Zero-Party, First-Party, Third-Party Data: Know the Difference

Progress stops for no one, marketers and businesses included. In the strive for more transparency and ethical collection of data from user activity on the internet, strict and powerful regulation has been introduced by authorities, such as the EU’s GDPR.

Google will also phase out the use of third-party cookies, making them obsolete by next year. It’s therefore imperative that the necessary information for targeted campaigns that maximize value for money is collected through different avenues.

This is where knowing your data becomes vital: what are zero-party, first-party, third-party data and what type will serve you best in an ever-stricter environment where privacy is the number one priority in terms of regulation?

This is what we’ll discuss today, so read on to find out how to make data work for you within the new regulations and the new browser requirements.

What are first-party data?

First-party data are those you collect directly from your customers or clients. First-party data are high quality data exactly because they come from your customer base. They are considered highly accurate and reliable, they are easy to store and process, and they are easy to manage and get insights from. Because users that browse your site or your apps give consent to having at least some of their data collected, first-party data are considered both high-quality and risk-free. They are also very cost-efficient.

With first-party data you can enhance your marketing campaigns, boost cross-sell and upsell strategies, and helps you personalize your service to customize it fully to your target audience.

Examples of first-party data are your clients’ contact information, subscription information, CRM data, activity on your business sites and apps, cart information, and all types of engagement and interaction with your business sites, apps, and other forms of communication (call center/SMS/email interactions).

In the same vein, second-party data are first-party data which a trusted business partner collected from their clients and shared with you, or which you purchased. These can help widen the scope of your campaigns and make your insights from your first-party data more robust.

What are third-party data?

Third-party data are bought from a vendor who didn’t do the collecting. That is, the source from which you buy the third-party data isn’t the one that directly gathered the information. This kind of data can come from a wide variety of sources, not just from the digital world and user activity on their devices. You can, therefore, gain access to data such as financial information or health information for your target audience.

The benefits of third-party data are mainly in making your existing data and insights about your target audience even more robust. Knowing specific information about the customer you want to target, such as shopping behaviors (online and offline), general attitudes and engagement, interests, and even political views, can help you create a highly specialized campaign that is guaranteed to generate engagement and conversions.

However, third-party data has some significant drawbacks which should be considered before purchase. Primarily, third-party data has serious privacy laws issues. There is no way to know if the data you purchased was obtained with consent from the users or with ethical consent (i.e. that they were aware of how their data would be used). It’s likely that you might have to deal with privacy laws.

Third-party data can also be of low quality compared to first-party data, because they were gathered from a wider range of people and may not accurately reflect the behaviors of your target audience. Often, third-party data contradict your first and second-party data. If that happens, you’re better off following the latter. Lastly, you must always keep in mind that your competitors have the same access to the same third-party data, so you will be working off the same information for creating campaigns for the same target audience.

In short, while third-party data have been useful in making your insights more robust, you must use them with caution.

What are zero-party data?

Zero-party data are the newest type of data, which are also of the most accurate and powerful. They are data collected from your target audience voluntarily. That means the data has been actively given to you by your clients, rather than having the information collected in the background after a generic confirmation of consent, without your clients aware of what is being collected and when as they browse or use your sites and apps.

Such data are collected when the users answer polls and questionnaires, play games and quizzes, state preferences and desires, or state what they are willing to buy and when. Usually, customers engage in these information-gathering activities because they receive something valuable in return: better shopping experience, suggestions for purchases, feedback on issues they are concerned about (e.g. what their skin-type is or what health risks they should guard against based on their lifestyle), a lack of generic advertising, and more.

Think of zero-party data as an even better, more powerful version of first-party data. They are reliable, accurate, privacy-protected (you will never have any issue with any privacy law), can help you make future decisions about product adjustments, and give you ready-made insights and answers to your questions. Zero-party data are the next best thing you could have in terms of marketing data.

The data collection terrain is dramatically shifting, making certain types of data obsolete or problematic, but at the same time also gives rise to much better, more enhanced ways of getting the answers you need for the perfectly targeted, cost-efficient marketing campaign that will help your business take flight.

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