Data-driven marketing has been proven to increase ROI, which is why data is such an important resource for marketers today. The “right” type of data will vary based on your needs and goals for the situation at hand. If you’ve been paying attention to the news recently, you may have asked yourself “what is first-party data?” And “how is it different from second-party or third-party data”?
In this post, we’ll give a basic definition of first-party, second-party, and third-party data, and discuss how your business can use each of them.
First-party data is data you collect directly from your customers or your audience. It can come from:
First-party data is used for retargeting, but also for understanding audience behavior, making predictions, and creating personalized content.
This information is desirable because it’s cost-effective, easy to manage, and tends to be more accurate than other types of data. And since you directly collect and own first-party data, privacy concerns are relatively minimal.
Second-party data refers to data you purchase directly from someone else. Rather than collecting data yourself, you can buy it from a company that is collecting the type of data you need. Essentially, their first-party data becomes your second-party data.
Second-party data comes from similar sources as first-party, only instead of your own audience, it’s from someone else’s. This data can come from website and mobile app activity, social media, customer surveys, CRM data, etc. Another way to gain second party data is through a partner. For example, a company may share first-hand customer data with an agency to use for marketing purposes.
If you’ve chosen your source well, you can trust the accuracy of your data. But is it relevant to your audience? You need to understand exactly who you’re purchasing from and their audience, as well as preview the information it contains – and you may also want to compare different partners.
Third party data is data you buy from an outside source that is:
When you purchase third-party data, it’s often coming from a large data aggregator, data exchange, or research group.
Third party data is popular because it’s quick to obtain and is available on a large scale. The downside is that your competitors also have access to the very same data. It’s publicly available, which means anyone can get it.
Besides that, third-party data may not always be relevant to your audience. Third-party data providers collect massive amounts of data and organize it into broad categories based on industry, audience behaviors, demographic characteristics. While you can choose a particular segment to purchase, there’s no guarantee that the respondents actually fit your buyer personas.
As with second-party data, you need to thoroughly understand what you are buying before purchasing third-party data.
Second and third-party data can enhance first-party data, but should not replace it. To learn more about using customer data to power your business, get in touch for a free consultation.