What are 1st, 2nd and 3rd party data and how can they be used in marketing?
Data is one of the key drivers of successful marketing. One of the biggest challenges for the marketer is understanding the data, prioritizing it and making it usable. What kind of data is the most useful for you as a marketer depends on the current situation and your goals. Do you want to focus on acquiring new customers or increasing existing customers’ purchases or maybe both? In this post, we will open up what different types of data mean and how they can be used in marketing.
What is 1st party data?
1st party data is the data that you collect directly from your own audience or customers. This includes, for example:
- Behavioral, or interest-based data collected from a website or application
- Order information
- Customer feedback
First-party data is collected directly from your own sources and it is most often the most valuable. It is also relatively easy to collect and manage, especially if you have a Data Management System (DMP). For first-party data, privacy concerns are minimal, because you know exactly where the data is collected, and you own it yourself. First-party data management and utilization should be every company’s primary goal, if you want to increase sales and take advantage of valuable information on deepening customer relationships and engagement.
The first party data can be used, for example:
- Predict the future
- Analyze your customers
- Personalize your content and advertising
- Re-target advertising
The accuracy and relevance of the data makes it possible to predict reliable models based on behavior. Even if your audience would be small, you can still get valuable insights. Since first-party data is based mostly on existing customers it is in a key position when you want to do re-marketing to target advertising to those who have purchased or visited the site previously. Using first-party data, you can also influence the customer experience and engagement by personalizing the advertising and site content.
What is 2nd party data?
2nd party data is someone else’s first party data. The data is collected directly from the other party, so the source of the data is already known, and the accuracy of the data can already be assured. 2nd party data quality is therefore the same as the first-party data, but the source is someone other than your own audience. Data Sources are very similar to the first-party data:
- Use of mobile applications
- Customer surveys
If you can find suitable data, the other party’s data can be very valuable for your company. Second party has a lot of same potential as first-party data, but it will create more possibilities than the use of first-party data only. As the source of the data is known, its high quality can be assured. Use of 2nd party data is open and you manage what you buy and take advantage of.
The second party data can be used for example:
- Expands valuable data
- Reach new audiences
- Predict behavior
- Build customer relationships
- Help your business grow
Even if the first-party data is of high-quality, you may not be able to achieve the desired scale with it, especially if the amount of data is small. Second-party data can help you reach more of the desired types of audiences without compromising quality. The second-party data is also useful when you want to reach new audiences and find more potential new customers. Like the first-party data, the second-party data is useful to predict behaviors. Using second-party data will inevitably lead to a partnership that will help your business grow.
What is 3rd party data?
Third-party data is the data that you purchase from external sources, which are not the original collectors of the data. Third-Party data providers gather large masses of data, process it and sell the data on. Providers categorize data based on things like audience behavior and interests, and demographics such as age and gender. The name and contents of the third-party audience data will vary between service providers, so you should get an understanding of what you’re buying and from where the data was collected before you add it to a campaign.
Third-party data is bought and sold programmatically, which means that it happens quickly and usually on a large scale. The downside of the third-party data is that the source of data may be unknown for buyer. Also, data is not exclusive, which means that competitors also have access to the same data. Thanks to the amount and reach of third-party data, you can use it to broaden your audience and gain deeper insights into their behavior and interests.
The third party data can be used for example:
- To enrich the first-party data
- Expand your audience
- Find new audiences
While self-collected data is usually the most valuable to a company because of its accuracy and relevance, its amount is often quite limited. The large scale of data is one of the positive aspects of third-party data. Once you’ve identified your audience, you can reach more of the similar audiences. With third-party data, the challenge is that if the data source is not known you can not be sure either of the reliability of the data or that it has been collected according to the existing laws and recommendations.
Bonus – 0 party data
Marketers can learn about customer preferences and purchase intentions by collecting information that the consumer proactively shares. This information is called zero-party data. Instead of making inferences and assumptions, customers are directly asked. If customers trust and value the company, they will often be happy to interact with the company and share information. Shopping plans and preferences help you build a sense of who your customer is. Zero-party data can be used to build direct relationships with customers and improve tailored marketing, services and promotions. The best zero-party data is collected from the customer by offering interactive experiences.
Generally speaking, the main difference between the 1st data, 2nd and 3rd-party is the balance between quality and coverage. Data utilization is easy: all you have to do is set your goals and dare to try.
Do you want to start using data?
We help you utilize your data in marketing. We can help you improve your current practices or help you get started with your data. If you have any questions regarding any data utilization in marketing, we will be glad to assist you. Here are some examples of our services:
Audience analysis can help you discover features that unite your audience (valuable 1st party data) and profile your audience. Analyzed audiences can be leveraged to capture new customers by mirroring their own audiences to their larger data mass, finding more audiences that emphasize the same features as existing customers and audiences. If you are interested in conducting audience analysis of your site or client’s site visitors and want to find new customers and start utilizing your data in marketing, leave us a contact request here.
Relevant Audience is a data marketplace that provides the audiences that are based on the first-party data from data partners. The data sources are high quality and reliable, and the partners involved have themselves determined the type of audiences their data will be built for. There are many data partners in Audience that allow for a wide selecton of audiences. You can view Relevant Audience ready audiences in our Segment Finder.
Read more about our data services:
Relevant Audience – Audiences for advertisers