Types of data
Marketers rely on different data types to segment their customers and approach them with relevant and personalized offers. This data can include identity data, behavioral data, engagement data, and more, such as a customer’s name, IP address, contact information, and product interests.
What is zero party data?
Zero party data is provided voluntarily or proactively by customers. This makes it unique from the other data types, which are inferred or observed through customer behavior.
Customers share zero party data through surveys or feedback forms, during customer service or support interactions, or other chat or communication channels.Â
Example: A clothing retailer sends a satisfaction survey to every customer three days after purchasing. A customer shares that they loved their new sweater, specifically saying that the fabric and color are their favorite. The retailer can then use this zero party data to share targeted ads and communications that feature other products in that fabric or color.
Pros of zero party data:
Mostly accurate and reliable
Organizations have direct control
Compliant with data privacy regulations
Cons of zero party data:
What is first-party data?
An organization collects first-party data directly from its customers or prospects across offline and online channels. First party data is also called 1P data or 1st party data.
First-party data channels commonly include an organization’s website, mobile app, email marketing, SMS, call center, social media, point of sale, customer relationship management (CRM) platform. It can also include in-store technology like beacons, which are WiFi or Bluetooth devices that enable retailers to send customers notifications or augment their shopping experience when visiting a physical storefront.
This type of data is most valuable to organizations given its accuracy and reliability, and it is typically cost-effective to collect with the right technology in place. Marketing efforts increasingly prioritize the collection of first-party data over other data types (see below for more details).
Example: A finance manager subscribes to a fintech organization’s email newsletter. The manager starts engaging with the newsletter content and clicks on several links to resources about how artificial intelligence can deliver cost savings. The finance manager then watches several videos on the organization’s website about its solution. The fintech company can use this first-party data to target the customer with more resources about implementing AI, especially in video form, given their demonstrated interest.
Pros of first-party data:
Mostly accurate and reliable
Organizations have direct control
Compliant with data privacy regulationsÂ
Cons of first-party data:
What is second-party data?
An organization acquires second-party data from a source that has a direct relationship with a customer or prospect.
The data source is usually another organization they are in a partnership, collaboration, or have some mutually beneficial relationship with — such as a media outlet sharing audience data with an advertiser, or a retailer sharing its customer data with a manufacturer.Â
Second-party data is owned by a different organization, however, it is still fairly reliable and is commonly shared during marketing partnerships.
Example: An international hotel chain enters a strategic partnership with an airline company to share select customer data, which helps each company better understand travel and booking habits of customers around the world.
Pros of second-party data:
Cons of second-party data:
What is third-party data?
Third-party data is collected by a source with no direct relationship with the customer, which makes it the least trustworthy data. It is most often collected by data brokers or providers who collect and aggregate data from sources including website cookies.
Third-party data can create risk for organizations, as there are data privacy laws that govern the collection and use of personally identifiable information (PII).
Example: An advertising technology company creates audience segments that organizations can purchase as a third-party data set. Companies across industries might choose to purchase these segments, aiming to quickly augment their first-party data and activate a large-scale campaign.
Pros of third-party data:
Cons of third-party data:
Shifting from third-party data to first-party data
Although half of digital marketing campaigns still used third-party data in 2023, there are several reasons why organizations are shifting away from third-party data:
Limited cookies: Third-party cookies, which have historically been used to collect user data and understand customer behavior across the web, are being phased out by web browsers and mail providers.
Privacy concerns: Organizations are increasingly liable for data privacy violations, especially as governments implement legislation like the GDPR or CCPA. First-party data addresses this concern when organizations receive consent from users to collect and use their data.
Dependencies: First-party data is most powerful for companies as they have full control over it. Organizations that rely heavily on second-party and third party data create dependencies on sources that could become unavailable suddenly.
Data management platforms (DMPs) were commonly used to manage second- and third- party data, however, first-party data platforms are becoming increasingly popular because they can collect and manage all data types.
