All Data Is Not Created Equal: Differences Between First, Second, and Third Party Data

December 1, 2016
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First party, third party, and now second party data – how do you keep them all straight?


When managing advertising or marketing campaigns, it’s important to make sure your budget dollars are well spent, and to validate that you’re actually reaching the right audience. Arming yourself with knowledge on the different types of data out there, along with the benefits and things to consider about each, can prove imperative for the success of a marketing or advertising campaign.

Web data can be classified into the following three main categories:

First Party Data: The Buzz to your Woody – Your Most Loyal Friend

First party data is broadly defined as information you yourself have collected about your site visitors or customers, or in a market research case, data from our panelists, and is generally the most valuable data you can collect about your audience. Companies that possess this type of information have a previous relationship with their audience or customers, and are therefore able to use this first party data – which may include names, site-interaction data, phone numbers, addresses, and information about products purchased – to communicate directly with them. First party data is what is stored in customer-relationship-management and loyalty-program databases, and is what makes market research companies with robust, deeply-profiled panels highly beneficial for data collection and audience validation.

Benefits: First party data provides specifics about your already-existing users and customers, allowing you to leverage the information you already have about their previous purchases, browsing history, and product interests to present an offer the user is truly interested in. For this reason, marketers can use their robust consumer data for very surgical marketing initiatives, and to build loyalty within their consumer base. The key to first party data is consistency, and the ability to link interactions and behaviors across screens/device to an individual user ID without the need for probabilistic methods.

Things to consider: The drawback to this data is that it is limited to only the people who you currently have a relationship with, and lacks practical value for your growth marketing initiatives. To extend your reach requires the inclusion of second and third party data.

Second Party Data: ‘You’ve Got a Friend In Me

Quite literally, second party data is your good friend. Second party data refers to data shared, privately and securely, from another party. It’s essentially a trusted partner’s first party data.

Benefits: Mutually beneficial relationships for both parties involved give each access to non-endemic audiences they might not have previously been able to reach.

Things to consider: When it comes to data quality, generally one of the most important factors to consider is the source of the data. First party data will always be the highest quality, but because of the trusted nature of these relationships, second party data is close behind. Second party data is a beautiful compliment to your first party data as both data sets don’t succumb to any issue of inferences, or questionable data collection practices, but does take longer to set up and likely doesn’t offer the scale that your integrated marketing elements require.

Third Party Data: The Acquaintance

Third party is information that’s collected by an entity that doesn’t have a direct relationship with consumers. This type of data is normally used to create consumer segments for targeting ads and marketing messages, but can often be deemed inaccurate in many cases.

Third party data is great for demographic, behavioral, and contextual targeting, and can be used to remove bot traffic. It also plays a critical role in solutions like audience targeting and audience extension. Third party data providers charge a fee to use their segments, usually on a CPM basis.

Benefits: Third party data owns scale. Mass quantities of third party data can be collected, and offers scale, but with this increased reach you often lose accuracy in the process.

Things to consider: Besides the varying degrees of inaccuracy, third party data usually lacks context of users, is infrequently refreshed, and lacks tracking across screens. Moreover, the value upfront is often very difficult to decipher, and only becomes apparent over the lifetime of a campaign.

The true cost of reaching a single individual within your target audience can be justified by the accuracy of the data. Third party data is a necessity of today’s increasing digital ecosystem, but the value of third party data is greatly accentuated by a fusion with rigorously defined first party data from a trusted source. Put simply, third party data verified against a sizable deterministic footprint can minimize inefficiencies, and usher in a new marketing dynamic where you can better influence the consumer’s journey by sharing your tailored message with the people who are truly your ideal consumer.

Imagine that time when you fell victim to a long monologue that was precariously irrelevant, or an instance where you were held prey to a long form video that obviously missed the mark. Brands can do themselves a disservice by shouting in to a void where their audience isn’t present. I’ll cover this topic in more detail in my second installment next week, but the central value that we can provide is at the intersection of a large first party data footprint and third party data sources of varying integrity. It’s my hope that these posts will help educate marketers on some of the most prevalent issues with third party data, while also looking for ways that we can better inform our brand partner’s targeting efforts based on a sizable footprint of real users. Real people to the order of millions in the U.S., and around the world, that have offered their opinions, and shared with Research Now deeply profile data points that span a wide spectrum; built on a foundation of trust, value, and transparency.

Data can span to Infinity and Beyond. In my second article on this topic, The Marketing Technologist’s Guide to Navigating Third Party Data & Data Validity in our Digital World, we’ll delve in to best practices for understanding the accuracy of data sourced from some of the most common data brokers across the industry.

Reaching Niche Audiences: A Case Study

Through Research Now’s Audience Validation solution, full-service media agency m/SIX, in partnership with Quantcast, was able to develop a highly-customized occupation model targeting C-Suite and Executive Decision Makers – increasing brand awareness among that target audience by 14%. To learn more about this increased capability, download the case study by clicking below.

Download Case Study

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