Your simple guide to first-party, second-party, third-party and zero-party data.
Finally, a simple overview will help you understand the different types of marketing data.
Understand first-party data and how to use first-party in your marketing strategy
I've been a marketer for over two decades, so I think I’m allowed to call myself an experienced marketer - and as an experienced marketer I can tell you honestly, data still confuses the shit out of me!
Why is data important?
What’s the difference between first-party and second-party?
Is third-party data valuable?
What the heck is zero-party data?
If you feel confused and overwhelmed by data too, then I’m here to help with a simple guide to the four types of data you need to understand to manage data in your marketing activity.
What is first-party data:
First-party data is collected from online sources (website, e-commerce, subscriptions, CRM, social media) and offline sources (surveys, feedback forms, point of sale and call centre data). It can be transactional, behavioural, and demographic.
Because you know where and how the data is collected, you can ensure it plays by all the privacy best-practices and is GPDR + CCP compliant.
First-party data gives you a richer understanding of your customer, it can help us see predict future behaviours, opportunities, and give you the ability to deliver better experiences and more effective marketing through retargeting, personalisation and customisation.
One of the issues with first-party data is volume, you often don't have enough of it.
Another challenge is that first-party data is often siloed, mismanaged and underutilised. You need strong planning, processes and platforms to bring your data together into a single source of truth that you can use.
What is second-party data:
Second-party data is another company's first-party data that you've purchased or traded through a mutually beneficial partnership agreement.
As you know the source, you can be reasonably confident in the quality and ensure it's collected in a privacy-compliant manner.
Second-party data is valuable as it can expand your customer data, help you find new customers, enhance your targeting, insights and ability to predict and forecast the future.
The downside of second-party data is that it's typically limited in size, scope and how you're permitted to use it.
It can also be expensive and require a lot of time and work to secure each new second-party data partner.
What is third-party data:
Third-party data is bought or collected by a company that isn't the original data collector.
Third-party data companies generally aggregate data from many different sources into one dataset, package it up and sell it.
The benefits of third-party data is its size, scale and speed to secure; the data is also grouped into customer segments or audiences with similar characteristics, so you don't have to sort or analyse it yourself.
Third-party data can help you build out your customer data, see larger trends, patterns, opportunities, and identify new customer segments.
Unfortunately, because it hasn't been sourced directly, the quality is often compromised, and you can't be sure it's been collected in a privacy friendly way.
Another shortcoming is that anyone can buy it, including your competitors.
What is zero-party data:
Zero-party data is the data your customer openly and directly shares with you in exchange for a benefit or reward. That genuinely being better communication, experience or product.
An example of zero-party data could be your customer nominating how often they want to receive emails and what topics they want to hear about.
Think of zero-party data as information your customer wants you to know.
It's distinct from first-party because it's intentionally provided by your customer - rather than inferred by their online or offline activity.