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First-Party Data vs. Third-Party Data: What’s the Difference?

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First-Party Data vs. Third-Party Data: What’s the Difference?

With 2023 approaching fast, it’s time to rethink your approach to data in marketing. 

Data collection is changing quickly. In 2023, the process of eliminating third-party data — better known as cookies — from browsers will finally be complete. The change makes the approach to collecting data and the types of data brands work with completely different. 

Collecting data is becoming more complicated in a more privacy-first world. This means internet browsers are favoring the privacy of users over performance-tracking capabilities for advertisers. So, how can your company adjust its data collection strategy to accommodate the changes?

Here’s everything you need to know about both first-party data and third-party data so that you can enter into the new year with an intelligent and informed marketing strategy. 

Why Are Cookies Going Away?

Sometimes referred to as the cookieless future, the shift away from third-party data is a response to increasing concern for privacy on the web. Phasing out third-party cookies is a strategy intended to alleviate consumer concerns about being tracked online — but it has pros and cons.

While the cookieless future may offer consumers additional peace of mind, it changes the way marketers approach data collection. Marketing companies now have to create scalable first-party data collection strategies to get accurate information about visitors to their sites.

What Is First-Party Data?

First-party data is collected directly from a company’s marketing initiatives both on-site and off. It’s willingly provided by shoppers and may include preference center data, purchase intentions, and personal context. These pieces of information all come together to show how the consumer wants the brand to recognize them. 

First-party data includes information gathered from behaviors, actions, or interests throughout your website and/or app; information you have within your customer relationship management (CRM) system; and information you have gathered from your social media platforms and/or advertising. 

What Are Some Strategic Ways To Collect First-Party Data?

Customers generally aren’t willing to hand over their personal information for nothing in return. Instead, you need to get creative with your first-party data collection strategy so that you can learn more about your customers and inform your marketing strategy:

  • Start a loyalty program: One of the best ways to collect first-party data is through a customer loyalty program. That way, you’re obtaining their name, phone number, email, and other valuable contact information — and they’re getting points and rewards in return.
  • Host a giveaway: Another great way to collect first-party data is to host a giveaway to act as an incentive. All they have to do to enter for a chance to win is provide you with their name and email address. 
  • Provide an incentive: If you’re looking to make your marketing strategy as efficient as possible, offer a promo code in exchange for names, email addresses, phone numbers, etc. Not only do you gain valuable information, but you might convert a sale as well. 
  • Use an omnichannel approach: Even better, you can use an omnichannel marketing approach by connecting all of these different platforms to create a seamless user experience. 

What Is Third Party Data?

Third-party data, also known as cookies, is information that is collected by outside sources that don’t have a direct relationship with consumers. In many cases, cookies are information that has been “stitched together” from a number of different sources, resulting in a more complete and useful dataset. 

The cookies collected by outside entities are then sold to companies looking for more insight into and information about their customers. As a result, third-party data is extremely valuable in honing targeting strategies for advertising and even securing potential leads. 

First-Party Data vs. Third Party Data: What’s the Difference?

The difference between first-party data and third-party data comes down to origin. With first-party data, the company itself is collecting the data directly from its customers whereas, with third-party data, the company is purchasing information about consumers from a third-party entity. 

Another important distinction between first-party data and third-party data comes down to consent. With first-party data, customers are consenting to the collection of their information by the company in question. However, with cookies, consumers usually haven’t consented to their data being collected and then sold to the highest bidder to do with as they choose. 

The primary methods of collecting first-party data are Google analytics, getting customer input via email, social media, or your website, and using a CRM to retain customer information. First-party data can tell you a significant amount about customer behaviors, as well as your target demographics and how to generate new leads. 

What’s the Future of Third Party Data?

The future of third-party data is uncertain, Google is planning to start phasing out third-party tracking cookies in their web browser, Google Chrome, beginning next year in 2023. 

This shift away from the use of cookies is caused by concerns about consumer privacy and company transparency. Consumers are increasingly concerned about the privacy and protection of their data, and rightfully so. Data leaks and hacks are, unfortunately, extremely common these days and many consumers have had their private and personal information unknowingly compromised. 

The decision to move toward a “cookieless” future wasn’t an easy one and was actually decided back in 2020 before being postponed to 2023. And as a result, brands that primarily rely on third-party data to learn about and get in contact with their customers will have to rethink their entire marketing strategies. 

First-Party Data vs. Third Party Data: Which Is Better?

While third-party data has certainly proved its value through the years, there’s no question that first-party data is both better and more valuable. For starters, first-party data is completely free whereas third-party data costs money — ranging anywhere between $1 to over $50 per thousand depending on the industry, provider, target audience, etc. 

Additionally, first-party data is typically more accurate since it’s obtained directly from customers rather than aggregated from various sources across the internet. It’s also a more scalable and “future-proof” data collection option, as it’s not going anywhere anytime soon. 

Finally, and perhaps most importantly, first-party data is considered more ethical since it requires consumer consent and company transparency. 

What About Second Party Data?

Second-party data falls in between first-party data and third-party data. With second-party data, a company collects information directly from its customers before selling that information to other companies with a similar target audience. 

Essentially, second-party data involves using another company’s first-party data. Second-party data can be incredibly valuable as it can provide you with insight into your competition’s customer base. 

…And Zero Party Data?

There’s also such a thing as zero-party data, which may look the same as first-party data, but in reality, there’s one key difference. With zero-party data, someone is willingly providing their information, whether it be their name, email address, phone number, mailing address, etc. to a company. 

For example, zero-party data might look like a customer filling out a contact form to get more information about a brand, product, or service. Zero-party data might also look like a customer opting in to receiving email newsletters and other updates. 

How To Pivot From Third Party Data to First-Party Data

If the “cookieless” future of 2023 caught you off guard, don’t worry — there are things you can do to prepare for the demise of cookies next year. Specifically, you can pivot from third-party data to first-party data. And while making the shift from third-party data to first-party data might seem difficult, with the right strategy and assistance, it can be seamless. 

The centerpiece of a scalable marketing strategy in the cookieless future should be leveraging first-party data in your favor. That means collecting more information via sources like Google analytics, activity on your website, and social media.

The best way to pivot from third-party data to first-party data is to work with a marketing data agency like MuteSix. MuteSix’s DataSix team has been leveraging first-party data for quite some time. They’re the leaders in helping brands collect data and analyze it to optimize paid media and creative strategies.

What Services Are Included With DataSix?

The following services are included complimentary when you utilize the DataSix team to inform your marketing strategy:

  • Advanced measurement strategies, including but not limited to incrementality testing, e-commerce data tracking, multi-touch attribution, and marketing mix modeling. 
  • Growth marketing models to inform future media investment strategies to reach key performance indicator (KPI) targets.
  • Reporting and data visualization utilizes custom dashboards for real-time data reporting based on each brand’s specific needs
  • Ecommerce vertical insights and trends provide access to agency-wide data sets across paid social, paid search, programmatic, email, and Amazon channels to gain a more comprehensive perspective
  • Custom-tailored customer analytics generate customer lifetime value (LTV) models, customer retention models, and more

How Does MuteSix’s DataSix Services Work?

Our DataSix service helps you take advantage of a 3-in-1 team structure that focuses on analytics, strategy, and product. It involves a data-driven creative and media buying feedback loop, using the data gathered to inform your media strategy and creative content. 

Conclusion

If you have any additional questions about first-party data, third-party data, or MuteSix’s DataSix services, reach out to our experts today. We offer a complimentary marketing consultation to assess your needs and come up with an initial strategy before getting started. 

Sources:

Why You Should Care About First-Party Data | Forbes

Collect and Leverage Zero-Party Data to Personalize Marketing and Drive Growth | TechCrunch

Third-Party Cookies Are Going Away: What Advertisers, Marketers, and Consumers Should Know | TechRepublic

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