What you need to know about first-party data

Pete Whitmarsh

Head of Paid Media

Analytics and Data Science

From segmenting audiences to identifying where a customer is in the buying funnel, data is at the heart of what we do. But not all data is created equal. Now more important than ever, companies need to start to utilize first-party data, instead of relying on third-party data. In this blog, we explain the differences between first, second and third party data, and how first-party data is the secret to developing a comprehensive digital marketing strategy.

What is first-party data?


First-party data is any data an organization collects directly from its own audience. First-party data is often considered to be the most valuable form of data for multiple reasons:

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

First-party data can be collated through various ways including:

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

First-party data does have limitations though. There needs to be enough data available to gain insights that can be used to create scalable campaigns. First-party data can be spread across multiple CRM systems, rather than one central place, and this can make it harder to utilize.





What is second-party data?


Second-party data refers to an organization’s first-party data that has been 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.  

Second-party data is also typically just as accurate as first-party data, as it comes from just one source. Second-party data can be useful in upscaling audience targeting and extensions. However, there can be concerns gaining explicit consent, and usually, organizations need to pay for access to 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 that have limited first-party data. Third-party data is available in huge quantities and can help with demographic and audience targeting, along with audience extensions. There are setbacks to using third-party data though.

Anyone can buy it, which means you are likely to be competing with other businesses when targeting users. The data is pulled from multiple internet sources, rather than a single website. This means the data is less reliable and makes it harder to guarantee explicit user consent.  

Why should I care about what data I use?


Because of large scale data breaches and companies’ misuse of data coming to light, consumer’s concerns around data privacy have grown rapidly. It’s also 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.  

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.

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 effectively utilize first-party data.

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