What Is First-Party Data?

What Is First-Party Data?

First-party data is the information companies collect from their audiences; it usually consists of site visitors, social media followers, and customers. As such, it is relevant to marketers and businesses who want to focus on building their audience.

The term “first-party” refers to the entity that initially collects the data for retargeting. There are minimal privacy concerns regarding first-party data because you know where it comes from, and because you’re a marketer, you completely own the information.

This data is beneficial because it helps you understand your customers better, as it has to do with interactions with your particular brand across many different consumer touchpoints.

As you can see, it is essential to understand other forms of data and how it impacts your company’s goals.

What Is Second-Party Data?

Second-party data is first-party data from another company. They get the information from their customers, which may also be related to, or benefit your interests, and they sell it to you. 

The primary difference here would be you obtaining the information versus another company obtaining their customer’s data and then selling it to you. 

You can count on this data to be accurate because it is not an aggregation of data from various sources. You’d purchase directly from the company that owns the data, forming a trustworthy partnership with them. 

Example: If the car insurance company then requests data from a car dealership that has collected information from people applying to purchase a new car, this would be secondary data. 

There would be mutual interest between the two companies that share an audience that could have common interests. Those buying new cars may be interested in insuring those vehicles, and those insured could be referred to a dealership if they ever need to buy a used or new automobile. 

What Is Third-Party Data?

Third-party data refers to data gathered by a business or other entity that doesn’t have any direct connection to the customer or visitor.

This form of data is typically collected and sold to companies in an attempt to aid them in building a more effective retargeting and advertising strategy. However, its usefulness is questionable since it’s not collected from your customers, and the information is available to the competition.

First-party data will be of more use to you and will save you time. This data will give you knowledge about your site visitors and customers to better inform you on how to make a more effective strategy for optimal results. 

Example: If the car insurance company reaches out to a third-party vendor to get other people’s information that may or may not have any interest in car insurance, may have changed their contact details along the way, and might be low-quality potential customers. 

What Are the Differences Between First and Third-party Data?

The most significant difference between first-party and third-party data depends on who collected the information.

First-party data is collected when the company that intends to use the information is also the entity managing the data. 

On the other hand, third-party data occurs when another company or entity collects the data and is made available by any other company.

With third-party data, the party with the information usually acquires it from a broad pool of other interested companies and entities who have access to the data.

Why Is it Important?

Your customer base will be the source of your highest percentage of profits. Therefore, companies should invest in a more cost-effective method of reaching their audience, wherever they are on the purchasing journey.

Aside from recency, quality, and accuracy presenting issues when using third-party data, your competitors can just as quickly obtain the same information—there’s no exclusivity. But getting data on unsuspecting consumers from second and third-party sources has become more challenging. 

Customers demand that companies respect their privacy, that their preferences remain anonymous, and that they are not victims of spamming or consistent (and undesired) marketing ads. It is no longer possible to pour millions into buying third-party data acquired without the consumer’s consent. 

In light of changing demands, these companies now face stricter regulations when collecting and using secondary and third-party data, making them less profitable. 

There has been a shift for companies to use more resources to understand first-party data better, as they no longer have the same rights to consumer information. This privacy Revolution protects the customer from exploitation as well.