alternative data collection
Exploring your alternatives to third-party data collection now will help your brand keep pace with the competition. Chances are, however, that even your most skilled analytics specialists on staff will need additional support.
So far, we’ve laid out several paths for your team to follow when looking to prepare for the inevitable transition away from third-party data:
- Leveraging business intelligence software to maximize the insights gained from your first- and second-party data sources
- Seeking out a qualified marketing analyst to guide your team through sustainable data-sourcing alternatives
- Forging collaborative partnerships in adjacent industries or with other local business owners to expand your data po0l
Rather than panicking in the face of impending changes to third-party data access, organizations can set themselves up for long-term success by using a combination of these tactics.
If your business is in this position and you’re not sure what to do next, you can explore how to introduce a more objective-based approach into your digital marketing strategy to guide your next steps.
Data Collection Goals and Marketing Strategies
Data collection serves a number of purposes across multiple business processes, especially those focused on providing services and products to customers, regardless of whether the focus is on business-to-business or business-to-consumer.
Our survey explored some of the most important goals around data collection and its role in supporting overarching marketing campaigns. We found that there were three primary goals businesses seek to accomplish through data analysis.
Data leads to better audience targeting
Our survey revealed that 70% of our respondents touted the ability to improve the targeting of marketing campaigns as one of the primary goals of their data collection efforts.
Being able to collect data from a number of relevant sources allows marketing experts to hone in on a more refined and focused definition of the ideal customer, which they can then use to craft extremely targeted and unique campaigns.
Data helps marketers understand and keep up with rapidly shifting trends in user privacy requirements
Tapping into both historical and current data flow allows SMB owners and marketers to better understand consumer trends in privacy concerns and anticipate changes in product or service demands. With 59% of marketers prioritizing improved market forecasting, our survey reveals that this is a crucial element of data collection.
User data allows marketers to further segment well-defined audiences
While targeting the proper audiences according to demographic data gathered, 57% of our respondents prioritize utilizing that data to further drill down their audience into targeted segments. Through more defined market segmentation, marketing teams are better able to craft campaigns around their products and services to audiences most likely to engage with lead conversion efforts.
SMBs prioritize maximizing the collection of ROI data
Data gathered from social media and digital channels is often focused on tracking consumer behaviors, their activity online, and the content they engage with the most.
When combined, this data can be used to reveal how effective certain marketing initiatives are in guiding potential leads through the inbound marketing funnel, and ideally resulting in conversions.
While third-party data can reveal the behaviors of your target audience segments across other platforms, it’s more effective to use tools to gather and track the behaviors of potential clients across your own platforms and channels.
This first-party data collection will offer more actionable insight and allow a better understanding of how your advertising efforts are driving sales, which is why ROI-focused marketing data is the priority of 47% of our respondents.
It follows that the other types of data cited by our respondents as most important to their business goals are also largely related to return on investment.
- While immediate ROI is important to understand the short-term effectiveness of your marketing data, CLV (customer lifetime value) has been prioritized by 36% of our respondents because long-term repeat customers help to build long-term profitability and help to provide stability over time.
- Profitability can be undermined if the CAC (customer acquisition costs) far outweighs the return. This is why tracking and understanding the costs of converting a customer are a priority for 34% of our respondents.
- Additional data points tracked and prioritized by respondents include conversion rates (31%), website traffic volume (29%), and engagement metrics (28%).
This emphasis on ROI data seems to indicate that first-party data–the type of data that fuels ROI and related metrics–is most valuable for SMBs, but third-party data is still profitable enough to be a concern.
As a quick refresher, here’s a brief overview of the three types of data and their significance to marketing teams.
- First-party data is data gathered directly from a customer on landing pages, social pages, registration forms, and other direct methods on your company channels. This data comes from established relationships with consumers and should be prioritized.
- Second-party data comes out of established partnerships and co-marketing efforts. This data carries a similar level of trust, as you’re ideally partnering with other companies that you trust.
- Third-party data is acquired as a product through data aggregation companies that purchase data from multiple sources and compile the disparate data into a unified product. While third-party data extends the scope of your marketing analytics, it’s generally the least trustworthy type of data simply because of the murkiness of its source.
Our survey revealed that, on average, SMBs are spending slightly more on first-party data sets than they are on second-party data, with 32% of our respondents reporting that they spend $700 or more per month on first-party data, and only 24% of SMBs hitting that spending threshold for second-party data.
This would make sense, as first-party data collection requires software tools and skilled labor, while second-party data is more of a passive resource earned through relationship building.
As for third-party data collection, our respondents reported a fairly even distribution of spending, from anywhere between $1-$300 per month (19%) to $800 or more (20%) and everything in between.
This seems to indicate that–like email marketing or PPC (pay-per-click) campaigns–SMBs can customize their spending on third-party data based on their business size, budget, resources, and analytics strategy.
We also asked our survey respondents about the return they’re getting from their data collection spending, and the responses seem to confirm that first-party data is indeed the most valuable.
More than 60% of our respondents reported an ROI of $30 or more for each dollar spent on first-party data collection. This well outpaces both second-party data collection (51%) and third-party data collection (49%).
On top of that, 10% of our respondents reported an ROI of $0 or less on their third-party marketing data, meaning that one in 10 businesses are actually losing money on their third-party data collection. In comparison, only 5% of businesses report losing money on second-party data collection and 2% of businesses report losing money on first-party data collection.
This paints an even clearer picture that first-party and second-party data are a much safer investment than third-party data.
Benefits of leveraging marketing data collection and analysis
As we’ve seen in this report, marketing data collection helps SMBs achieve the goals they set out to achieve. When we match up effort to results, the respondent data reveals that the most prioritized goal of data collection and analysis—refined and improved targeting in marketing campaigns—is also the most cited benefit of these data collection efforts.
In fact, an overwhelming 49% of our respondents said that “better-targeted marketing campaigns” was one of the biggest benefits of their marketing data collection and analysis.
Company size impacts results
Business size does seem to have an impact on the benefits of data collection and analysis. While better targeting is still cited as a key benefit by 49% of businesses with more than 500 employees, market forecasting is actually the most frequently cited benefit (52%) for these larger businesses in comparison to businesses with 500 or fewer employees (40%).
This would seem to indicate that larger businesses with more staff and more resources are better able to not only focus on current campaigns, but also to strategize and plan for future campaigns based on market projections.
At the other end of the spectrum, smaller businesses with fewer than 100 employees cite improved conversion rates (53%) above all other benefits.
One potential explanation for this could be that smaller businesses with fewer moving parts are able to more quickly implement changes based on data analysis, resulting in immediate improvements to conversion rates.
A strong first-party data strategy provides the best value for small businesses
Through data collection and analysis, SMBs are able to improve the targeting of their marketing campaigns, and this improved targeting seems to bring with it several related benefits like improved conversion rates (44%) and better ROI (43%).
Ultimately, better targeting helps drive revenue through conversion rates and improved ROI, and first-party data is the highest quality source for these insights.
SMBs should be more empowered to collect relevant, high-quality first-party data
Third-party marketing data comes from data brokers, while second-party marketing data comes out of partnerships with other companies. Many small businesses are already leveraging in-house resources to collect first-party marketing data, which should make the transition away from third-party data reliance somewhat less painful.
While we learned above that 92% of our respondents are either already using a digital marketing agency to assist with data collection or plan to do so in the near future, a significant portion of our respondents already have experience collecting and analyzing data with existing resources on staff.
- 68% of businesses rely on an in-house team (39%) or individual (29%) to collect and analyze marketing data.
- Only 30% of our respondents report currently using a digital marketing agency or consultant as their primary source of marketing data collection.
SMBs are confident in the data collection efforts they have in place
A combination of agency support and in-house marketing experts provides a majority of our respondents with a high degree of confidence in the analytics they’ve gathered.
- 83% of businesses rate their overall marketing analytics efforts as moderately (43%) or very (40%) effective.
Breaking down their efforts by types of data, we found that a large majority of our respondents were extremely satisfied with their ability to collect first- and second-party data. They’re accomplishing this through the use of digital tools.
- 80% of SMBs are moderately (39.7%) or very (40.7%) confident in their ability to collect and analyze first- and second-party data
- Roughly half of SMBs are already using data analysis software (55%), customer data platform software (51%), and/or data collection software (49%).
Our results revealed that while marketers are largely concerned about the impending loss of third-party data, the reality is that the majority of SMBs already have the tools and experience needed to pivot to first- and second-party data collection, which should also result in higher-quality data streams and more reliable insights.
Future-proof your data collection practices by making the pivot away from third-party data collection for a cookieless world
While there is no true need for marketing professionals to panic about the loss of third-party data, there is a need to pivot away from the reliance that 50% of SMBs have on third-party data. Filling the gap left by this pivot will be something that SMBs must quickly learn to navigate.
For those who don’t have the skills or staff to accomplish this pivot in-house, we suggest turning to digital marketing agencies and consultants to fill the gaps and improve the data streams from first-party and second-party sources in order to bolster channels that will improve overall ROI and profitability.
Sources
- Essential Data Broker Industry Statistics in 2023, ZipDo
- U.S. Data Privacy Laws to Enter New Era in 2023, Reuters
- Prepare for Phasing Out Third-party Cookies, Chrome for Developers
- CFPB Launches Inquiry Into the Business Practices of Data Brokers, Consumer Financial Protection Bureau
- Business Intelligence software Buyers Guide, Capterra
UpCity’s Survey Method
This survey was conducted using Pollfish in October of 2023 among 300 U.S. small business marketing analysts to learn about their data collection practices, strategies, preferences, and concerns. Respondents were screened for their role overseeing marketing information management and analytics.