What is first party data, and why do you need to know about it?

Pete Whitmarsh

Pete Whitmarsh

Head of Paid Media

Analytics and Data Science

The key to creating a comprehensive digital marketing strategy that works is data. From segmenting audiences to identifying where a customer is in the buying funnel, data is at the heart of what we do.  

Not all data is created equal, however, it is more important than ever for brands to be utilizing first-party data, rather than relying on third-party data.  

What is first, second and third-party data? 

First-party data

Considered to be the most valuable, first-party data includes any data which a company has collated directly from its own audience. This could be through web analytics, newsletter subscriptions, app downloads, satisfaction surveys, or customer accounts.

First-party data is considered to be the best for multiple reasons: it comes from a single source, so is more likely to be accurate; insights come directly from the customer, so campaigns and strategies created using these insights should yield better results; there are minimal concerns around data misuse and privacy, as you are in control of how it is collected and stored. 

There are limitations with first-party data. There needs to be enough data available for marketers to gain enough insight to create scalable campaigns, which can be a struggle for businesses just starting out. Even bigger businesses can face challenges; first-party data is often spread across multiple CRM systems, rather than in one central place, which can make the data harder to utilize effectively.

Second-party data

Lesser known than first and third-party data, second-party data essentially refers to one company’s first-party data, which has been collated and sold to a second company.

This 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 that 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.  

Second-party data is typically just as accurate as first-party data, as it also comes from just one source, and can be useful in upscaling audience targeting and audience extensions. However, there can still be concerns with gaining explicit consent, and you will usually be required to either pay for the data or hand over your own customer data in return. 

Third-party data

Third-party data refers to any data which has been collected and sold on by a data aggregator company. Third-party data has its uses; it’s available in huge volumes, and can help in demographic targeting, audience targeting and audience extensions, particularly for businesses who have limited first-party data.

However, there are a lot of setbacks to using third-party data. Anyone can buy it, which means you are likely to be competing with other businesses when targeting these users. The data is pulled from multiple internet sources rather than a single website, which makes the data less reliable, and it’s hard to guarantee explicit consent from the users.  

Why should I care about what data I use? 

Consumer concern around data privacy has grown rapidly over the last few years, which has largely been steered by large scale data breaches and companies’ misuse of data coming to light. It’s entirely possible that clever, but aggressive, paid targeting has also influenced this caution too, with many consumers questioning whether they are being listened to after seeing highly targeted ads and sponsored posts.  

While this is not the case, it doesn’t stop consumers from feeling wary about how their data is being used by companies, meaning they are less likely to give permission for businesses to use – or sell on – their data.  

This explicit consent is particularly important now, following the implementation of the EU’s General Data Protections Regulation (GDPR) last year, which has seen laws around how brands and marketers collect, store and use consumer data tighten. Anyone who buys third-party data relies on these external companies gaining explicit consent from the consumers to have their details sold on, as they are not responsible for collecting the data themselves.  

The industry is already seeing a movement away from third-party data, too. Last September, Apple rolled out Intelligent Tracking Prevention (ITP) 2.0, which blocks tracking cookies on Safari, effectively disabling third-party cookies. Safari accounts for 17% of web traffic, so this move can have a big impact on data collection, and it’s possible that other browsers will follow suit.

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 be prepared for whatever the future may hold, by learning how to utilize first-party data effectively. I will be running a webinar on how to use Google Marketing Platform to take full advantage of your first-party data on January 31st, which you can sign up to here.

Attend this webinar if you want to hear:

  • How third-party cookie data is now much more limited than it used to be
  • What this means for your online advertising
  • Features of the new Google Integration Center and
  • Some of the ways you can utilize first-party data across the Google Marketing Platform to maximize ROI on your digital spend
  • Real use cases of this in action

Want to get the latest insights delivered to your inbox?Sign up here

Analytics and Data ScienceInsights

The challenges of considered purchases and harnessing behavioral modeling to predict the future

Read article
Get the latest digital marketing insights delivered to your inbox