In this executive read, we’ll quickly go through the three types of data – first-party, second-party and third-party – explain what they mean, their source, and the pros & cons of each.
1. WHAT IS FIRST PARTY DATA?
First-party data is any data that is directly collected and owned by you.
SOURCES OF FIRST PARTY DATA
- Lead-form registrations
- Web analytics data
- Website registrations
- App downloads
- Purchase data
ADVANTAGES OF FIRST PARTY DATA
- It comes with a high degree of accuracy as it comes from a single known source
- There are minimal concerns around data misuse and privacy, as you are in control of how it is collected and stored
- Campaigns and strategies created using insights derived from first party data yield better results (e.g. CTR, conversions) as this is based upon data coming straight from customers
- Owning first-party data allows you create your own segments based on the unique data points you have captured for your brand
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DISADVANTAGES OF FIRST PARTY DATA
- While first-party data is high in quality, it can be limited in scale
- The data points captured may not be sufficient enough to make assumptions to build a precise lookalike audience
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2. WHAT IS SECOND PARTY DATA?
Second-party data is first-party data of one company/ brand made available to another. Typically, the companies here would be targeting the same audience however in non-competing categories. For example, an infant milk formula brand may want to widen its reach by leveraging a diaper brand’s first-party data. Another example could be a hotel group sharing data with an airline.
ADVANTAGES OF SECOND PARTY
- It can help to widen the reach for your brand
- As the partnering brands will not be director competitors, there is less risk in losing customers to a competitor
- It comes with a similar level of accuracy and safety as it is first-party data of another company
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DISADVANTAGES OF SECOND PARTY
- No disadvantages as such but there could be some concerns with gaining explicit consent
- The companies need to trust one another as data is handed over to one another
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3. WHAT IS THIRD PARTY DATA?
Third-party data is data collected and used or sold by a data aggregator.
ADVANTAGES OF THIRD-PARTY DATA
- Comes with massive scale
- Can be leveraged well for wider reach particularly when you are adding targeting filters demographic targeting, location targeting, audience targeting
- Can be used effectively if you have limited first-party data.
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DISADVANTAGES OF THIRD-PARTY DATA
- The data is not exclusive to you and can be used by competitors targeting the same user
- The data could be collected & collated from multiple sources making it less reliable, and harder to guarantee explicit consent from users.
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