first party data

Why Direct to Consumer Brands Need to Leverage First-Party Data

by | May 21, 2024

first party data

Written by Jessica McKeil

Jessica McKeil is a cannabis writer and B2B content marketer living in British Columbia, Canada. Her focus on cannabis tech, scientific breakthroughs, and extraction has led to bylines with Cannabis & Tech Today, Terpenes and Testing, Analytical Cannabis, and Grow Mag among others. She is the owner and lead-writer of Sea to Sky Content, which provides content and strategy to the industry’s biggest brands.

The digital landscape isn’t a fun place to operate when you are a direct-to-consumer cannabis brand. Few, if any, of the usual channels want to touch cannabis products, whether it’s social media or online advertising platforms. Now, with the demise of third-party cookies, many brands have been left scrambling to figure out their next steps. 

First-party data, the information you collect directly from your customers when they browse, buy, and sign up, has become more important than ever. If you are selling cannabis or hemp products online, your marketing efforts need to make the most of this precise resource. 

From audience segmentation to advanced customer data platforms, here is what the next evolution of online marketing with first-party data will look like.  

Advertising Isn’t Fair for Cannabis Brands

Few legal markets have opened up traditional marketing channels to cannabis and hemp businesses. As a cannabis brand, you can’t buy billboards near schools or (depending on the state) even the highway. You can’t sponsor events or display your goods through a window with public visibility. And none of us should forget that a global panel at the United Nations effectively recommended an international ban on cannabis advertising.

In the online world, there are equally few spaces open to cannabis and hemp brands. Other than X, nearly all social media shuts down cannabis content. Online advertising platforms don’t accept it, and Google isn’t open to ads selling any substances that alter your mental state. Google even seems to have a vendetta against hemp-derived substances that the Food and Drug Administration doesn’t explicitly approve.

Of course, we have all witnessed the brands that have ingeniously circumnavigated these advertising restrictions for truly remarkable campaigns (Stok’d is one of the most recent examples). But what do you do if you don’t have a physical location? Direct-to-consumer cannabis brands have previously relied on leveraging third-party data. But soon, even this door will close. 

Even if they couldn’t splash ads on the sides of city buses or freely advertise on social media, many cannabis brands were making due by leveraging the information they gleaned from third-party cookies.

Cookies allowed brands to retarget their target audience with personalized advertising based on online behavior or demographics. Third-party cookies were a means of collecting valuable data on user interactions and could help track the effectiveness of specific marketing campaigns.

But cookies (at least effective cookies) are now a thing of the past. Many governments have introduced stricter privacy laws, like the General Data Protection Regulation (GDPR) in the European Union, as well as California’s Consumer Privacy Act (CCPA) and the Privacy Rights Act (CPRA).

Google announced plans to phase out third-party cookies in Chrome by the end of 2024, replacing them with more privacy-focused alternatives. Other major web browsers, like Mozilla Firefox and Apple Safari, have also implemented measures to limit third-party cookies.

So, that leaves all cannabis brands in a pinch.

Taking Matters into Your Own Hands: Leverage Your First-Party Data

Without ads and third-party cookies, is there any way forward? A new data revolution is happening, so you can maximize your ROI from ad spend by working with what you already own — your first-party data.

First-party data is the information collected directly from customers or visitors through their interactions with a company’s owned channels and touchpoints. It can include everything from:

  • Customer demographic data (name, email, location, etc.), which they provide when they create an account or make a purchase
  • Behavioral data (website visits, app usage, purchases, etc.) tracked only through your platforms and website
  • Customer relationship data (orders, support interactions, etc.) logged in the company’s CRM system

Think about it. If you’re an e-commerce direct-to-consumer cannabis company, you likely already have access to much of this information from your current transactions list.

The benefits of first-party data are multi-faceted:

  • It is collected directly from the customer by their interactions with your brand. It is not obtained or purchased from third-party sources.
  • It provides a unique and accurate view of the customer’s interactions with your products.
  • You maintain full control and ownership over this data, so you’ll stay compliant with data privacy regulations like GDPR and CCPA.
  • You build an ability to create highly personalized marketing and targeted advertising campaigns.

Get Personal: How To Put First-Party Data to Work

First-party data is only valuable if you put it to work. As per Google, “90% of leading marketers say personalization significantly contributes to business profitability.” This means if you want to transform your wealth of first-party data into results, you have to make it personal.

Audience Segmentation

Mastering audience segmentation is the gold standard of personalization. Audience segmentation analyzes a broad audience to discover smaller groups structured around shared characteristics like demographics, behaviors, and preferences.  

Segmentation allows for a personalized and more human approach to marketing. Apply what you’ve gleaned from these unique segments to deliver meaningful messaging about the audience’s behaviors, habits, and preferences. 

Customers are far more likely to engage and convert to messaging that speaks directly to them. Audience segmentation has proven, time and time again, to deliver high engagement, improved loyalty, and greater online conversions.

Advanced First-Party Data Solutions

Enter the Customer Data Platform (CDP). For all the non-digital marketers here, CDP is a software system that centralizes customer data from various sources into a single, unified database. With the rise of first-party data, CDPs have emerged to help brands better gather, consolidate, and understand all the information they are collecting. 

Often, there is a partnership between CDPs and marketing agencies, where the CDP connects the dots between your website visitors and demographic data; then the agency gets to work segmenting, 

A Cannabis-Friendly Customer Data Platform in Action

How does this work in reality? And, perhaps more importantly, does it apply to the cannabis arena, which tends to come with its own specific set of digital challenges? Let’s look at Savvy Data, a cannabis-friendly CDP that partners with WUNDERWORX, a cannabis marketing agency. Together, they’ve recently launched a new online hemp business.

Steve Nolan, founder and CEO of WUNDERWORX, explained, “We knew that launching in a very competitive market like hemp would need more than brand awareness. The plan was to implement Savvy Data once we built the website to not only give us greater insight as to who was visiting the site but also a competitive edge in converting them.” 

Within weeks of launching, they got a top-down view of who was visiting, even if they weren’t immediately buying. “The client envisioned a much younger demographic and instead, their target audiences turned out to be much older, mainly Gen Xers and Baby Boomers. Armed with 

this data, we changed our email marketing and paid social ads on Instagram and Meta to reflect an older demographic,” Nolan explained (full WUNDERWORX case study here).

This is because Savvy Data connects the IP addresses of online visitors to match them against a massive 15-terabyte consumer database containing 245 million American and 25 million Canadian adult consumers. This cannabis-friendly CDP has captured about 35 percent of visitor email addresses and real-time demographic data for 15 percent of all online visitors.

Savvy Data is a Customer Data Platform that gives you unparalleled insights into who is visiting your website.

How accurate are these results? Jared Gray, managing partner and co-founder of Savvy Data, told us how the platform uses artificial intelligence to ensure it separates bot traffic from real traffic. According to Gray, “By matching a user’s IP address we can provide our clients’ their middle of the funnel, first-party data in the form of triple verified emails and in some cases, complete demographic data, such as phone numbers, home addresses, hobbies, interests, ethnicity, household income, Linkedin and Facebook pages of these visitors.”

Brands can use this heightened level of customer detail to refine their sales funnels. They can use nurturing emails to incentivize visitors to make a purchase or combine several channels, like email marketing, direct mail, SMS, and telemarketing, to improve sales and conversion rates.

CDPs like Savvy Data are tools that help brands personalize marketing in a cookie-less world. As Gray said, “With the eventual demise of the cookie, we saw an opportunity to create a unique tool that would give eCommerce companies the ability to better understand their audience and grow sales.”

If you get tons of traffic, but struggle to convert, using a CDP like Savvy Data could help with the follow through.

The Lesson? D2C Cannabis Brands Need To Put Their Data to Work

Undeniably, direct-to-consumer cannabis brands face unique challenges in marketing their products online. With traditional advertising channels restricted and the demise of third-party cookies looming, leveraging first-party data has become crucial. 

First-party data is a critical resource, particularly for D2C cannabis brands. With this in your pocket, you can personalize your marketing, improve customer insights, and, ultimately, achieve higher conversion rates from your store. It’s time to evolve how you are using it.