Privacy-First Advertising: First-Party Data & Web3 Guide

The way people interact online is changing, and so is advertising. Users now expect more privacy and more control over how their data is collected and used. At the same time, brands are losing access to the tools they relied on for years as third-party cookies are phased out and privacy regulations become stricter.

As a result, traditional audience targeting is becoming less effective and harder to scale.

To adapt, brands are increasingly turning to first-party data and Web3 to build more direct and transparent relationships with users. Meanwhile, Web3 is reshaping digital behavior as users move across dApps, NFT marketplaces, DAOs, and blockchain games using wallets rather than traditional logins.

This shift is creating a more transparent, user-owned digital environment, where engagement is driven by participation rather than passive tracking.

In this guide, we’ll explore how first-party data and Web3 work together and why privacy-first advertising could shape the future of audience targeting.

What Is First-Party Data?

First-party data is information a company collects directly from its own audience through owned channels and interactions. Unlike third-party data, which is purchased or aggregated from external sources, first-party data comes directly from users who intentionally engage with a brand.

Common examples include:

Website interactions;

Newsletter subscriptions;

CRM records;

Mobile app activity;

Purchase history;

Loyalty program participation;

Survey responses;

Customer support conversations;

Wallet connections;

Community engagement;

Discord or Telegram participation.

What makes first-party data valuable is not only the information itself but also the relationship behind it.

When someone subscribes to a newsletter, joins a community, creates an account, or connects a wallet, they actively choose to interact with a brand. That creates a more transparent and permission-based relationship compared to traditional tracking systems.

This distinction matters because modern consumers increasingly care about privacy, consent, transparency, data ownership, and personalized experiences without invasive tracking.

As trust becomes more important online, many companies are shifting their strategies toward owned ecosystems rather than relying entirely on external advertising platforms. That is why more brands are investing in email ecosystems, loyalty programs, token-gated communities, wallet-based memberships, community-driven experiences, and private Discord and Telegram groups, among others.

In many ways, first-party data is becoming the new foundation of digital identity.

What Is Web3 Data?

Web3 data refers to behavioral and transactional information generated through blockchain-based interactions. Unlike traditional Web2 data, which is often stored privately inside centralized platforms, Web3 data is usually transparent and publicly verifiable on-chain.

Examples include: wallet activity, NFT ownership, DAO participation, DeFi transactions, on-chain governance voting, staking behavior, smart contract interactions, and many more. This creates an entirely new type of user intelligence. For example, a crypto wallet may reveal that a user:

Frequently trades NFTs;

Participates in DeFi lending;

Holds governance tokens;

Plays blockchain games;

Interacts with specific ecosystems;

Participates in DAO voting.

Traditional advertising systems could never access this level of behavioral context without invasive tracking. Web3 changes that dynamic because blockchain activity is inherently transparent.

However, there’s an important nuance. A wallet address may be public, but the real-world identity behind it may remain pseudonymous. That creates a unique balance between transparency and privacy.

Why This Changes Advertising

The biggest shift happening in digital advertising is not simply the decline of cookies. It is the transition from tracking users to understanding participation.

For years, advertising platforms attempted to predict user interests by analyzing: browser behavior, search activity, app usage, website visits, and click patterns. Much of this data was inferred, and Web3 introduces something different.

Instead of estimating user interests, blockchain ecosystems often reveal how users actively engage with communities, products, and digital economies. This changes how advertisers think about audience quality. Someone who: votes in DAO governance and holds ecosystem tokens long term, participates in blockchain gaming communities, and attends token-gated events, besides owning NFTs from a specific ecosystem, usually demonstrates far stronger intent than someone who briefly visits a landing page.

In many ways, Web3 shifts advertising away from interruption-based marketing and toward ecosystem participation.

First-Party Data vs Web3 Data: What’s the Difference?

Although first-party data and Web3 data are often discussed together, they represent different layers of modern identity infrastructure.

Factor | First-Party Data | Web3 Data
Source | Owned platforms | Blockchain activity
Identity Model | Email, login, CRM | Wallet address
Privacy Structure | Consent-based | Pseudonymous
Data Storage | Private databases | Public blockchains
Accessibility | Restricted | Transparent
Portability | Limited | Cross-platform
Attribution | Platform-dependent | On-chain verifiable

The key takeaway is that these systems are not competing with each other. Instead, they are becoming complementary layers of modern identity infrastructure. First-party data provides relationship context, whereby Web3 data provides behavioral transparency.

Combined together, they create a far richer understanding of user engagement than traditional advertising systems alone.

Why First-Party Data Became Essential

1. The Decline of Third-Party Cookies

The advertising ecosystem has been preparing for a post-cookie era for years. In October 2025, Google confirmed that Chrome would continue to allow users to decide how third-party cookies are handled, rather than fully deprecating them. Yet, the company also announced the retirement of several Privacy Sandbox initiatives, including:

Topics API;

Protected Audience;

Attribution Reporting API;

IP Protection.

At the same time, Google confirmed continued support for technologies such as, CHIPS (Cookies Having Independent Partitioned State), and FedCM (Federated Credential Management). Thus, the broader message was clear: the industry is moving toward more privacy-preserving identity systems.

Even if cookies survive in some form, they are no longer reliable enough to serve as the foundation of modern advertising.

2. Rising Privacy Regulations

Privacy legislation is also reshaping the global advertising landscape. Frameworks such as GDPR in Europe, CCPA in California, and other international privacy laws are forcing companies to rethink how they collect, store, and process user information.

Modern regulations increasingly require:

Explicit user consent;

Greater data transparency;

Easier opt-out mechanisms;

Stronger identity protection;

Responsible data governance.

As compliance becomes more complex, advertisers are moving away from opaque third-party data ecosystems and investing instead in direct audience relationships that are easier to manage responsibly.

3. The Need for Consent-Based Marketing

Consumer behavior is changing as well. Users are becoming more selective about which brands they trust and what information they are willing to share online. Years of aggressive retargeting and excessive tracking created a growing disconnect between advertisers and audiences.

Today, personalization still matters, but users expect a clearer value exchange. People are more willing to share information when they receive tangible benefits such as:

Exclusive community access;

Personalized experiences;

Loyalty rewards;

Governance participation;

Tokenized incentives;

Early product access.

This is one reason token-gated ecosystems and wallet-based communities are gaining momentum in Web3 environments. Participation becomes voluntary, transparent, and value-driven rather than passive and invisible.

4. Higher Audience Quality

Another major advantage of first-party data is the quality of its audience. Traditional third-party targeting focused heavily on scale, often prioritizing reach over actual engagement. First-party ecosystems work differently because they attract users who are already interested in the brand or product.

Someone who joins a private community or participates in a loyalty program usually shows much stronger intent than a user passively tracked through browser activity alone. These interactions often indicate:

Higher engagement levels;

Stronger purchase intent;

Better retention potential;

Greater long-term loyalty;

More active community participation.

This becomes even more important in Web3 environments, where participation itself acts as a powerful signal. Users often invest not only their attention but also their time, reputation, and sometimes financial capital in ecosystems they genuinely care about.

Read on: Why Prediction Markets Need Crypto-Native User Acquisition

5. More Reliable Attribution

Attribution is becoming increasingly difficult in fragmented digital ecosystems. As browser restrictions reduce tracking visibility and users move across multiple devices, platforms, and decentralized applications, traditional attribution models are becoming less accurate.

First-party data helps address part of this issue because brands can analyze engagement within their own ecosystems rather than relying entirely on external advertising platforms.

At the same time, Web3 introduces an additional layer of transparent and verifiable activity through blockchain interactions. Wallet transactions, NFT ownership, governance participation, and smart contract activity can all provide valuable insights into how users interact with digital ecosystems over time.

Although attribution in Web3 is still evolving, the combination of first-party data and on-chain analytics could eventually offer a more accurate and privacy-conscious alternative to traditional tracking-based measurement systems.

To learn more about where the industry is heading, check out The State of Crypto Advertising in 2025: Insights from Advertiser Behavior.

Where First-Party Data and Web3 Start to Overlap

The overlap between first-party data and Web3 becomes most visible across three major layers: identity, behavior, and digital environments. Together, these layers are reshaping how brands understand their online audiences.

1. Identity Layer

One of the biggest changes introduced by Web3 is the way digital identity works.

Traditional Web2 identity systems rely heavily on centralized identifiers such as email addresses, social media accounts, platform logins, and browser cookies. Contrary, Web3, yet, introduces a more decentralized identity structure built around wallet addresses, ENS domains, on-chain reputation, and token ownership.

Thus, instead of replacing traditional identity systems completely, many brands are now combining both approaches to create a more connected view of audience engagement.

For example, a user might first subscribe to a newsletter, then connect a wallet, join a Discord community, mint an NFT, and eventually participate in governance activities. Each interaction adds another layer of context, helping brands better understand not just who users are, but also how actively they engage within digital ecosystems.

At the same time, control over identity is gradually shifting toward the user.

In Web2 environments, platforms largely own the relationship with the audience. Social followings, account access, and user data typically remain tied to centralized platforms. In Web3, identity becomes portable because users own their wallets and can move across applications and ecosystems without relying on a single intermediary.

A simple way to understand this shift is: Web2 identity is rented, and Web3 identity is portable. Your audience on a social platform ultimately belongs to the platform itself, and your wallet identity, however, belongs entirely to you.

2. Behavioral Layer

The overlap between first-party data and Web3 becomes even more interesting when viewed through the lens of behavioral insights.

Traditional advertising systems relied heavily on inferred behavior. Browsing activity, search history, and app usage were analyzed to predict interests and purchase intent. Web3 changes this dynamic by introducing observable participation.

On-chain activity can reveal signals such as:

NFT engagement;

DAO governance participation;

Cross-chain activity;

Gaming ecosystem involvement;

Long-term token holding behavior;

DeFi protocol usage.

These actions provide a much clearer picture of user intent because they reflect active participation rather than passive browsing patterns.

At the same time, this transparency also creates important ethical considerations.

While blockchain activity is public, users still expect brands to handle behavioral insights responsibly. Aggressive wallet profiling or excessive targeting can quickly undermine trust, especially in communities that strongly value decentralization and privacy.

As a result, the future of Web3 advertising will likely depend on finding the right balance between personalization and responsible data usage.

3. Environment Layer

The convergence between first-party data and Web3 is also reshaping the environments where digital engagement happens. More users are now spending time inside decentralized ecosystems such as dApps, blockchain games, NFT marketplaces, DAO communities, Metaverse platforms, and decentralized social networks.

In Web3-native communities, interactions are often:

Community-driven;

Incentivized;

Ownership-based;

Reputation-sensitive.

As a result, traditional interruptive advertising formats tend to feel out of place in decentralized ecosystems. Banner-heavy campaigns and aggressive retargeting strategies often generate resistance because they conflict with the culture of community ownership that defines many Web3 spaces.

Participation-driven campaigns tend to perform far better.

Strategies centered around tokenized rewards, governance access, ecosystem partnerships, NFT utilities, or community collaboration align much more naturally with how Web3 communities operate.

The Rise of Hybrid Strategies

The future of advertising will likely not belong entirely to Web2 or Web3. Instead, the industry is gradually moving toward hybrid strategies that combine the strengths of both ecosystems.

Combining CRM Data with Wallet Intelligence

One of the clearest examples of this shift is the integration between traditional customer data systems and blockchain-based activity. Some brands are now combining: email engagement, CRM profiles, loyalty activity, wallet interactions, NFT ownership, and community participation. This creates richer audience segmentation while reducing dependence on third-party advertising platforms.

For example, a blockchain gaming company may identify users who:

Purchased in-game assets;

Hold ecosystem NFTs;

Participate in tournaments;

Open newsletters consistently;

Engage with community events.

Instead of targeting broad demographics, the brand can build campaigns around actual ecosystem participation. This creates more relevant personalization because the insights come directly from owned relationships, verifiable engagement, and long-term participation.

Web2 and Web3 Customer Journeys

Customer journeys are also becoming far more complex than they were a few years ago. In traditional Web2 environments, users typically moved through relatively predictable funnels centered around websites, apps, and advertising platforms. Web3 introduces additional layers of interaction that often happen across decentralized ecosystems.

A modern customer journey may now look like this:

A user discovers a project through social media;

Subscribes to a newsletter;

Joins a Discord community;

Connects a wallet;

Claims an NFT;

Participates in governance;

Attends token-gated events.

These interactions rarely happen inside a single platform. As a result, traditional analytics systems often struggle to capture the full picture of user engagement. This is one reason hybrid identity systems are becoming increasingly important for brands operating across both Web2 and Web3 environments.

Why Hybrid Strategies Work

Hybrid strategies are gaining momentum because they align more naturally with how modern users behave online. Instead of forcing brands to choose between personalization and privacy, these models attempt to balance both.

They work particularly well because they combine several important advantages:

Privacy: Users control participation levels.

Transparency: Blockchain interactions are verifiable.

Personalization: Brands gain richer engagement insights.

Community: Engagement becomes relationship-driven.

Ownership: Users increasingly benefit from participation.

Most importantly, hybrid systems create more balanced relationships between advertisers and audiences. Instead of relying entirely on invisible tracking, brands can build engagement around consent, participation, and community value.

That represents a healthier long-term model for digital advertising.

What Is Web3 Retargeting?

Retargeting has been one of the most effective tools in digital advertising for years. Traditional retargeting relied heavily on cookies and browser tracking to follow users across websites after they viewed a product, visited a landing page, or clicked on an ad.

While effective for years, that model is becoming increasingly limited as privacy regulations tighten and users become more protective of their online activity.

Web3 introduces a different approach.

Instead of tracking passive browsing behavior, Web3 retargeting focuses on active participation inside blockchain ecosystems. In other words, brands can better understand what users genuinely engage with rather than simply what they briefly look at online.

This may include activities such as:

Owning specific NFTs;

Participating in DAO governance;

Interacting with DeFi protocols;

Using blockchain gaming platforms;

Engaging with certain ecosystems consistently over time.

That distinction matters because participation usually reflects stronger intent than passive browsing alone.

For example, someone who actively holds governance tokens or regularly interacts with a blockchain game is often significantly more engaged than a user who simply visited a webpage once through a paid ad.

As a result, Web3 retargeting creates opportunities for brands to build campaigns that feel more contextual, relevant, and community-driven instead of overly intrusive.

Traditional Retargeting vs Web3 Retargeting

Although both models aim to improve audience targeting, their operations are fundamentally different.

Traditional Retargeting | Web3 Retargeting
Based on cookies and browser activity | Based on wallet and on-chain activity
Tracks browsing behavior | Tracks ecosystem participation
Relies on centralized platforms | Relies on decentralized identity
Audience data controlled by platforms | Users control wallet identity
Often based on inferred interests | Based on verifiable engagement
Increasingly affected by privacy restrictions | Built around transparent blockchain interactions

The shift is not only technological. It also reflects changing user expectations around privacy, ownership, and digital identity.

Traditional retargeting tried to predict what users might want. Web3 retargeting focuses more on understanding what users actively participate in.

How Web3 Retargeting Works

One of the biggest challenges in digital advertising is that most users do not convert during their first visit. In fact, nearly 90% of users leave without taking action, which means brands often lose valuable potential before the customer journey even begins.

Web3 retargeting is designed to turn those exits into re-engagement opportunities.

Instead of relying only on traditional browser tracking, this approach focuses on how users interact with blockchain ecosystems over time. Wallet connections, NFT interactions, DeFi activity, or engagement with blockchain games can all help brands better understand user intent and reconnect with audiences more effectively.

This allows campaigns to feel more relevant and contextual rather than repetitive or intrusive.

Services, such as Coinzilla Retargeting, follow this model by helping Web3 brands re-engage users based on how they interact with a product, ecosystem, or conversion funnel. Rather than simply following users across the internet, the focus is placed on delivering the right message to the right audience at the right stage of engagement.

Challenges of Combining First-Party Data and Web3

Although combining first-party data with Web3 offers valuable opportunities for advertisers, integrating these systems remains far from simple.

Identity Fragmentation

One of the biggest challenges is fragmented identity. In traditional digital ecosystems, user activity is usually connected to a single account or login. In Web3, users often interact through multiple wallets across different blockchains, platforms, and devices.

As a result, understanding the full customer journey becomes significantly more difficult. A single user may appear as several disconnected identities, making attribution, user mapping, and personalization far more difficult.

Infrastructure Complexity

Another challenge is the fragmented nature of Web3 infrastructure itself. Unlike traditional advertising ecosystems, where analytics and attribution systems are relatively standardized, Web3 environments still lack consistent measurement frameworks across chains and platforms.

This creates difficulties around:

Cross-chain attribution;

Wallet tracking;

Campaign measurement;

Audience segmentation.

Because many ecosystems operate independently, brands often struggle to connect engagement signals into a clear and reliable view of user behavior.

To address this, some retargeting services, such as Coinzilla Retargeting, simplify the process through managed tracking setups and funnel analysis specifically designed for Web3 campaigns.

Privacy and Trust

Privacy remains one of the most sensitive issues in Web3 advertising. Although blockchain activity is public, users still expect brands to handle behavioral insights responsibly. Aggressive wallet profiling can quickly damage community trust. This is especially important because many Web3 communities strongly value decentralization, ownership, transparency, and user control.

Brands that approach Web3 advertising with traditional surveillance-heavy strategies may struggle to build long-term credibility.

Sybil Activity and False Signals

Another challenge involves signal quality. Not all wallet activity represents genuine engagement. Some ecosystems face issues related to sybil behavior, fake wallet creation, incentive farming and artificial engagement.

This creates difficulties around audience quality and attribution accuracy. As a result, advertisers increasingly need smarter identity frameworks capable of distinguishing genuine ecosystem participation from manipulated activity.

FAQ

What is 1st-party, 2nd-party, and 3rd-party data?
First-party data is information collected directly from your audience through owned channels such as websites, apps, newsletters, or communities. Second-party data is another company’s first-party data shared through a trusted partnership. Third-party data is aggregated information collected from multiple external sources, often without a direct relationship with the user.

What is a first-party data platform?
A first-party data platform is a system that helps brands collect, organize, manage, and activate customer data gathered from their own ecosystems. These platforms often combine data from websites, apps, CRMs, loyalty programs, and communities to improve personalization and audience targeting.

Can Web3 advertising work without cookies?
Yes. Web3 advertising relies more on wallet activity, on-chain engagement, and ecosystem participation rather than browser-based tracking. This creates alternative targeting opportunities that are less dependent on third-party cookies.

What is on-chain identity?
On-chain identity refers to a user’s digital presence built through blockchain activity, wallet usage, token ownership, and participation across decentralized ecosystems. Unlike traditional accounts tied to platforms, on-chain identities are portable and controlled directly by users.

What is zero-party data?
Zero-party data is information users intentionally and proactively share with a brand, such as preferences, interests, or feedback. Unlike inferred behavioral data, it comes directly from the user through voluntary interactions.

What is cross-chain activity in Web3?
Cross-chain activity refers to users interacting with multiple blockchain networks instead of staying within a single ecosystem. This may include transferring assets, using decentralized apps, or participating in protocols across different chains.

Final Thoughts

First-party data and Web3 are changing how brands approach digital advertising in a privacy-first world. Instead of relying on invasive tracking, companies are focusing more on direct audience relationships, community engagement, and transparent user participation.

As Web3 adoption grows, combining first-party data with on-chain insights could help brands build more personalized, trustworthy, and effective marketing strategies.