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First, second, and third-party data – everything marketers need to know

By Brady Gadberry, SVP, head of data products



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November 16, 2022 | 8 min read

First-, second-, and third-party data are useful terms in theory but not always in practice. For The Drum's Deep Dive into Data & Privacy, Brady Gadberry (SVP and head of global data, Acxiom) lays out the three types of data you need to grow – and to call yourself a truly data-driven brand.

Analyzing first, second, and third-party data on a laptop

As marketers, we regularly throw around terms like first-, second-, and third-party data. Data is part of any smart marketer’s strategy, after all. But are we so focused on data type that we are losing sight of what data does for us?

Here’s a quick refresher around what the terms first-, second-, and third-party really mean. However, and this is the point of this article, these definitions have everything to do with how the data was collected, and far less about how useful the data can be to your marketing strategy.

For example, with the impending deprecation of third-party cookies, there’s a lot of talk about how important it is for brands to build their first-party data assets – and rightly so, as it’s data you can own and control. But before you eschew all other data and throw the baby out with the bathwater, don't lose sight of the wide variety of customer data and the huge role it will continue to play in your overall marketing strategy.

After all, it’s unlikely you’ll be able to achieve all your marketing goals with a first-party data only strategy. If the only people you can engage are those you already know, you’ll quickly realize that while you might be able to retain and grow customer relationships, you won’t be able to acquire new ones. And new customer acquisition is a cornerstone of growth.

So, what other types of data do brands need? Obviously one answer is second-party and third-party data. But what does that mean in practice? When it comes to the real business of marketing, the type of data is far less important than the results it will deliver.

Here’s another way of thinking about three different types of data every brand needs in their marketing data strategy.

1) The data that helps you predict growth

First things first: you’ve got to be able to define your offer and understand your customers - those in your first-party data graph. This is common sense, but incredibly, still not common practice. You’ve got to have the qualitative and quantitative data that helps you understand where you’re starting.

But then you’ll want to move swiftly on to the interesting part: using what you’ve learned to start predicting which audiences will be your most promising growth vectors. This is where additional data comes in.

Take what you know about people and their interactions with your brand – what they’re buying, how they’re engaging with your website, or visiting your stores – and expand it beyond your four walls. Look for the stuff you can learn about them that might not appear directly connected to your brand at first. For example, what sports and hobbies do they enjoy, what media are they consuming, or what kind of purchasing power do they have?

The goal is to identify the patterns that will help you predict successful audience growth and acquire new customers. To predict future purchases, the gold standard is a clear data point like the purchase history your brand already has. However, the next best thing is similar transaction data about those who haven’t yet purchased from you but have bought competitor offerings. Maybe it’s from a second-party partner relationship or maybe it’s third-party licensed data, but what’s important is that it is predictive.

Have you just bought a home? Or like me have you just moved your oldest child into college? If so, you’re probably in the market for new insurance, home improvements, or dorm must haves (and airline tickets)! These major milestones in people’s lives are powerfully predictive – but may not be apparent in your own direct customer interactions.

Ultimately, it takes all kinds of data – purchase data, media data, footfall data, and many more – working together to feed the algorithms that will help you predict which actions will lead to winning outcomes.

2) The data that helps you maximize reach

As we’ve already discussed, cookie deprecation is a hot topic. We must all build out direct connections and stronger relationships to our customers. But we should also be augmenting the contact data that allows us to reach them. Did you know 28% of people use more than four email addresses? Even if you have a responsive one – will it be the one your marketing partner has or the email your perfect prospect uses to log in to the publishers where you are buying ad space? Do you know the latest IP address for your customer’s smart TV so you can deliver relevant advertising?

When you’ve determined the characteristics and personas that predict your best new customers, you’ll need to find them out in the world. Practically speaking, you’ll need to work with an agency and data partners that have a clear view of the whole universe of your potential new buyers and who understand the meaningful characteristics that predict a great return on your ad spend.

This is where brands can widen their view. It takes third-party data to connect to audiences and meet them where they are: in digital display, on email, on CTV, via direct mail, or anywhere else you may wish to engage with them. While your strategy must be led by first-party data, you need to be able to take action on that strategy in the broader ecosystem by augmenting these data assets if you want to reach your audience reliably.

3) The data that helps you drive creativity and effectiveness

The final type of data I want to talk about is one that sometimes gets lost in the quantitative world of artificial intelligence (AI) and machine learning (ML). It’s the beautiful “Aha!” inspiration that often emerges when brands and creative agencies partner to create cut-through campaigns.

We can’t lose sight of the descriptive data and customer experiences that inspire the messages we send. The data that fuels these insights is often third-party, but it might also be first-party data gathered through focus groups and surveys. It’s the fact-based but qualitative information that can let us walk around in our customers’ shoes and sparks the big idea for the creative and messaging that moves markets.

So there you have it. Three types of data that aren’t as simple as the first-, second-, and third-party breakdown we usually hear about.

The first type of data helps you understand what you’re selling and who you should be selling it to, the second type helps you get it in front of bigger audiences of likely buyers, and the third helps you create the messages that will capture their hearts and minds. And, of course, it goes without saying – all data that is part of your marketing data strategy, needs to be ethically sourced, privacy-compliant, kept secure, and used responsibly.

Without all three kinds of data, you can’t drive customer growth. But if you can harness all three, I think you can legitimately call yourself a data-driven brand.

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