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So, you want to talk about data, but you’re not sure where to start. Maybe all the different parties (first, second, third, zero…) have you just wanting to stay home. We know it can get a bit messy, but as marketers today, it’s incredibly important to understand the evolving landscape of customer data, as it has a significant impact on how you connect with your customers. Let’s dig in.
First-party data is information that a company collects directly from its customers and audiences through their own channels. It is very valuable data because it’s gathered straight from your audience, so it is relatively easy to manage and store, cost-effective and considered highly accurate.
First-party data can consist of:
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 customer relationship manager (CRM) or digital management platform (DMP).
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.
Having a clear understanding of your customers’ behaviors, interactions and marketing activity across devices is the key to understanding what they’re interested in, which can get tricky when customers tend to use multiple email addresses, devices and credit cards. You can use this data to tailor your messages to their needs and wants, like which categories they recently purchased from.
Because first-party data is collected by you from your website, it has staying power a cookie does not. You maintain a one-to-one connection with your customer, as long as they continue interacting.
Knowing customer purchase history and brand interactions enables customer segmentation and targeting. This information is used to personalize offers and messaging to entice them to buy more of products they've already purchased (and try new ones they might like).
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.
As you expand your data strategy beyond first-party data, the more time and energy you need to spend to reconcile your new data with your existing data. Second-party data is first-party data that comes from an 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, like grocery shopper data for a CPG brand.
Second-party data can consist of:
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.
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.
With an increased reach, you can start to target other potential prospects that you may not have had access to in the past.
As with first-party data, second-party data is collected directly by your trusted partner from their website, mobile app or social profiles.
For certain verticals, such as CPG, partnering with retailers allow them to measure the performance of campaigns and what consumers actually purchase in-store.
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 to 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 don't 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:
The primary benefit of third-party data is to beef up the data you already have and widen your scope of people to target. When choosing a data partner, it’s important to carefully vet them to ensure they follow data and privacy best practices.
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. By filling in the gaps, third-party data lets you effectively reach out to customers in their preferred channels.
Through modeling and advanced analytics, third-party data can be used to identify your current best customers and find more potential customers who look just like them. These prospects can be reached across all channels, including digital, advanced TV, email, direct mail, digital out of home, audio and gaming.
With additional demographic details, behavioral context and transaction insights, you can improve your understanding of customers and add multidimensional insights that can go beyond first-party data’s scope to deliver highly relevant content and offers to customers and prospects in the channels they’re most engaged in.
Zero-party data is voluntarily and proactively shared by the customer with a brand. It often includes preferences, purchase intentions, personal contexts and data on how the individual wants to be treated by the brand.
The key word with zero-party data 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:
Zero-party data is gold to marketers, and it helps us develop an even deeper understanding of our customers and their preferences.
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.
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, marketers should prioritize collecting data their audiences are consciously giving them.
Using zero-party data capture techniques like interactive quizzes and games gives you the opportunity to dynamically enhance and personalize content in real-time.
The tides of marketing are changing. Consumers expect personalization and for brands to understand them, but brands are working against many factors that make reaching their customers exponentially harder: Disjointed channels, the loss of third-party cookies, increased privacy expectations, new regulations at the state and local level, reduced media budgets and rising walled gardens.
Consumer data has emerged as a titan against these headwinds. According to new Epsilon research, 60% of brands surveyed said they are looking to first-party data strategies to combat third-party identifier deprecation. But it is not a silver bullet.
Brands need a comprehensive, thoughtful data strategy that goes beyond merely collecting data. To understand their best and next best customers, marketers need a holistic understanding of who each person is, not just how they engage with you. A complete data strategy, powered by the right technology, uses first-party data, enhanced by zero-, second- and third-party data to drive better customer experiences and higher performing campaigns.
We’ve all been operating with limits on third-party cookies for a while—Safari, Firefox and Edge all opted to get rid of 3PCs in the past five years, meaning a large portion of web activity in the U.S. has actually been on browsers that don’t accept them. Google’s Chrome is just the last holdout among top browsers (and have been doing a “will they, won’t they” dance over the past few years, so it’s hard to know what to expect from them).
For now, Chrome has chosen not to deprecate 3PCs, but it's discussed doing an opt-in for users, which (if implemented), we would expect rates to be well under 10%. Signal loss is still going to occur, and the industry needs to continue preparing for a world beyond third-party cookies.
When data is used effectively, brands open the door to more cohesive, connected digital marketing across channels. Customer data enhanced with identity resolution can take disparate data points and unify them into one holistic view and use various data points to build more complex customer profiles.
From there, brands link the customer journey, develop more targeted campaigns to real, in-market customers (regardless of channel or device) and create a closed-loop system of measurement that uses machine learning and AI to continually improve.
A fully realized data strategy that drives stronger performance and increases revenue needs to draw from all types of data. This is because data gives you an empirical understanding of your customers, and the ability to tie data points together creates a harmonized picture of each person.
Looking for the right partner to help your brand take the next step? Epsilon's industry-leading technology and services are ready to get your brand where you want it to go. From Epsilon Digital to COREid and from Retail Media to Data, our suite of products and services are backed by decades of industry expertise and are designed to help your business reach its marketing goals.
Epsilon has spent decades building our data solution and making strategic acquisitions to strengthen our offerings. We manage the industry’s top-ranked consumer database, with coverage of every marketable U.S. household, and we continue to optimize our customer analytics offerings through ongoing curation and development.
Epsilon's customer data platform (CDP) combines all your different data piles into one. Demographic info, offline purchases, website visits, email opens—whatever you have—they'll all connect to a representation of that person. Epsilon's CDP adds to what you know, using data that we see across our partner network, so you'll see each person fully, clearly and securely, across all your marketing.
Epsilon’s data clean room gives brands access to a universe of potential customers. Our clean room comes with data and identity built-in from day one, giving you insights on 255M+ unique U.S. individuals to create audiences of those most likely to buy.
Your best customers are out there—you just need to find them. Working with Epsilon's Digital solution means reaching more of your most valuable and unique customers that were previously unreachable. And because Epsilon Digital is the only programmatic ad solution with full visibility into all consumer interactions and purchases across the open web, you can learn and optimize on the fly.
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.
Learn more about how to build a data strategy that leads to real results.
This article was originally published on September 22, 2023, and has been updated.
