Is All Data Equal?
As data collection techniques embrace a more digital approach, researchers and marketers alike find themselves increasingly inundated with data from different sources- whether first party, second party or third party data. Whilst there is inherently value in all data sources, it would be naïve to assume that all three hold equal value across different contexts.
First Party Data
First party data refers to information collected directly from the customer by a brand. This can include information from sources such as marketing automations (newsletter sign-ups), social networks, ticketing providers, mobile app and website usage, beacons, CRM data, etc.
It is reported that more than two-thirds of marketers believe that first party data provides better understanding into their customers. Not only is this information believed to be the most reliable and valuable, it is also typically available at no additional cost.
However, one of the main limitations regarding first party data relates to the fact that the data set is limited to the pool of customers that the brand currently has a relationship with, and thus lacks value for growth marketing initiatives. As such, efforts to extend reach would likely have to incorporate working with second or third party data providers.
Second Party Data
In simple terms, second party data is a trusted partner’s first party data. A relatively newer entry within the data sphere, second party data can either be a one-time purchase or a lasting partnership where partners exchange data.
One of the main advantages relating to second party data is that it can help add further depth and meaning to existing first party data. However, data partnerships may result in complications particularly considering difficulties in integrating different sources of data along with increased attention and scrutiny regarding data sharing laws.
Third Party Data
Third party data is generated from other platforms, typically aggregated from other websites or sources. Its main strength lays in the sheer volume and size of the data set. Although there are a growing number of companies that sell third-party data, buyers should be wary of a number of factors. For instance, is the company utilizing modeling or registration-based data, as the inferred and declared demographic can differ quite considerably. Additionally, with third party data, one has no/limited visibility as to the original sources of data or how up to date the information is.
Each of the three data sets has its own set of advantages and disadvantages that should be weighed and analyzed according to the purpose of the data collection. Whilst first party data is more reliable it lacks the scale and magnitude available through second or third party data. As such, the combination of data sets will depend on the goals and objectives of the company’s research or broader marketing activities.