First, second and third-party data: what are the advantages of a data strategy

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Among the countless innovations of the 21st century, the development of a “currency” has completely transformed the way professionals, companies, and consumers view the market for products and services. 

And we are not talking about dollar, euro or any other kind of currency, but about data!

First, second and third-party data are terms related to the so-called Data-driven Marketing. 

This management approach consists of the collection, study, and use of data in marketing decision-making.

First-party data, however, is more valuable to companies, as it is generated from their own channels and platforms. Thus, it tends to be more accurate and reliable.

In this article, we explore this concept in detail, from its definition and advantages to its potential and responsibilities in a market increasingly oriented by data. Keep reading to learn:


What are first, second and third-party data?

First, second and third-party data are terms that refer to the body, institution, or company responsible for collecting and making available a set of information.

Thus, when conducting a study to develop a marketing plan, for example, an organization can generate its own data, obtain market reports from partner companies, or consult specialized agencies that make this type of data available on open platforms.

Joni Castorino, director of Oracle Data Cloud, differentiated these approaches in a very didactic way at the Advertising Week New York conference in 2016, defining the 1st, 2nd, and 3rd-party data, respectively, as “mine”, “yours” and “theirs”. Let’s look at each of them below.

First-party data: “my data”

First-party data, or primary data, is information collected directly by the company making use of it. 

It is generated through marketing campaigns, website and social media monitoring tools, surveys, and others.

The main characteristic of first-party is that its information is collected from the company’s domains: the channels in which it operates and the resources it adopts to capture data.

Its major advantages are reliability, accuracy, and confidentiality. The company establishes its own parameters and metrics in its analyses and can keep its reports protected.

Second-party data: “your data”

Second-party data, or secondary data, is information collected by a partner company willing to share or trade this data.

This practice is very common among companies exploring different niches within the same market. In such cases, as there is no direct competition between the two organizations, they are free to assist each other in various ways.

A dietary supplement distributor, for example, could benefit from the information provided by customers of a gym and vice versa. Similarly, a retailer can partner with its distributors to gain insights into production, logistics, and public preferences.

The main advantage of second-party data is that it allows companies to access relevant data without collecting it. Also, they can broaden their view of the market by combining this information with first-party data.

Third-party data: “their data”

Finally, we have third-party data, which is information provided by open data providers that share statistics about the behavior, habits, and preferences of different consumer profiles from various purchasing channels.

Companies that market or make this type of data available on sales and advertising platforms generally work with large volumes of information and use digital services, such as online apps or services, to collect it.

The biggest advantage of third-party data is its scope. It is an extensive and varied data that serves various types of business. On the other hand, this broad view may lack accuracy. 

Also, since the data is open to the provider’s users, the chances of differentiating yourself in the market are lower, as your competitors will have access to the same information.

Source: Smarketing Cloud

What are the advantages of generating your own data?

In principle, the biggest advantage of first-party data is in the control you have over it, from its origin to its utilization. 

Since the company that generates the data is the same one that uses it, the strategies adopted to capture this information can be designed to meet the business needs and objectives directly.

However, the benefits do not stop there. Check below some other important advantages acquired by companies that choose to generate their own data.

Accurate market information

One company often quoted at conferences on the subject is Netflix. Besides being a great entertainment center, its platform is also a robust user analysis tool.

The company has a valuable database on customers’ behavior within its channels and builds all its strategies, campaigns, and even its content catalog from this information.

It is clear that business models like Netflix facilitate the generation of first-party data, but more “traditional” markets are investing in technological solutions to promote constant interactions with the consumer.

This is the case of the automotive industry, which popularizes several online services and adopts usage data in its campaigns.

us automotive industry digital ad spending
Source: eMarketer

Automation of CRM campaigns

Marketing automation is increasingly explored by companies, mainly due to the optimization it offers to a business’ operations.

With the popularization of Digital Marketing services such as Google Ads and social networking tools, third-party data has become the most used resource for the automation of campaigns and services on the internet.

However, companies that choose to create their own data acquisition channels and use CRM systems have significant advantages over others, especially when we talk about retargeting and remarketing strategies.

For example, in e-commerces, it is already frequent the automatic activation of specific campaigns for users who abandon the cart or make frequent visits to a certain product or category.

Development of campaigns and products

With detailed information about its audience, the chances of a company succeeding in the market multiply. New demands are easily identified, and weaknesses of the competition are highlighted. Besides, it is possible to measure the performance of products, services, and campaigns in real-time.

This gives companies unprecedented power, which can adapt themselves in a much faster and more effective way to the demands and wishes of their consumers.

The possibilities are even greater when the user data is obtained from monitoring and analyzing behavior because the richness of reports in this manner is even greater.

For example, it is possible to identify problems and needs that consumers have not yet realized and use this information to develop products, services, and campaigns much more efficiently.

How to use first-party data?

In general terms, the company that wants to start collecting and analyzing data from its consumers will need to invest in resources, communication, and planning. 

State of Marketing Report 2024

Below you will find a more detailed description of each of these parameters.

Data Collection

You can collect data from your consumers in different ways. The most traditional is the famous customer registration in retail stores, but building a really rich database requires other resources.

This includes software specialized in capturing browsing data on websites and social networks, as well as the development of official platforms and applications or the hiring of services performed by third-party companies.

The Data Management Platform, or simply DMP, is software or SaaS companies that aggregate first, second and third-party data and organize it in different ways within the same place, making analysis much faster and more intuitive.

Data Concession

You will need to work on your communication to create a relationship of trust with your audience and encourage them to provide information on your collection channels such as pages tracked by plugins, forms, and registrations.

People are increasing their awareness about the importance of their data and will not hand over this “currency” without value being offered in return.

Content Marketing is one of the most used strategies to stimulate this reciprocity. When a company provides knowledge or experience of value to its audience, people tend to offer information more easily.

Data Management

While many tools facilitate the storage and analysis of user-generated data, managing it requires many technical and legal obligations.

The procedures adopted must comply with the legislation of the country in which the company operates. The company that manages and uses the data is responsible for its safety.

The metrics and statistical parameters adopted must be strategically conceived, taking into account each business’s characteristics and needs. 

Also, limits and restrictions must be imposed regarding how the company uses the information in its campaigns.

How can you integrate first and third-party data?

Suppose first-party data provides a detailed view of your business, and third-party data enables a broad market perception. 

Why not combine these two types of data to manage your marketing budget even more effectively?

This is a trend that is becoming popular with the help of DMPs and other platforms that provide this functionality.

For example, Google allows users to upload local data (first-party) and merge that information with their third-party database to improve ad targeting.

google ads

Facebook also offers some similar features, as well as several other options capable of “polishing” the target audience of campaigns in a very precise way.

facebook ads

It is also possible to perform this integration manually simply by monitoring the data generated by your own channels and comparing it with reports made available by other companies.

However, regardless of the resources used, the fact is that this strategy guarantees a micro and macro view of your market — a level of management control unimaginable decades ago.


Why invest in data-driven marketing?

Waymo, a company that emerged from Google’s ambitious autonomous car project, celebrated at the end of 2018, more than 10 million miles traveled on public roads in the United States.

Just like companies that use data-driven marketing, Waymo’s cars are driven by data! 

Information collected by sensors, internet, and GPS is crossed to define the vehicle’s position, identify obstacles, analyze signs, and estimate the best route to travel. Imagine “driving” your company with such precision!

Besides understanding in detail the profile and behavior of your audience, the biggest advantage of data-based strategies is that actions are fully measurable. 

This favors ROI because the results obtained can be continuously monitored and assessed with enormous accuracy.

Such advantages are causing operational marketing to lose space for intelligent strategies that adopt more precise objectives and can be continuously optimized according to activity performance and market timing.


What is the scenario of this strategy in the world?

According to The Digital Universe of Opportunities study, promoted by Dell EMC, about 40 trillion gigabytes of information will circulate around the planet by 2020 and, like it or not, we all contribute daily to this thunderous volume of data by performing searches, using applications or simply leaving our mobile phones in our pockets.

Several tools and devices have been introduced into our daily lives in recent years to collect information about our habits, pains, and desires. 

This “race for data” has taken such proportions that governments in different parts of the world have started to define rules for the use of data.

European data protection law and its impacts

Several European Union countries already adopted their own laws on the collection and processing of personal data. 

However, in recent years, the need has arisen to unify these rules and establish basic standards for companies that benefit from this type of strategy.

The General Data Protection Regulation (GDPR), the major European data protection project, was approved in 2016.

The standards cover all companies that store or process EU citizens’ information.

However, as many affected corporations also carry out activities in various other regions of the world, the measures caused a domino effect, forcing partner and tertiary companies to adhere to the rules to avoid conflicts.

The impact caused by GDPR influenced other countries to move in the same direction. 

The use of data draws attention due to the possibility of carrying sensitive information about individuals, as well as the implications involved in its use. 

However, these resources are already adopted by companies around the world and are delivering surprising results.

This relatively late regulation is a feature of the rapid introduction of new technologies to the market, but nothing affects the legitimacy of the strategy.

Data-driven marketing is a powerful resource that is maturing naturally, and it is up to organizations to adapt to their proper legal requirements.

The fact is that when properly managed and analyzed, data, whether first, second or third-party data, helps companies and communication professionals gain a clearer and broader understanding of the market and its consumers, in addition to generating valuable insights for new campaigns, products, and services.

Data-driven marketing is such an important subject that it was the focus of a Rock Content Magazine’s edition. Download it and learn more!

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2024 State of Marketing Report

Your golden ticket to crush your goals with data-driven insights!

2024 State of Marketing Report

Your golden ticket to crush your goals with data-driven insights!

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