June 28, 2022
Last week we walked through the definitions of first-, second- and third-party data and how you would generate, find or purchase data at each level. In this week’s column, I’d like to explore how you might use each different type of data in your marketing efforts.
First-party data: Just a reminder that first-party data comes directly from your audience and/or customers and you’ve collected it yourself. This gives you an incredibly high level of confidence that the data is reliable and accurate. Privacy laws aren’t really a concern when you use your own data.
So what exactly can/should you do with it? With first-party data you can gain some valuable insights, even if your data set is relatively small. Because there’s so little room for error, you can effectively work with a smaller sample size.
You can gain incredible audience insights from your first-party data. You can watch website behaviors, for example, and predict, based on other people’s past behavior, when a visitor will actually buy something. You can also monitor what kinds of ads, both messaging and channels, are the most effective to trigger the call to action you prefer.
One of the most powerful elements of using first-party data is that you can personalize your messaging, creating a sense of a custom experience for your prospect or client.
Second-party data: Remember that second-party data is data you’d purchase from a single source, like a trade association. It is collected the same way first-party data is, only you’re not the one collecting it.
The upside of second-party data is that it’s very reliable, much like first-party data. Because you’re going to be working directly with the organization that collected it, you can have a great deal of confidence in it. But because it does come from outside your own ecosystem, it also gives you a chance to expand your audience.
If your first-party data set is particularly small, you also might seek out second-party data to scale up your insights. This might be particularly useful if you are trying to predict future behaviors. You can deploy some predictive modeling on your data partner’s site and then test, monitor and adapt as the audience reacts.
Third-party data: Just to refresh your memory, third-party data is data that you purchase from sources that did not actually collect the data. These aggregators purchase the data from multiple sources and then deliver it through a programmatic platform. The scale of data available is staggering. But this is where the privacy issues come in. Technically, the people on these lists did not consent to you having access to them.
All of that being said, there are some huge advantages to using third-party data, which is why the marketing industry is so concerned about all of the privacy laws going into effect.
Because of the sheer volume, third-party data offers marketers some huge advantages. Third-party data is all about scale. You can use your first-party data to create look-alike audiences within the third-party data set that will dwarf your first-party data numbers.
By using third-party data, you can improve the accuracy and precision of your marketing messaging and targeting. You will simply learn more and see patterns more clearly in a larger data set.
There’s a place in every marketing plan for all three forms of data. Understanding their origins and how you can use them is critical. But it is always going to start and end with your own first-party data. If you don’t already have a plan for harvesting and leveraging it, the time is now.
This was originally published in the Des Moines Business Record, as one of Drew’s weekly columns.More