The difference between Zero, First, Second and Third party data

I recently had the pleasure of being invited to be a guest speaker at City University (Hong Kong) for the MBA program, marketing module. I discussed with them the difference between these four types of data. I thought it would be worth sharing with you too.

Zero party data: This is considered to be the 'new' data, what I mean is that it only recently coined in late 2018, and gained traction since. It came about because although people like to protect their privacy, they are happy to intentionally share some data with brands they buy from, so brands can understand them better. This is in the form of explicit consumer preferences not implied. Such as purchase intentions and preference data. This is considered to be the most powerful type of data as it is the most accurate kind of data. Businesses and brands, should aim to acquire as much zero party data as possible. For instance having an opt-in newsletter or eBook, collect purchase data and feedback.

First party data: This was considered to be the most powerful data of all until zero party data was introduced, but it is still quite imperative to run any digital marketing campaigns. First party data is the data you collect from those that have directly engaged with your business, and it is therefore considered to be quite accurate and relevant. It is actions like email downloads or website visits. Think of it as you are the only one to own this unique data set, and it provides great insight into your customers on their habits, likes and dislikes.

Second party data: This is data a company receives directly from a partner vendor or platform. This is also considered to be quite accurate as the partner/seller collects this data straight from their own audience. Your typical example of second party data is when an airline shares their first party data with a hotel. This means that the hotel receives someone else's first party data, thus making it second party data for the hotel. When acquiring second party data you can feel confident in its accuracy as you purchase it directly from the owners. It is recommended to seek out companies with data you need and form a relationship with them.

There are so many benefits of second party data that get overlooked, such as increasing the scale of your audience/data, reach new audiences, help to predict behaviours and maybe close the offline and online user journey.

Third party data: This is data a company pays for from an outside vendor or platform, and are not the original collectors of the data. You buy it from large data aggregators that pull it from various other platforms or vendors. They pay publishers and websites for their first party data, data such as user behaviour and demographic information. Some examples of these data providers are Oracle Blue Kai, Exelate, Visual DNA, Latome etc which are then usually leveraged in programmatic platforms such as Google Doubleclick, Mediamath, Trade Desk etc.

The benefits of third party data is that it provides the most scale and can help to increase the precision of your targeting.

So what? Why am I going on about the different types of data? Is one better than the other? No.

They all offer great value, and work extremely well together. Zero, first and second party will always deliver the stronger results in reporting as they are closer to purchasing an item (thus lower in the conversion funnel). Whereas third party is great for the upper funnel of the consumer journey and to generate reach and scale.

(All this data can be collected into a Data Management platform, known as a DMP - but thats worth another post).

Do not be scared of data. It adds so much value and can really help to understand who your audience is, as well as move your audience from the top of the user funnel (awareness) down to a conversion which is the bottom of the funnel.

Did you know about all these different types of data? Do you use all four? Get in touch if you would like to know more about how to incorporate them into your digital strategy and media campaigns.