Growth Marketing

First vs. Third Party Data Explained

Learn the differences between first-party and third-party data points and how to effectively use them.
July 19, 2023
min read

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It's 2023, and without data your sales strategy is limping on a leg while climbing uphill. Regardless of size or industry, every sales teams must include customer data to optimize sales processes successfully. From personalized outbound copy to highly tailored demos, data has revolutionized the way organizations operate and interact with their users and prospects today. There are various types of data, including zero-party data, first-party data, second-party data, and third-party data. First-party and third-party data are particularly crucial among the wide range of data available today.

These two types of data significantly impact sales strategies, give more profound insights into leads, and help overall business expansion. Understanding the meaning, features, and critical differences between these two essential data types is necessary for leaders, strategy makers, and sales reps.

In this article, we will explore the fascinating realm of first-party data and third-party data. We will understand their importance, distinguish their characteristics, and gain insight into their effects on businesses and users.

What Is First-Party Data and What Are Its Key Features?

First-party data, often regarded as the Holy Grail of data collection, refers to the information organizations obtain directly from their users. First-party data includes information collected through user interactions on various platforms owned by the business, such as website form fills, onboarding screens, mobile apps, social media profiles, and any other direct touchpoints where users willingly provide their information.

First-party data can also be collected from loyalty programs run by the organization, customer surveys, and customer feedback. This information contains essential user attributes, behaviors, and preferences, enabling businesses to understand their target audience and users better.

Since first-party data originates from the source itself, it is commonly considered the most precise, dependable, and pertinent form of data. It helps enhance sales messaging, target ads, boost retargeting strategies, and increase conversions.

Critical features of first-party data include the following:

  • User-Centric Insights: Sales reps can better understand different audience segments by leveraging first-party data. They can analyze user behavior, preferences, demographics, purchase history, and other valuable insights to develop tailor-made and focused sales messaging and build customized sales collateral.
  • Highly Relevant and Collected in Real-Time: Businesses can access first-party data in real-time, enabling them to address user needs and preferences promptly. This facilitates personalized interactions and customer experiences that deeply resonate with the users.
  • Compliance and Data Ownership: Companies have increased control over the collection, storage, and use of first-party data, which they obtain from their own channels. This control allows them to comply with data protection and privacy regulations and retain ownership of the collected data.

What Is Third-Party Data and What Are Its Key Features?

Third-party data refers to the data companies obtain from sources outside their own user base, like business intelligence platforms and third-party data marketplaces.

In contrast to first-party data collection that is done through internal channels, third-party data originates from external data aggregators, data providers, or trusted partners. They gather and organize information from diverse sources. These sources encompass third-party websites, mobile apps, social media platforms, offline transactions, public records, and more.

The most significant characteristic of third-party data is that it is not collected by the company that intends to use it. Instead, it is purchased or licensed from third-party vendors. They specialize in collecting, organizing, and selling this data to businesses for various purposes, such as analytics, market research, digital marketing, and more.

The key features of third-party data include the following:

  • It Has Multiple Data Sources: Third-party data is obtained from various providers, enabling sales teams to access a vast amount of information about users from different demographics, interests, and behaviors. This wide range of data allows them to gain valuable insights into users they might not otherwise be able to access directly.
  • Enhances the First-Party Data: Utilizing third-party data allows organizations to improve their existing first-party data. Integrating internal and external data provides businesses with a holistic understanding of their current users and prospects and helps them improve the customer journey.
  • Broad Perspective: Third-party data is gathered from various sources, giving a more comprehensive view of user behavior across different touchpoints. This broad perspective allows sales teams to enhance user targeting and reach new market segments.

First-Party Data vs Third-Party Data: Key Differences

Now that we have gained a basic understanding of both first-party data and third-party data, let's discuss the differences between these data types:

1. Data Source and Ownership

  • First-Party Data: The data is obtained directly from users through interactions on the company's owned platforms like form fills on websites, mobile apps, and social media profiles. The company has exclusive ownership and control over first-party data, as it is derived from its direct engagement with customers. Organizations store this data in their customer relationship management (CRM) platform so their sales teams and other relevant teams can easily access it.
  • Third-Party Data: Third-party data is sourced externally and not provided by the company’s own users. Data providers typically collect this data through various channels, including websites, online platforms, offline transactions, etc. The company acquiring this data does not possess direct ownership of the data sources from which it is gathered.

2. Cost and Availability

  • First-Party Data: Collecting first-party data may require an initial investment in tech infrastructure, but it ultimately proves valuable and cost-efficient over time. The company has immediate access to the data without any additional expenses for its utilization.
  • Third-Party Data: There are several expenses associated with obtaining third-party data, as organizations must compensate data providers or business intelligence platforms for access to the data. Additionally, the availability of specific data sets may be restricted, depending on the offerings of the data providers.

3. User Consent

  • First-Party Data: User consent forms the basis of first-party data, as users willingly provide information to the organization. Such permission is typically obtained through terms of service, privacy policies, or explicit consent prompts.
  • Third-Party Data: Obtaining third-party data does not always require direct consent from the individuals whose data is being collected. Typically, it is the responsibility of the data providers who gathered the data from different sources to ensure that appropriate consent has been obtained and data privacy is maintained.

4. Volume and Scale of Data  

  • First-Party Data: The volume of first-party data is limited to company interactions and engagements with its users. Although this data is valuable, its extent may be restricted to the company's existing user base. Organizations can only rely on direct relationships with users to collect this data.
  • Third-Party Data: Third-party data provides access to a much larger volume of information from multiple sources and data management platforms, allowing for a significantly larger dataset. This expanded reach will enable sales teams to obtain insights into a more extensive user segment beyond their current user base.

First-Party Data vs Third-Party Data: Wrapping Up

Both first-party data and third-party data have their own unique features and strengths. First-party data is known for its trustworthiness, relevance, and accuracy, while third-party data provides  scale, diversity, and broader insights.
The future of data-driven businesses relies on finding the right balance between data collection, privacy, and ethical usage. The most successful data strategies usually combine both data types, using their individual benefits to gain a thorough understanding of prospects, provide personalized experiences, and enhance business growth.

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