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What Is First-Party Data, Second-Party Data, and Third-Party Data?

Article • October 25, 2022 • Written by: Diane Keng

Every marketer knows that data is crucial for customer and brand success. The type of data that marketers use depends on what goals they want to achieve. That’s why it’s important to understand the different types of data and what function they serve.

Identifying, collecting, and organizing the right data informs your segmentation and personalization strategies. Especially when there’s a defined process for pulling and utilizing actionable insights from this data.

What Is First-Party Data?

First-party data refers to data obtained directly from the interaction between consumers (existing and prospective) and your brand. This type of data is usually free, fully owned, and highly relevant to the brand. First-party data examples include:

  • Transactional data 
  • CRM data
  • Site visitors’ behavior data
  • App user data
  • Subscription and Membership data
  • Social media data (from owned accounts) 

However, first-party data is not limited to digital channels. Brands can also collect this data from non-online sources like user feedback, customer service feedback, and shared information.

Many marketers struggle to meet consumer needs because they don’t prioritize the right data. First-party data contains information about consumer behavior, when interacting with your brand. These insights drive marketing strategies. For example,  if a pet store tracks a customer’s behavior on their website, it can use first-party data to determine when that customer will need to restock on pet food, allowing the pet store to send highly relevant and timely messaging to that individual.

What Is Second-Party Data? 

Second-party data is data gained from strategic partnerships. This is essentially your partners’ first-party data. It’s not readily available, and you only gain access through meaningful relationships with other brands. 

Technically, second-party data is also first-party data, but from a “second person” perspective. So, 2nd party examples are similar to the 1st party examples discussed above. Collecting, analyzing, and utilizing second-party data is a great starting point for broadening your reach. With second-party data, marketers can widen their target market or target new verticals. For example, through partnership, a credit card brand can gain access to a men’s clothing line’s audience. 

What Is Third-Party Data? 

Third-party data is paid online and offline data that are widely sold and readily available. You can find this type of data on all social media platforms. Third-party brokers aggregate data from different first-party data owners to form comprehensive customer profiles, which they sell as third-party data. 

Marketers can use this data to gain insights into consumer behavior on different channels when they’re not interacting with your brand. For example, suppose a protective eyewear brand wants to drive more customers to its store. By using 3rd party data, they now have access to information regarding where else potential consumers spend their time online, allowing them to become highly susceptible to targeted ads from the protective eyewear brand. 

However, 3rd party data collection methods don’t typically align with consumers’ privacy ethics. As a result, you run the risk of compromising buyers’ trust. Not to mention the strict privacy regulations countries are recently enforcing to protect consumers.

Why Marketers Need to Prioritize First-Party Data

Third-party and first-party data are the most used by marketers. But the focus needs to shift to first-party data. As you probably know, new devices and platform developers are giving consumers more control over who can access their data. As a result, third-party data is becoming unreliable, and marketers must rethink marketing strategies with first-party data in mind. 88% of marketers are already prioritizing first-party data. Here are more reasons why you must:

  1. Google is phasing out third-party cookies.

    For years, marketers have been using third-party cookies to learn about consumer behavior on various platforms and channels. However, this marketing approach will change dramatically with Google’s determination to phase out third-party cookies.

    In February 2020, Google announced its plan to officially eliminate third-party cookies. Much like Apple, Google attributes this change to its aim to protect consumer privacy. Although these plans have been delayed or pushed back to 2024, one thing is certain— consented first-party data is the future.

  2. Consumers have heightened privacy concerns.

    In a recent report by KPMG, 86% of the respondents expressed their concerns about data privacy, while 78% couldn’t quite believe the amount of data brands have access to. As a result of this rise in data privacy concerns, data companies are clamping down on who they sell data to, and third-party data is becoming sparingly available. Not only that— governments are now ramping up data privacy regulations to protect consumers.

    First-party data is user-shared data collected during direct consumer-brand interactions. Consumers consent to share this information with you. As a result, privacy concerns over this type of data are almost non-existent.

  3. First-party data is more reliable and accurate.

    Since you collect and manage your first-party data, it is typically the most reliable data available to you. It is more accurate and relevant to your business compared to third-party data. It gives insights into consumer interests, needs, and pain points. As you build more meaningful consumer relationships, you’ll be able to further streamline your data and ultimately increase its accuracy and reliability. 

Today, data has become even more important to consumers. Brands that understand this prioritize first-party data. They can build meaningful customer relationships by pulling actionable insights from the right data to drive personalization strategies. 

Ready to learn more about predictive personalization and data science in digital marketing? Check out Breinify’s other blog posts or get in touch.

Ready to transform your digital personalization with incredible speed?

Diane Keng

CEO & Co-Founder @ Breinify
Forbes 30 Under 30 for Enterprise Technology