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Dec 07

First, second, and third-party data: How are they different?

The center of any programmatic advertising campaign is data, and what data you’re using the help to maximize your reach and return on investment. But, you may have wondered what the different types of data do and where they come from. What are the differences between first-party, second-party, and third-party data?

First-Party Data

First-party data is data that a company collects directly from its customers. First-party data is unique to that company because it is directly linked to its consumers. There are some different things you can learn from first-party data: the preferences and patterns of your customers purchasing behavior, the user data associated with your customers, and more. A study done by Forrester Consulting shows that 87% of US digital marketers cited first-party data as the most critical source of data. First-party data is especially useful for retargeting because you can leverage the information you already have about consumer’s past purchases and product interests. But, first-party data cannot be used to reach a new audience because you don’t have any data associated with that new audience since they have not visited your website before. That’s where the other two types of data come in.

Second-Party Data

Second-party data is similar to first-party data. The difference, though, is that the company that collects the data directly from its customers is sharing that data with another party or organization. Second-party data acts as an agreement between the two parties, much like a partnership. Thus, you can think of second party data as data that users aren’t giving you directly, but that you’re collecting through a direct partnership with another entity. A way of collecting second-party data is to have one party place a tracking cookie on the partner’s website for them to be able to gather the data. For example, a high-end clothing company might partner with a luxury yacht company to find new customers. Thus, through second-party data, you can extend your audience through other entities by using their first-party data.

Third-Party Data

Third-party data is data that is collected from the customer by a company that isn’t directly involved in the transaction. Third-party data is large scale: it is distributed to many different networks through online data, which is collected usually by placing a third-party cookie on first-party websites. Examples of third-party data sources are Acxiom, BlueKai, and Experian, which aggregate user data from many different sources and then analyze that data. Thus, third-party data allows for an in-depth analysis of target audience information to be collected. Also, the benefit of third-party data is the high volume of user data that you can access. It is another way for you to extend your audience reach and reach new audiences, but because it is widely accessible to competitors, the information you are gaining is not as unique compared with first-party data.

Defining your marketing goals can help you determine what different types of data you should use in your campaign. By doing so, you can optimize your online ad digital spend using data-driven marketing.

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