So, you want to talk about data—but you’re not sure where to start. Maybe all the different parties (first, second, third, zero…) has you just wanting to stay home. We know it can get a bit messy, but as marketers today, it’s incredibly important to understand all of your data as it has a significant impact on how you connect with your customers.
Let’s dig in.
Table of contents
What is first-party data?
Simply put, first-party data is data you’ve collected directly from your customers. Many marketers hold first-party data to such high esteem for this reason—it’s gathered straight from your audience, so not only is it relatively easy to manage and store, but it’s cost-effective and considered highly accurate.
First-party data can consist of:
- Website and mobile app interactions and behaviors
- Purchase history
- Contact information – including email, phone or address
- SMS
- Point-of-sale & CRM data
- Call centers
- Subscription information
- Social media data
This data is collected directly from consumers, transactions and by placing a pixel on your website, mobile app, product or social channels. Typically, the information is recorded in a CRM or DMP.
Why is first-party data important?
As we’ve discussed, first-party data is invaluable to many marketers. It gives you a clear picture of how customers interact with your brand, so you can make informed decisions on how to best communicate with them in the future:
It enhances personalization. Having a clear understanding of your customers’ behaviors, interactions and marketing activity across devices is the key to understanding what they’re interested in. You can use this data to tailor your messages to their needs and wants, like which categories they recently purchased from.
It future-proofs your marketing. As I’m sure you’ve heard, cookies are a goner. Because first-party data is collected by you from your website, it has staying power a cookie does not. You maintain a 1:1 connection with your customer (as long as they continue interacting).
It drives cross-sell and upsell. Knowing customer purchase history and brand interactions enables segmentation and targeting of customers. This information is used to personalize offers and messaging to entice them to buy more of products they have already purchased (and try new ones they might like).
It's privacy protected. As data privacy becomes more of a concern to consumers and brands alike, it’s important to invest in a strategy that puts privacy first. As we’ve discussed, this kind of data is collected first-hand, right from the source.
What is second-party data?
Second-party data is data that you did not collect. It’s essentially first-party data that came from another organization outside of your own. This can mean that you obtained second-party data from a trusted partner in which you share a mutually beneficial relationship with, or that you purchased.
Second-party data can consist of:
- Customer surveys and feedback
- Website and mobile app interactions and behaviors
- Purchase history
- Contact information – including Email, phone or address
- SMS
- Point-of-sale & CRM data
- Call centers
- Subscription information
- Social media data
Why is second-party data important?
Second-party data is a great way to expand the scope of your data. Typically, you would gather this kind of data from a trusted partner that you know, which ensures accuracy and relevancy. Plus, once you have second-party data, you can manage it in essentially the same way as your first-party data:
It increases the depth and breadth of your data. Data fielded directly from your customers is of course valuable, but there’s only so much you can learn. If you’re wanting to expand your dataset beyond what’s in your purview, second-party data is a great way to do it.
It helps you reach audiences you might not have in the past. With an increased reach, you can start to target other potential prospects that you may not have had access to in the past.
It (also) future-proofs your marketing. As with first-party data, second-party data is collected directly by your trusted partner from their website, mobile app or social profiles.
It measures performance. For certain verticals, such as CPG, partnering with retailers allow them to measure the performance of campaigns and what consumers actually purchase instore.
What is third-party data?
Third-party data is data you buy from an outside source that is not the original collector of said data. It can come from a wide variety of sources both offline and across the digital ecosystem. It is then aggregated, segmented and sold to marketers for their own advertising campaigns.
Third-party data can be purchased as audience segments for individual campaigns, meaning you can choose exactly which kind of customer you want to target. For example, you might be looking for fitness enthusiasts to buy your organic brownies. So, you could purchase an audience segment of females ages 25-45 that are outdoor enthusiasts and have shopped at health food stores in the past month.
In addition, third-party data can be purchased to enrich your own customer data with information you do not collect directly or cannot access. Most brands will purchase third-party data to add critical demographic information such as age, income, gender and interests, which enhances your customer profiles to help improve personalization.
Third-party data consists of:
- Demographics
- Financials such as income, net worth
- Purchases
- Categorical Interests
- Online behaviors
- Propensities and attitudes
- Health information
Why is third-party data important?
The primary benefit of third-party data is to beef up the data you already have and once again widen your scope of people to target. The efficacy of third-party data is often debated in the industry, hence it is important to carefully vet any partner to ensure they follow data accuracy and privacy best practices:
It enriches the data you already have. Third-party data can help you fill in the gaps first-party data can’t—not just from your site or direct interactions. Brands will usually start with demographic and lifestyle data and expand to purchase and behavioral data.
It helps you discover best prospects. Through modeling and advanced analytics, third-party data can be used to identify your next best prospects. These prospects can be reached across all channels, including digital, aTV, email, direct mail, digital out of home, audio and gaming
It helps you target better. With additional demographic details, behavioral context and transaction insights, you can improve your understanding of customers and add multi-dimensional insights that can go beyond first-party data’s scope.
What is zero-party data?
Zero-party data is the newest type of data to hit the scene. The term, coined by Forrester Research, refers to data that has been voluntarily given to you by your customers.
It sounds similar to first-party data, and it definitely is. But the key word here is voluntary. While customers understand that you might be tracking their interactions and behaviors on their site to build your first-party data assets, they’re not explicitly telling you every move they make—you’re making observations and predicting behaviors based on those observations. Zero-party data leaves no room for inference.
Zero-party data consists of:
- Loyalty program memberships
- Interactive quiz or game responses
- Preference data
- Purchase intentions
Why is zero-party data important?
Zero-party data is gold to marketers:
It’s definitive and trustworthy. While self reporting can sometimes be an issue, for the most part, you have to trust what your customers are telling you. Zero-party data gives you direct access to your customers’ intentions.
It's (even more) privacy protected. Customers are encouraged to willingly provide information about themselves on their own terms—it’s not being collected in the background without their understanding. With GDPR and CCPA regulations and cookie deprecation on the horizon, marketers should prioritize collecting data their audiences are consciously giving them.
It makes personalization that much better. Using zero-party data capture techniques like interactive quizzes and games gives you the opportunity to dynamically enhance and personalize content in real-time.
Wrapping it up
There will always be some nuance when it comes to explaining and discussing the different kinds of data. But as we’ve discussed, data is the lifeline and the connection point between you and your customers (and new ones). Understanding those nuances is essential to choosing the right type of data or data mix to prioritize in your marketing mix.
