What you need to know about first-party data

Pete Whitmarsh

Head of Paid Media

Analytics and Data Science

From audience segmentation to identifying where a customer is in the buying funnel, data is at the heart of what we do. However, not all data is created equal. Brands must now, more than ever, utilise first-party data, rather than third-party data, to increase conversions and deliver positive results. In this blog, we outline the differences between first, second and third party data, and how first-party data is the key to creating a comprehensive digital marketing strategy.

What is first-party data?


First-party data is often considered to be the most valuable for multiple reasons:

  • It comes from a single source, so likely to be more accurate
  • Insights come directly from the customer, so campaigns and strategies should yield better results
  • There are minimal concerns around data misuse and privacy, as you control how data is collected and stored.

First-party data can be collated directly in a number of different ways by companies. Collation methods can include:

  • Web analytics
  • Newsletter subscriptions
  • App downloads
  • Satisfaction surveys
  • Customer accounts.

First-party data does have limitations though. There needs to be enough data available for marketers to gain insights that can be used to create scalable campaigns. This can be a struggle for businesses just starting out, but big businesses can face challenges too. First-party data is often spread across multiple CRM systems, rather than in one central place, making it difficult to effectively utilise the data.





What is second-party data?


Second-party data is lesser known than first and third-party data, but it refers to a company’s first-party data that has been collected and sold to a second company. Second-party data can be mutually beneficial for brands who share audiences but sell different products or services. For example, a vegan beauty brand may want to widen their reach by tapping into a vegan food brand’s customer base. It’s likely there will be an overlap in customers, but as the companies are not direct competitors, they do not need to worry about losing customers to one another.

Typically, as it comes from one source, second-party data is just as accurate as first-party data, and can be useful in upscaling audience targeting and audience extensions. However, there can be concerns gaining explicit consent, and usually, businesses are required to either pay for second-party data or hand over their own first-party data in return. 

What is third-party data?


Third-party data refers to any data that has been collected and sold on by a data aggregator company. Third-party data has its uses, particularly for businesses with limited first-party data. Third-party data is available in huge volumes and can help with demographic targeting, audience targeting and audience extensions. Third-party data does have a lot of setbacks though.

Third-party data is less reliable as it is pulled from multiple internet sources rather than a single website. It is hard to guarantee explicit user consent to use it, and as anyone can buy it, you are likely to compete with other businesses when targeting users.  

Why should I care about what data I use?


Due to large scale data breaches and companies’ misuse of data coming to light, consumer’s concerns around data privacy have grown rapidly. It’s entirely possible that clever, but aggressive, paid targeting has influenced user caution too, with many consumers questioning if they are being listened to after seeing highly targeted ads and sponsored posts.  

Although this is not the case, it doesn’t stop users feeling wary about how companies use their data, meaning users are less likely to give permission for businesses to analyse – or sell on – their data.

It’s unlikely that third-party data will die out completely. However, it will likely be harder to get hold of, and more expensive – albeit at a higher quality. Either way, it’s important to learn how to utilise first-party data effectively, in order to be prepared for whatever the future may hold.

Want to make sure your first-party data is delivering the best results?Contact us and our data scientists can help

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