Data Types 101: What are First Party, Second Party, and Third Party Data?
If you run a business with an online presence, you’re going to need customer data. Customer data allows you to do things like effectively target with ads.
But how you obtain data is becoming just as important as the data itself. There is an increasing shift in importance between first-party, second-party, and third-party data. And brands need to know the difference if they want to keep the customer’s trust and stay compliant with GDPR.
What is First-Party Data?
First-party data is customer data that you collect and own yourself.
Increasing privacy restrictions and moves from companies like Apple and Google to limit or prevent the collection of third-party data through cookies and other means have made first-party data even more valuable to marketers than ever before, and for good reason.
First-party data has the fewest restrictions around its use. It’s the most reliable, because you know it’s been collected from your own customers, and has information relevant to you and your market.
First-party data can be used fearlessly for email marketing, personalizing website experiences, customer-tailored promotions, and product research.
What First-Party Data Do Brands Have?
Depending on the collection method, brands will be able to obtain and leverage the following kinds of first-party data:
- Behavioral data collected from your website, app or product
- CRM data
- In-store purchase data
- Survey data
- Social media profile data
- Customer feedback
“Every brand has first-party data, but the problem is that it’s all siloed. Without a complete view of their customers, brands often spend too much money and effort in building and maintaining point to point integrations between systems. CDPs allow you to streamline that entire process by integrating all customer data in a single place for smarter targeting and personalization.”
– Lakshmi Ramesh, Senior Director of Data Services at Tinuiti
What Can Brands Do to Create More First-Party Data?
Brands have multiple ways of reliably collecting first-party data, even in a post-cookie landscape.
Tracking Pixels can be added to your website, product page, and social media profiles to gather information. Data will be collected whenever a customer visits one of the above digital venues, which you will be able to use in turn to study user behavior.
CRMs aka “Customer Relationship Management” platforms can help you collect data as customers interact with your emails, website, social media, or directly through your sales and support people. Also known as a Customer Data Platform (CDP).
Lead Generation Forms like surveys or gated content can provide plenty of insights about a customer. Surveys need to be as short as possible, however, because too many questions will annoy a customer and prompt them to leave, instead.
Progressive Profiling is the process of slowly building up more information about a customer over time. The more a customer interacts with you, the more opportunities you have to ask their preferences and add this information to your database.
To learn more, check out “The Ultimate Guide to First Party Data [in a Privacy First World]“
What is Second-Party Data?
Second-party data is just like first-party data, except it wasn’t collected by you. Another company collected it from their own customers and has either sold it to you or shared it as part of a partnership.
There are some risks associated with second-party data including it not being as relevant to your own customers. Remember: this was data gathered by another company for their own needs, and their needs may not coincide with yours.
What is Third-Party Data?
Third-party data is data that is held and sold by people who are not the original owners of that data. These are usually data aggregators that buy up data from other sources such as companies, government entities, researchers, and then resell this data to other companies.
Although buyers can categorize, filter, and sort through this data in order to get better results, quality is not guaranteed, and you’re often going to be buying large amounts of data with relatively few contacts that are actually usable. Also, companies are moving away from third-party data because it places them more at-risk with privacy laws.
With third-party cookies quickly becoming a thing of the past, the words at the top of every marketer’s mind in 2021 are “first-party data”.
What about Zero Party Data?
Zero-party data, also known as “explicit data,” is a term coined by Forrester Research. It refers to data that a customer willingly and knowingly shares with a company. Zero-party data is volunteered by the customer proactively.
In contrast, first-party and third-party data is inferred from behavioral data and other sources. Pixels, cookies, and cross-platform identification are passive measures and therefore do not count as zero-party data.
One way to collect zero-party data is via an interactive experience where users knowingly provide information count as zero-party data.
Examples include:
- Surveys
- Quizzes
- Contests
- Polls
- Registration forms
- Social media
To learn more about how zero-party data works, visit our recent blog post, “What is Zero-Party Data?“
The Future of Data and Privacy [according to the experts]
“With improvements to online privacy, customers are becoming more choosy about which companies to share their data with. Since trust is built on transparency, it’s good form to be open about what information you’re collecting, what you’re using it for, if you are sharing it, and how they can opt-in or opt-out of this process,” Nirish Parsad, Marketing Technologist at Tinuiti says.
“It’s also important to use the data in a way that creates a good ad experience. It’s a two-way street and customers cannot be expected to share their data if they won’t see some benefit from it in some way. You should be thinking of it as a value exchange.”
In 2021 and beyond, brands should prioritize first-party data as much as possible. It is a more accurate representation of your customer base, provides more value to the business, and is least likely to get you in trouble with privacy watchdogs.
Contact us to learn more about first-party data and how you can use it to boost your business.
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