CCPA and the Pivot to First-Party Data

December 12, 2019

This is a guest post from Shane Danaher, Senior Data Technology Analyst at 3Q Digital.

When the California Consumer Privacy Act (or CCPA) comes into effect on January 1, 2020, companies’ use of consumer data will change dramatically.

With a broad definition of personal data and an extensive legal reach, CCPA will touch most digital businesses — especially those in the marketing space. Because CCPA foists broad restrictions on the sale and transfer of personal data, it will make third-party data both less reliable and harder to procure. In light of these changes, businesses will have to rely more heavily on first-party data, as well as tools designed for procuring the same.

Having a strategy in place to migrate away from reliance on third-party data will allow your business to maintain its engagement with customers, and avoid running afoul of the law.

Note: This article is not meant to be taken as legal advice; rather, it provides info that can serve as a starting point for your journey toward CCPA compliance.

First of all, what is the CCPA?

The California Consumer Privacy Act is a piece of legislation designed to give citizens of California better control over how their data is shared on the internet. Although many consumer-facing businesses fall within its purview, CCPA takes an especially aggressive tack toward dealers in third-party data.

The legislation targets businesses that meet any one of the following three criteria:

  1. Produce annual gross revenues greater than $25 million
  2. Annually buy, sell, or share consumer information of more than 50,000 Californian consumers, households, or devices
  3. Earn at least 50% of its revenue from the sale of California consumers’ personal information

Even if none of the above apply to your business, chances are they do apply to your third-party data provider, creating potential problems for how you target new customers.

First vs. Third-Party Data

Simply put, first-party data is information you gather yourself; third-party data is information procured from somewhere else.

Examples of first-party data would be information gathered through customer purchases or surveys; an example of third-party data would be an audience purchased through a data exchange.

Typically, businesses use third-party data for new customer acquisition, whereas they use first-party data to gain insights into their existing customer base.

Third-Party Data and CCPA

CCPA is designed to aggressively target third-party data providers. Not only does the legislation threaten significant penalties for companies that deal in third-party data without consumers’ consent, but it also obligates companies to decorate their websites with a “clear and conspicuous” link titled Do Not Sell My Personal Information, which gives users the right to restrict how their personal data is used.

Assuming that many users will avail themselves of this opportunity to restrict the sale of their data, we can infer that third-party data sources, never renowned for their quality, will likely diminish in usefulness.

CCPA also ensures that anyone selling data into a data exchange exposes themselves to great risks. The law obligates companies to delete user data at the user’s request, not only from the company’s internal records, but also from any downstream locations to which the data has been sold. This effectively puts whoever gathered the data at legal risk for the behavior of any party the data's sold to.

With third-party data likely to become more difficult to acquire, less trustworthy to use, and more risky to create, companies should pivot away from relying on it, and instead focus on building a robust, first-party data collection system.

The First-Party Alternative

Not only does using first-party data limit your legal risk under CCPA, it also ensures that you’re using quality information to inform crucial business decisions.

By using tools like Google Analytics, Google Tag Manager, and Segment, you can gather a host of insights about your users, personally monitoring the data collection to ensure accuracy and compliance with user wishes.

Analyzing your first-party data can provide you with good information about who is using your service, and partnering with services such as Google’s Similar Audiences tool will allow you to find new users based on the data you’ve collected concerning your current audience.

With other states likely to soon adopt legislation similar to CCPA, now is the perfect time to start weaning your company off of third-party data, and relying completely on info you’ve gathered yourself.

Shane Danaher

3Q Digital
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