First party data vs third party data
Jun 2, 2023

First party data vs third party data

What is first party data, and third party data? Are they the same thing? Where does one end and the other begin? What is a Customer Data Platform (CDP), and why is it important.

These are questions that we at work to answer every single day. We help e-commerce deal with customer data, increase customer loyalty and engagement and keep customers coming back. However, today let’s dive into the differences and benefits of first party data vs third party data. So you can learn how to get the most of out them for your e-commerce.

What is first party data?

First party data is a category of business intelligence that refers to information collected directly from your customers.

It can come in many shapes and forms, but typically you can collect the following ways:

  • Information collected directly from your website: You can collect information about site visitors’ behavior, preferences, or demographic characteristics by using cookies, web beacons, and other technologies on your own website.
  • Information collected directly from mobile apps: You can collect information about app users’ behavior, preferences, or demographic characteristics by using cookies and other technologies within mobile apps that you develop for others.
  • Data collected directly from call centers: You may have the ability to capture some customer behavior over the phone when they call in to ask questions about products or services available through your company. This data will be specific to each individual caller and could include their name, address, and contact details as well as specifics about what they were calling about (e.g., shoe size questions).

What is third party data?

Third-party data, or data collected by a third party (i.e., not you), is the kind of information that most people are familiar with. This is the data that you see on your favorite website when it asks if you want to subscribe to its newsletter and then proceeds to show you an email signup form with your name and email address already filled in.

Third-party data can include information like names, addresses, and phone numbers; as well as interests like hobbies, travel habits, and purchasing behavior. By aggregating this information from multiple platforms—like social media profiles or browser histories—advertisers can target audiences more precisely than ever before.

Because third-party data is already collected elsewhere for monetization purposes, it’s typically readily available for purchase in bulk quantities at a relatively low cost per thousand impressions (CPMs). That means marketers can reach their target audiences without having to spend any additional time collecting the information themselves; instead, they simply pay other companies who have done all the legwork for them!

First party vs third party data

First party data is data that you collect directly from your customers. This includes things like customer email addresses, phone numbers, and addresses.

Second party data is a type of data that you purchase from other companies (or other people within your own company). You can use this to supplement your existing first party data by adding in details such as job titles, birthdays, and more.

Third party data comes from outside sources such as marketing agencies or partners who have already collected information about customers on their own through surveys or other means.

The value of 1st party & 3rd party data for advertisers

First party data is by far the most important data for marketers and advertisers. Why is that? Because it’s more valuable than 3rd party data, which makes up about 80% of all customer profiles. You can use first party data used to target your best customers across devices, platforms, channels, and apps. It also allows you to reach beyond cookies by using technology like device fingerprinting that identifies individual users across multiple devices or browsers. It means you can gain a full overview of your actual customers. Regardless of platform or device

First party data allows advertisers to see who converts on their website after they’ve been targeted with specific messaging based on first-party information like name, email address, or phone number through retargeting campaigns. When you work with first party data, you can have confidence in the quality of the data you gain from those campaigns. Especially when you compare it with third-party sources such as Google AdWords where users may not be aware they’re being tracked by cookies until after they’ve already made a purchase from an ad campaign that targets them based upon browsing history alone!

Typically, first party data is of much higher quality, as you how, where, when, and why it was collected. This allows you to have more trust in the accuracy of the data.

First party data vs third party data, which one is better?

You might be asking yourself, how does having first party data over third party data have an effect on my business?

Here are a few examples to show the importance of working with first party data.

Scenario 1:

“A new update to IOS just landed, severely restricting how companies such as Facebook can collect data”

  • First-party data: You own the data, so you are not depending on Facebook, Google, or any other major tech company.
  • Third-party data: You’re in trouble. The third-party data will be heavily impacted by such restrictions, which will limit the effectiveness of your marketing. This is because most companies rely on Facebook and Google to source their data. An update that regulates data tracking severely restricts these companies’ data collecting.

Scenario 2:

“Your CEO asks the marketing department to use the best-for-business segments, for a new ad campaign”

  • First-party data: Your data is sourced directly from the company’s customers, which makes it the most precise data possible. The segments created are incredibly accurate. It allows you to not only understand the conversion rate, but also the profitability of each customer in the segment.
  • Third-party data: The data is sourced from a third-party, making it inaccurate, which in turn creates mediocre segments. You don’t have the full overview, and cant deliver what is asked for.

Scenario 3:

“A concerned customer wants to know more about how their data is being used”

  • First-party data: Because the data is sourced directly from your company, you know the complete journey of the data and can therefore explain any privacy concern to the customer.
  • Third-party data: The data is owned by another company, which means you don’t know the full data journey. You can therefore not explain the data journey, possibly losing your concerned customer

How can a Customer Data Platform help with first party data and marketing?

A Customer Data Platform collects, consolidates, and analyzes all your data. When you integrate into an e-commerce customer data platform like Custimy, the software automatically pulls data from the last 24 months. The software then creates segments for you, showing you the most valuable customers and most valuable products for your business.

All this is first-party data, readily available in the E-commerce Customer Data Platform. To make it even easier, the first-party data can then be activated in-app, directly to Facebook. This allows you to not have to worry about long processes and integrations. It’s done with just a few clicks using APIs

A Customer Data Platform is an easily accessible great way for your webshop to get access to first-party data. Because the data is collected from multiple data sources and every irrelevant data point is filtered, you’re left with the best possible aggregated data.

As we mentioned, the first-party data is key to an effective marketing strategy. It is also great to create strikingly precise and powerful lookalike audiences. Feeding Facebook with better, more precise data leads to better lookalike audiences. Data from a CDP is the best possible way to achieve this striking precision. The data makes it possible for you to acquire new customers, simply by using a CDP. No more guessing in Facebook’s ad creator about personality traits.

Marketing has for the longest time been throwing stuff at the wall and seeing what sticks. This Spray-and-Pray mindset is not only ineffective, but it can also negatively affect potential customers. Nobody wants to see irrelevant content and offer. It hurts your business if you reach out to them in the wrong way. That is why we argue it is a must to deliver personalized experiences in your marketing. And that starts with first party data from a CDP