Australia’s largest bank is among those lucky brands that has a sizeable audience of its own (and the permission to market to it) and is making other brands and merchants pay for access in a way that brings value to its end customers.

It is one of a number of stand-out responses to an online marketing world rocked by GDPR, the death of the Cookie, Apple’s permission-based tracking, EU declaring ‘consent pop-ups’ illegal, scepticism about programmatic marketing, and now in Australia, a review of the Privacy Act by the Attorney-General.

CommBank, retailers like Woolworths and Coles, and payment schemes like Visa, MasterCard, Amex are creating walled garden mega-loyalty plays that use first party data to bring value to clients and customers, and work in competition to the likes of Alphabet and Meta.

It’s a radical shift that also begs the question: what can you do if you are a merchant that does not have significant first party data of your own? More on that in a moment but first, a brief history of first party data and how CommBank and others are tapping into its rise and rise.

Data, dollars

Organisations with large databases of ‘first party’ data (that is to say, data gleaned from customers directly as they do business) have for many years understood the value this data has in guiding their interactions with customers. These data assets are from loyalty programs, contractual relationships, including subscriptions or even the delivery records of shoppers buying online.

This data can be used to improve relationships (and sales) with your customers but recently it has also occurred to the data-owners that they could use this asset to help other merchants sell to these same customers, for a fee.

In most cases they can also measure customer intention not just infer it, correctly attribute sales to promotions, and do all of this with the permission and active collaboration of the customer.

These transaction-informed marketers already have well-developed data muscles and can develop prediction markets of their own to determine customer intention to buy, or in some cases they can just ask the customer.

Their next step has been to make this pool of customer intention available to other merchants/advertisers, in competition to Alphabet (Google) and Meta (Facebook/Instagram/WhatApp).

There are plenty of examples:

• The US grocery giant Kroger has a cloud platform based on its loyalty program for marketing access. So has Tesco in the UK.
• In Australia, the two largest grocers have media companies fuelled with loyalty program data; Coles has ‘Unpacked’, Woolworths has Cartology.

Banks too are entering this market for customer intention; CBA is investing heavily on a number of fronts to build customer intention assets.

It has invested in Klarna (which has added Hero to help its customers and merchants), bolted the ‘deal seeking’ platforms Little Birdie and Cheddar onto its banking app, and the big one, a large investment in the Artificial Intelligence platform H2O.ai to help predict purchase intention using the rich data a bank has on its customers’ shopping behaviour.

CBA has even become the solution for customer intention by acquiring electricity and telecommunications companies, based on the fair assumption that most customers intend to turn on the lights and make a phone call.

One vendor applies AI to its client-bank’s data, identifying pockets of customer intention to buy or switch suppliers, then offers this demand to potential suppliers in an auction marketplace (similar to RTB). Being banks, they can then present the offers and report on actual sales for the winning bidder.

Payment schemes are entering the first party data contest too: Visa, MasterCard, Amex, Discover, JTB, CUP et al all have very large data assets and have dabbled in providing data services to merchants. (Mastercard promotes access to data from 2.4 billion cards and 65 billion transactions per year, and it is smaller than Visa!).

The payment schemes’ data is disadvantaged in that it is anonymised: the schemes do not know individuals, just cards and they do not see what the customer purchased, just how much they spent.

Enter Consumer Data Right regulation and Open Banking. Mastercard has announced it will be certified as a data recipient (in Australia) and will act as a ‘middleware’ enabler to service providers who can leverage payment and banking data to offer richer consumer and merchant services. And most importantly, give consumers reasons to provide permission to use the data.

In evidence that the rate of change in payments data will only accelerate Mastercard has acquired two companies already established in the ‘CDR’ data market; Finicity and aiia, while Visa has acquired Tink for the same purpose and announced an investment in the data recipient Basiq.

Great, but what about me?

While the ‘rise’ of first party data markets is good news for the large retailers, large banks and global payment schemes, how can you compete if you do not fall into this category of corporation?

Well, you can pay to use their data of course, using them as marketplace operators for a fee while enhancing their data for resale to (potentially) your competitors.

Or you could participate in collaborative commerce with like-minded organisations and assemble a data asset of equivalent value through a network of companies with first party data they would like to enhance and employ for marketing, with permission, while preserving customer privacy.

This is the opportunity, “collaborative commerce” and perhaps the imperative, if your business lacks the scale of first-party data it needs to grow sales.