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.

UNDERSTANDING THE 3 TYPES OF DATA: FIRST-PARTY, SECOND-PARTY, THIRD-PARTY EXPLAINED