What’s the difference between first, second and third-party data?
There is a lot of news around moves to limit the use of “third-party data”, with many browsers preventing the use of third-party cookies for privacy reasons. But what is third-party data? And how do all these parties relate to cookies and online tracking? Here’s a brief explanation of the different terms.
Who are the Parties?
In the case of data, things are not quite as fun as they might sound. The parties are the people and organisations that are interacting. The parties involved are:
- The organisation running the website or marketing to customers and prospects
- The customers and prospects themselves
- Other organisations offering data
It’s important to understand that, although there are three categories of parties, they don’t map directly to first-, second-and third-party in the context of data.
The Difference between Cookies and Data
Technically, cookies are small files that are placed on a website visitors PC to allow tracking. The cookie itself doesn’t contain data about the person but identifies a particular browser that can then be associated with data held in another database.
First-Party Data
First-party data is information owned by the company doing the marketing that has been collected as a result of their relationship with the customer or prospect. A simple example would be data that has been collected from a registration form on the organisation’s website and fed into the marketing database or CRM. You can also include other information that is collected directly from the prospect or customer – for example, the website pages they have visited.
First-party cookies are simply cookies that are placed on the visitor’s computer by the website that is being visited. Note that for marketing automation systems, cookies are now all first-party cookies – i.e. the code runs from your website, even though the cookie information is held in a separate marketing automation tool.
Second-Party Data
Second-party data is information that is collected by someone else, but used directly by the marketing company: essentially, you’re getting access to someone else’s first-party data. For example, if you use a publisher’s email list, this is second-party data. You can also buy data to enrich your marketing database or CRM – for example, you might be using the Dunn & Bradstreet database to add firmographic data.
Second-party cookies don’t exist.
Third-Party Data
Third-party data is information that you use from other sources who didn’t directly collect the data themselves. So third-party data is generally acquired from data brokers or technology companies that aggregate data from a range of sources and then resell it.
As the companies providing third-party data are aggregating from several sources, quality can be a concern. Often the sources vary considerably in the accuracy and completeness of the data, and it’s also the case that it’s very difficult to be confident that the data was collected with consent. Third-party data is often the easiest to obtain, but frequently the lowest-quality data available.
Third-party cookies are cookies that are placed by a website or server that is different from the site being visited. A classic example of this is the Facebook “Like” button, which enabled visitors to a website to click an icon to “like” the content on Facebook. The code to place the button on the website also put a cookie on the visitors’ computers.
The Facebook Like button is a good example of non-monetary payment for third-party cookies: the website got an easy-to-deploy promotional tool that they could use, and Facebook was able to gather the browsing habits of its users when they were not surfing Facebook (creating more data about them that could be sold to advertisers).
A major concern about third-party data and cookies is whether there is consent from the subject. For example few web users knew that Facebook was tracking the websites they visited and using that data to enrich the information that was gathered on the Facebook platform.
The like button also illustrates the power of third-party cookies, with Facebook able to collect the browsing habits of their users across a huge percentage of the web. The volume of data that can be collected, and the ability to gain deep insight from such large amounts of data have resulted in a powerful backlash against third-party cookies. With browsers increasingly filtering out third-party cookies, there is a frantic search by the large tech companies to find new ways to gather information about internet users.
What Data Should I Use?
First-party data is almost always the most accurate: if you’ve thought about what information you need about customers and prospects, and built campaigns to collect that data, you should be in a good position. As you have complete control over first-party data, you can also ensure that consent and privacy are built-in to the collection process, and that compliance with regulations is therefore ensured.
But first-party data is limited. Typically you’ll have much more data about customers than prospects. And this is where second-and third-party data comes in. Ensuring you only use credible sources for your data is critical: not only will that help ensure you remain compliant with legislation, but it will also help guarantee quality and accuracy. Selecting the right data providers is, therefore, a critical part of any marketing team’s work.
