Data makes up a large part of our conversations about marketing, so we wanted to explain some of our terminology. First- and third-party data are valuable assets for your marketing programs and have individual pros and cons. In this blog post, we will define the difference between first- and third-party data and explain why they’re so important to your future marketing success.
First-Party v. Third-Party Data
First-party data is the data your company owns based on information collected from customers and prospects. It is free and can be collected through cookies or customer information voluntarily provided through online form submissions, transactions, rewards programs and more. First-party data, also known as advertiser first-party data, is a company’s most valuable asset because it is offered voluntarily from the data’s source (the customer) and represents a known audience. If Amazon has ever recommended products you might like on its homepage, you’re seeing first-party data in action to target advertising at you based on your past website behavior, purchase history and product interest.
Third-party data, on the other hand, is received indirectly from consumers and costs money to target. Third-party data, also known as publisher first-party data, is sold to companies from data collection companies such as Oracle Data Management Platform and Lotame. It is collected from companies that do not have a direct relationship with consumers. A third-party data provider (Oracle Data Management Platform) will pay publishers (ESPN.com) to let it collect information about its site visitors (you). This information is then used to create profiles of your audience’s web behaviors, which can then be sold to advertisers to target ad buys.
While third-party data enables you to expand your program’s reach and awareness, it comes at a cost. First-party data is free to target, and promises a greater chance of conversions. Conversions are higher on a known “warm” audience than on unknown “cold” prospects found through third-party data.
What About Retargeting?
Ok, so if first-party data targets your advertising towards your known audience – how does that make it different from retargeting? Retargeting is a form of targeted advertising based on a prospect’s activity on your website that did not result in a conversion. We sometimes refer to this as interest-based retargeting, meaning they checked out your landing page and abandoned it without completing the form to download your white paper. Or, in e-commerce, they put an item in their shopping cart and abandoned the cart. Your advertising would then retarget users around the internet, asking the prospect to pick up where he or she left off.
We see retargeting as one application of first-party data. In this case, the “data” is that the prospect has an interest in a specific product. But first-party data has the ability to build a much broader profile of a visitor, encompassing both their browsing history on your site as well as data in your CRM or marketing automation platform. By using all of the available information you already own you can personalize your advertising offers to the wants and needs of your prospects.
When leveraged correctly, data is an invaluable marketing asset that helps focus and continuously improve your marketing programs. Through these assets, you can expand your advertising’s reach while nurturing an existing audience to help create brand loyalty and affinity.