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Is it Better to Use Third-Party or First-Party Data in Digital Marketing?

Accumulating data just for the sake of collecting data doesn’t put your resources to best use. You need to ensure you have a plan to know what you’re looking at and understand what your data is telling you. The quality of the data is increasingly crucial as more companies move online. That means understanding the value of different types of data and how to leverage them to achieve your marketing and business goals. 

Data Defined

Data is simply information. It represents facts or statistics from your business operations, such as products, services, costs, sales prices, customers, and sales history.  It can also include website statistics or what you collect from ongoing digital campaigns. Other valuable external data may consist of industry and competitor analysis, customer demographics, and additional information that helps to define business scope and goals.

There is no shortage of data in the world right now. In 2020, humans created 2.5 quintillion bytes per day. You can think of it as one million trillion or a billion-billion bytes of information. And it's growing every single day. 

Different types of data used for digital marketing include:

  • First-Party Data –Businesses collect this customer data through surveys, Google Analytics, mobile apps, social media, CRM systems, and email. The company owns all the data it gathers.  
  • Second-Party Data – This data is collected by affiliated companies such as suppliers. It includes purchasing history, GPS location, media consumption, and browsing history.  
  • Third-Party Data – Other companies or institutions collect this data. It may contain some of the same information as first-party data but is not owned by the business using it. 

The Benefits of Each Type of Data

Gaining a competitive advantage through effective marketing campaigns is dependent mainly on using the right types of data. Each has benefits and serves different purposes and goals.

First-Party Data 

The primary benefit of first-party data is that it's free. You have full ownership and control because you collect it directly from the source, making it valuable for market segmentation and targeting efforts. You can use first-party data to build an email list for reaching out to your customers and those who are potential customers based on visits to your website. Second-party data for you is first-party data from other companies, providing insight into customer behavior and highlighting opportunities.

First-party data gives you valuable information about your customers, including:

  • Demographics
  • Interactions 
  • Interests and behaviors 
  • Purchase history 
  • Websites visited and duration on site

First-party data collection is far from new for most businesses, though few understand how to use it to its full potential. For instance, a home service company collects customer data, including contact information, address, phone number, and billing information. Their phone number can text discounts rewards or remind them about seasonal servicing needs. You can use their service address to tailor advertising based on local weather, events, or even home renovation trends in the area. 

First-party data can improve your customer experience. Using the data they already have, they can provide targeted concierge-style service. A first-data strategy enhances customer loyalty and is vital for future service expansion. Collecting the information is easy; understanding how to leverage the data requires experience and expertise. The information you collect in first-party data helps you shape your messaging to your most loyal customers to resonate with them best.

Third-Party Data 

Third-party data provides a vast and diverse accumulation of information. It leverages the dedicated data collection expertise of other companies. The more data they can collect, the more you can leverage it to achieve better targeting. This type of data provides insight into consumer behavior, helping businesses reach new audiences who are more likely to be interested in their products.  

First-party data is a fantastic resource for internal uses to help you target your most loyal customers. However, third-party data, used by programmatic companies, provides the best targeting capabilities. The larger amount of data out there affords you the most information because there is more to analyze. That makes programmatic ad buys preferred for display and video ad buys.

Common sources of third-party data include:

  • Acxiom 
  • Amazon 
  • Experian 
  • Facebook 
  • Google 
  • Oracle Data Cloud 
  • Salesforce Marketing Cloud 
  • Visa

One caveat of third-party data is that collection is dependent on the user agreeing to the use of cookies. Consumers are increasingly more informed and active in choosing how their information is collected and used. Companies are phasing out the use of third-party cookies due to new privacy laws, such as Google with its Chrome browser. That adds even more complexity for companies that rely heavily on third-party data or don't have deep expertise in multiple data strategies. 

Are You Adequately Leveraging Different Types of Data for Your Digital Marketing Strategies?

No matter how much data you accumulate, it doesn't serve a purpose without a way to transform it. Understanding your data creates insights that give you the blueprint for effective actions that further your goals. Relevant data and the use of intelligent technology shapes successful marketing strategies. Work with a digital partner who understands how to collect and utilize different types of data to your advantage to achieve your business objectives.   


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Karlie Mandigo

Written by Karlie Mandigo

Karlie Mandigo is a Senior Digital Marketing consultant for Federated Digital Solutions. She has been leading the consulting team since 2017 and has developed a particular skillset that focuses on the automotive industry. Her passion for her career comes from the ability to cultivate trusting relationships with clients. She enjoys putting all the puzzle pieces together to create a strategy that will help achieve and exceed her client’s goals year over year. Karlie puts the work in with her clients and it shows as she knows and believes that true commitment starts AFTER the sale.

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