In today’s digital age, the landscape of data privacy is rapidly evolving. Data has become a new currency for businesses. Smart regulations like GDPR and CCPA, are restructuring the way businesses collect and use consumer data. Businesses are constantly trying to collect, analyze, and use data to obtain a competitive place in the industry. Whereas, with this increasing complexity of data privacy regulations and the decline of third-party cookies, companies are turning to first-party data thinking of them as a more reliable and sustainable source of information. By utilizing this valuable information, businesses can personalize their marketing efforts, improve customer experiences, and drive revenue growth.
What is First-party, Second-party, and Third-party Data?
First-party Data
First-party data is the amount of information that businesses collect from their consumers or their driven audience through their channels. This collected data is very valuable because of its accuracy and reliability about the information and it comes straight from the source.
Business uses first-party data to create more target-oriented and personalized campaigns, improve customer bonding, enhance marketing effectiveness, and customer loyalty, and adhere to relevant privacy regulations.
Business collects first-party data by including, tracking pixels to their website, product profiles, CRM Systems, customer feedback, and loyalty programs. This means collecting information about their behaviors, actions, and related interests and recording them within their individual businesses CRM (Customer Relationship Management) or CDP (Customer Data Platform).
Here are a few examples of first-party data:
- Customer email address and phone numbers
- Information from a customer relationship management system (CRM)
- Data from websites, mobile apps, or consumer’s social media accounts
- Data from products purchase and retailing
- Data from email-based subscriptions
- Information from customer survey
- Information from customer feedback
- Data from loyalty programs
The data mentioned above is collected directly from the audience or the customers via interactions with them, transactions, and survey forms.
Second-party Data
Second-party data is the information material collected by another company or organization and shared with another company, commonly as a part of a mutually beneficial partnership among them.
It is different from first-party data, and third-party data as they are either collected directly from the audience and from various sources and then sold as a package of information to various other companies.
Second-party can be useful for several reasons, which include:
- Developing Insights
- Broadening your audience
- Expanding the enterprise
This data is initially the first-party data of another organization and shared with other(s), this may include information such as:
- Website, applications, or social media activity of the users
- In-store retail history
- Survey responses
- Subscription or offers-based information.
Third-party Data
Third-party data are the statistics that are collected and sold by the third-party organization, separate from the original collector. It is collected in the same way as first and second-party data, by doing surveys, interviews, and collecting feedback forms. However, this research is often conducted on sample sizes, which can lead to information becoming less useful for a business or an organization.
It can be obtained from a variety of sources, like:
- Public Records
- Online or digital tracking
- Offline surveys
- Governmental, non-profit, or academic sources
It consists of information such as –
The third party can be used in many ways such as:
- Precisely target potential customers
- Enhance customer understanding through data enrichment
- Optimize customer profiles for personalized marketing
- Extend market reach to drive sales
- Tailor marketing content to individual preferences
Importance of First-party Data
Till now we have seen all types of data that can be gathered via different means and different organizations. Now, let’s see what makes first-party data stand on the top among these three and why it is considered vital in the industry.
Comparing First- and Third-party data
| Feature | First-party Data | Third-party Data |
| Source | Sourced directly from users | Sourced from external data providers |
| Ownership | You own the data | You buy access to data |
| Accuracy | More accurate and directly collected | Less accurate due to due to potential inaccuracies in collection and processing |
| Relevance | Relevant to your business and customers | Less relevant as it is collected from a broad range of users |
| Privacy Regulations | More tightly regulated | Less regulated as it is often aggregated and anonymized |
| Examples | Demographics, retail history, behavior, email subscriptions | Interests, income levels, geographic locations |
| Use Cases | Personalized marketing, customer segmentation, products recommendation, loyalty programs | Audience targeting, lookalike modeling, market research, competitive analysis |
| Cost | Relatively low cost to collect data and analyze | Can be expensive to purchase and integrate |
| Control | High level of control over data collection methods and usage | Limited control over data quality and updates |
As the above table explains, first-party data is always more reliable and profitable for businesses in many ways instead of just purchasing third-party data from different organizations. It is more relevant and even cost-effective. From framing a good target audience for your campaigns to getting good and worthy responses from them it is first party data that trumps over third party data anyday & anytime.
What Is Zero-party Data?
Zero-party data is defined as, “Information that customers actively provide to a brand, including preferences, purchase plans, personal details, and desired recognition”. Forrester Research coined this term.
Zero-party Data is the most valuable and vital type of data an organization or a brand can collect from their customers. It’s a dataset that consumers proactively share with the brand, such as their preferences, interests, and their feedback. By actively and willingly sharing this information, customers empower brands to provide highly customized and personalized result experiences. This data is often collected through surveys, quizzes, highly interactive experiences, or preference centers. By utilizing zero-party data, brands can build stronger customer relationships, enhance their product offerings, and produce more relevant and reliable marketing campaigns, leading to more profit for a brand or an organization.
Benefits of Zero-party Data
Zero-party data have so many benefits for businesses and brands, and it can be helpful for companies in the following ways:
- Comply with privacy regulations
- Demonstrate their commitment to privacy
- Avoid legal pitfalls
- Gain insights
Collection of Zero-party Data
The datasets of zero-party data can be collected via their channels such as:
- Mobile Applications
- Websites
- Social Media accounts
- SMS
- Emails
Conclusion
Data driven privacy is a big issue in today’s growing digital world. Where there is misuse of collected data, at the same time, there are many ways to protect your data and privacy within an organization itself. First-party data is the most reliable and relevant form of data to be collected from the users, whereas second and third-party data are less reliable and can be expensive. Even though all of the datasets are utilized for exploring their target audience and analyzing their behavior, relying on first-party data can be more profitable and produce more positive leads for the campaigns. However, with the introduction of Zero party data, the research and data acquisition landscape is about to change as it is viewed to be the most valuable form of data for the brands and the organizations to work on.