UNDERSTANDING TYPES OF DATA

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

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

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

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

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.

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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