06 Sep First-Party Data VS Third-Party Data (And Why It Matters)

Introduction

Data is the lifeblood of many industries, and customer data is especially valuable. There are two main types of data that can help you understand your customers: first-party and third-party. The difference between them might seem straightforward at first, but it’s actually one of the most important factors in building a successful business strategy. If you have questions about what kind of customer data you should be collecting or using, then this article will help clear things up!

First-party data

First-party data, sometimes called internal data, is the information that a company collects directly from its own customers. The two main types of first-party data are transactional and behavioural. Transactional data includes information like what you purchased, how much you paid for it, when you bought it and where. Behavioural data describes your actions on or off the site—for example, which pages in an e-commerce store have been viewed by a customer.

First-party data is considered the most valuable type of consumer insight because it provides context to other pieces of information that may be less useful alone: if I know that my target audience is women between 25 and 35 years old who live in New York City (a big piece of third-party demographic information), but I also know their purchasing habits (which I can get through first-party behavioural tracking), then I can use both pieces together to demonstrate value.

Third-party data

Third-party data is data that has been collected from other sources. This can be public records, surveys, ad networks and more. Third-party data can be used to supplement your own data or to improve the accuracy of your own data. If you are missing certain information on customers like their email addresses or phone number, third-party resources can fill in these gaps with additional info that may be relevant to your business.

Example: If you’re a grocery chain looking for new customers but don’t have any information about their age range or family size (commonly referred to as “demographics”), you could use an ad network like Facebook Ads Manager to target potential shoppers based on what they have shared publicly on social media.

Why does it matter?

First-party data is more accurate and valuable than third-party data because it’s pulled directly from a consumer’s interaction with your brand. You know who you’re talking to, which means you can tailor your messages accordingly.

Third-party data isn’t as valuable because it’s often older or less reliable, but it’s cheaper than first-party data.

How to use third-party data

Third-party data can help you target your ideal audience by showing you who they are and what they like. You’ll want to use third-party data in conjunction with first- or second-party data, as it will allow you to narrow down the audience that has already shown interest in your brand or product.

When someone visits your website but doesn’t convert right away, retargeting ads can be used to show them ads for products or services similar to what they’ve been browsing online. This type of targeting allows marketers to use third-party data to remarket after a visit has occurred without having any other information on that particular consumer at all!

Using a combination of first-, second-, and third-party datasets provides marketers with more actionable insights than ever before possible thanks to their ability not only to identify new audiences based on existing ones but also identify specific attributes within those groups themselves (e.g., age range, gender). These attributes can then either be used alone as inputs into existing models (such as those used for predictive modelling) or combined together into one large group representing all customers regardless of demographics – this makes segmentation easier than ever before too!

How to use your first-party data

One of the most valuable things you can do with first-party data is building a more personalized experience for your customers. By combining this information with external data sources, you can learn more about what they want and how they behave. You can then use that information to improve your targeting and messaging—meaning that you’ll be able to reach people who are actually interested in what you have to offer.

You might also be able to use first-party data for product development purposes, as well as service enhancement and improvement. In fact, many companies have created entire businesses based on using customer information in this way!

Differences between first and third-party data

When it comes to data, the first kind that comes to mind is third-party data. When you think of your social media accounts, for example, these are third-party sources — you’re not the original source of the information. Third-party sources are often used by companies and marketers in order to get insights into who their customers are and what they like (or don’t).

First-party data is another type of information that has a lot of value when it comes to knowing more about your audience. First-party refers to any information collected directly from a consumer or customer (like when you sign up for an online service). For example: if you go online shopping on Amazon and add something like shampoo into your cart but don’t purchase anything else before leaving the site without checking out – then this would be considered first-party by Amazon; however, if someone else buys something using their account instead then it could still be considered first-party because it came from one consumer (the one who purchased) rather than many different users across multiple platforms as would happen with third party info spread across other channels such as Facebook ads etcetera.

Conclusion

In conclusion, third-party data is a great tool to have in your arsenal. It’s helpful for targeting customers and improving ROI, but it doesn’t have as much power as first-party data does. So if you are trying to reach a specific audience or target a specific segment of consumers with your product or service offerings, then first-party data is going to be more effective at doing so.

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