Why should marketers care about first-party, second-party, and third-party data

Why should marketers use first-party data? Future is Consent-driven, Cookieless & model-based. First-party data is the building block. The data strategy of an enterprise determines the insights that a marketer gains. It helps marketers know their customers better. The data collection approach defines a strong, sustainable future-proof marketing strategy that improves customer acquisition & retention value. 

‘How data is stored?’, requires us to understand the existing data infrastructure and design it to better customer relationships. Using server-side tagging enables us to use a first-party data strategy in a cookie-less world. We will be introducing first-party, second-party, and third-party data. Each type of customer data is distinguished by how they are sourced and stored. Navigating into the cookieless world, marketers need to innovate ways of applying different data types to their advantage.

This article will introduce you to:

● What is first-party data?

● What is second-party data?

● What is third-party data?

● A Round-Up

What is first-party data?

First-party data is the customer data that marketers collect from their websites, CRM, and subscription data. Some online and offline sources used are websites, applications, CRM, social media, or surveys. First-party data empowers marketers to create a single source of truth while implementing the data strategy. 

Using first-party data in a cookieless world

The privacy of consumer data has become one of the topmost priorities in the browsing policy, and this regulation has changed the practice of approaching audience data. The other wave of restriction is the removal of cookies from Safari websites. Cookies are “client-side” technology. They store personal data on the client’s browser. 

Client-side tagging makes customer data sit in third-party servers. With less control over your customer data, you cannot adhere to data privacy compliance norms. Third-party cookies have made client-side tagging obsolete. It has affected the ad targeting competencies that use third-party data for data collection. The marketers use their CRM and other marketing automation software to assess information, and it also helps generate good ROI.

First-party data use cases for a marketer.

Marketing attribution, retargeting, personalization, ad optimization, campaign design are some of the use cases for which first-party data is leveraged. It offers specific information on your existing customers, further supporting unique customer ID creation and other processes to support your CDP. 

The accumulated data on website visitors offers you deep insight into their interests and requirements. You can leverage information to customers using their previous purchases and interests. It helps you present the content according to their personalized interest.

Allows more valuable targeting

Due to restricted browsing policies, marketers have to shift their data aggregation strategy from cookie-based targeting to first-party ID-based data accumulation to get valuable and real customers. This data can help in attaining more addressability and targeting efficiency. First-party data is deterministic & Marketers who follow this strategy are more efficient & able to attain a better return on Ad Spend (ROAS).

Personalization of content and advertisements

First-party data allows marketers to personalize the content or ads consistently. Personalization always increases the propensity to convert. The lifetime value (LTV) of a customer increases dramatically when they receive a personalized & relevant User experience.

Advanced measurement and attribution

The first-party data promotes improved understanding of customers and access to touchpoints that are valuable to them. Around 58 percent of marketers believe that first-party data helps them in the decision-making process and attributions and budget allocation related to online engagement and in-store sales.

Allows retargeting campaigns

Improving consumer loyalty and accelerating advertising campaigns through retargeting is what First-party data solves. Marketers can develop new retargeting strategies based on customer’s clicks, touchpoints, and interests. The first-party data allows reaching ideal customers through different channels like Google Ads, Facebook, Linkedin, and other advertising platforms.

How to collect first-party data?

Adding server tags or media pixels to your website, digital product, or social media and ad platforms helps you collect first-party data. The first-party data on consumer’s actions and behavior get recorded in the CRM or CPD. For example, when a consumer visits your website or product page and gets engaged in purchasing products, filling survey forms, or checking subscriptions, data gets stored in the database for future credentials. Read more about how to collect first-party data here. 

What is second-party data?

Second-party data is essentially someone’s first-party data, whom you trust & partner with to enrich your data segments and expand your reach. For example, A telecom provider partnering with a streaming service provider to increase customer retention or to run acquisition marketing.

How to use second-party data?

Second-party data has precise audience information which marketers can best utilize to broaden the data universe. You will depend on another source to improve your marketing. Some ways in which you could use purchased or partnered data are: 

Developing the scale of your data

The second part allows you to add on the reach that you won’t get through first-party data. If your first-party data has less audience, then it will not be easy to expand your campaign. Supplementing it with similar data helps you in increasing your commerce.

Improving business relations

You get second-party data from genuine sources like an agency or company. This mutual partnership helps in improving advertising and marketing strategy. It also opens up co-branding opportunities.

How to collect second-party data?

Second-party data can be acquired through partnering with an agency or company to reach the utmost customers. You can finance an agency for data collection, and they will render you with relevant data. This data will help in enhancing marketing and advertising efforts.

The other method is to purchase it from a genuine organization—research about the company that assembles first-party data similar to your campaign and buys that data. Integrate the data in your CRM to get insights into consumer behavior while purchasing a product or service.

 Using second-party data in a cookieless world

The expiration of cookies urged marketers to look for options that help them in expanding their campaign. Second-party data can be a profitable asset for marketers if purchased from a genuine firm or agency. In addition, this data can be merged with your DMS to reach more audiences. Second-party data sources include website activity, mobile app usage, social media, newsletters, surveys, and clicks.

What is third-party data?

Third-party data is the data you acquire from resources that are not the original holder of that data. Instead, you buy it from those who purchase the data from data aggregators. These aggregators pay money to publishers and data owners for their first-party data. For example, when you advertise something using Facebook ads or Google ads, the data collected via those platforms become third-party data. The sad part is that despite spending money on those ads, you would not have as much control as the publisher allows. You cannot own third-party data.

How to use third-party data?

Third-party data available on the publisher platforms helps in improving your advertising campaign, but the conversion rate is questionable as competitors use the same data. In addition, marketers can use third-party data across different audience segments.

Expanding audience

This data allows you to expand your marketing reach to audiences. It gives more information on consumers who would never have accessed your website before.

Increase precise targeting

Third-party data includes data points across multiple parameters and dimensions, such as data helps in demographic, behavioral, and contextual targeting. Such data helps to achieve deep and hyper-targeting. It helps in making targeting more precise. It helps in enabling narrow search and makes your ad campaign more efficient.

How to collect third-party data?

Marketers utilize the demand-side platform (DSP), data management platform (DMP), and public data exchange and marketplace to reach data providers. Therefore, a precise analysis of data providers is imperative to attain exact information.

Using third-party data in a cookieless world

The outdated client-side tagging urges advertisers and marketers to overcome the difficulty of declined audience lead. The server-side tagging supports first-party data but can use third-party data to reach the maximum audience.

A Round-Up

The server-side tagging supports first-party data and is the most accurate data. You can use first-party data to personalize consumer behavior insights. Choosing second and third-party data may allow marketers to increase leads, but it is not mandatory that all these data help conversion. It will be a wastage of time and effort for markets to personalize the ads and content who may or may not purchase the product. The second and third data are experimental, but first-party data help in getting sure returns to the efforts.

Using Magic Pixel for acquiring First-party data strategy

Magic Pixel is a server-side tag management solution that offers the best solutions to marketers to get the best return on marketing investments. Magic Pixel encourages first-party data usage due to several reasons:

● It offers built-in best practices of tag management within the solution.

● You can create the first-party context through server-side tagging as all customer data will be stored on your server.

● The information received from first-party data is accurate as it is stored directly in your server.

● The ambiguity on the success of the second-party and the third-party data is less in comparison to first-party data.

● Second-and third-party data can increase customer reach, but the first party is more productive and offers sure returns.