The Data Family Tree — first party, second party, third party data
In a world where data is the new oil, it is imperative for marketers to understand which well to dig. For any campaign to be successful, it needs to be backed by relevant and meaningful data. There are three types of data — first party data, second party data and third party data. The main difference between them being a trade-off between quality and reach. Quality refers to the richness and relevance of the data. Let us now look at each type of data, their uses and benefits.
First party data
First party data is the information marketers collect directly from their customers and audiences (site visitors and social media followers). It includes:
1. Data from behaviors exhibited or actions taken across your website, app or product
2. CRM data
3. Social media profiles data
4. Subscription based data
5. Data from surveys and customer feedback
First party digital data can be collected by adding a pixel to your website, app or product which collects data on behavior and activity and stores it in a CRM or CDP.
First party data have two main benefits as stated below –
1. The data collected is of high quality, accurate and reliable and compliant to data privacy guidelines like GDPR and CCPA
2. Can be used to segment the customer base and target them in a cost-effective manner by giving insights into their consumer journeys. This is a strategic use case that is essential for an organization’s growth
Second party data
Second party data is essentially someone else’s first party data that is bought directly from the source and can be utilized for one’s own marketing campaigns. This data can be acquired through mutual collaborations and agreements wherein both businesses benefit from the exchange of data.
Second party data has the following benefits –
1. The data is a match of your targeted or desired audience and can be used to expand your first party data and effectively target the right consumer segments
2. Since the data has all come from a single source, it is generally reliable and accurate
Third party data
Third party data is usually bought from external parties who are not the original collectors of that data. These are large scale data aggregators who collate data from various other platforms.
Third party data has the following advantages –
1. This dataset lets you fill the gaps in your first party data and is easily scalable
2. This data is readily available and can be purchased in bulk, therefore is less time consuming to collect
Quality vs Reach: Types of Data
Source: 1st, 2nd and 3rd Party Data — What It All Means?[1]
These three types of data are commonly known to marketers, however based on recent developments in data partnerships and consumer empowerment, a fourth type of data has emerged according to Forrester research. This is called Zero party data. This is data that a consumer proactively shares with your brand. It can include preferences, purchase intentions, consumer persona, and personal context[2].
The right mix of these four data types can help improve customer engagement metrics and optimize your consumer data strategy. Research indicates that most marketers are unable to exploit the full potential of data available at their disposal. Only 77% of vendors surveyed say they acquire, use, and/or activate second-party data on behalf of clients, and even fewer have programs to systematically collect and optimize zero-party data.[3] Using these data types in a prudent fashion can help you –
1. Better identify prospects from existing customers with the aim of retention and let lifetime value propel the right marketing mix
2. Better targeting and personalization based on actual consumer needs and preferences. Zero party data can be a key element in this exercise
3. Earn consumer trust by balancing privacy and personalization. 54% of US online adults say they’re annoyed by targeted advertising, but 28% also say they don’t mind being contacted by companies with relevant offers even if they have not opted-in to receive communications[4]
[1] https://www.adsquare.com/1st-2nd-and-3rd-party-data-what-it-all-means/
[2] https://go.forrester.com/wp-content/uploads/Forrester-Consumer-Data-Beyond-First-And-Third-Party.pdf
[3] Source: Forrester’s Q2 2017 Global Consumer Data Types Online Survey
[4] Source: Forrester Data Consumer Technographics® North American Consumer Technology, Media, And Telecom Online Benchmark Recontact Survey 1, Q3 2016 (US)
