Explained: Zero-party data vs first-party data vs third-party data
Posted: June 10, 2023
In recent years, consumers have been provided with greater protections for their privacy than ever before. Regulations such as the European Union’s General Data Protection Regulation (GDPR) are designed to protect personal data and impose sanctions on organizations that do not comply or attempt to circumvent these regulations.
Another significant shift is Google Chrome’s planned withdrawal of support for third-party cookies that will mark the end of the era of third-party data for marketers, advertisers, and agencies.
As a response to the cookieless future, many companies are beginning to transition away from third-party data by investing in strategies that involve collecting and using first-party data to fuel personalization. Another type of data has emerged as a result — zero-party data.
Before implementing any strategy, it’s essential we’re all on the same page — what do these terms actually mean?
- Zero-party data
- First-party data
- Third-party data
- Do marketing teams need to reduce their dependence on any one kind of data?
The differences between zero-party, first-party and third-party data
Zero-party data
What is zero-party data?
Zero-party data, also known as explicit, opt-in or self-reported data, is often viewed as the optimal way of collecting customer information for marketing purposes. Unlike other forms of data collection that rely on third-party sources and require analysis or inference to understand user preferences, zero-party data is collected by directly asking customers for information. This type of data is often collected when customers are prompted by a company, such as through surveys, loyalty programs, or preference centers.
The benefits of zero-party data
Zero-party data is a valuable source for businesses as it is specifically requested from customers and shared with the business directly. This type of data allows businesses to gain a deeper understanding of their audience, as well as build more trust and transparency with them. Not only that, customers feel more empowered because they have a greater degree of control over how their data is used.
The challenges of zero-party data
To be given the privilege of requesting zero-party data, a brand must consistently prioritize privacy across all of its online platforms, which can be a lengthy and challenging process. Additionally, some marketers are skeptical about the reliability and excellence of zero-party data since customers are often encouraged to share data in exchange for a reward.
First-party data
What is first-party data?
First-party data, also known as customer, proprietary, owned or in-house data, is a type of data that companies collect directly from their own customers. This type of data can often provide valuable insights into customer behavior and preferences. These insights can inform important business decisions such as marketing campaigns, product design, and more.
The benefits of first-party data
Using first-party data allows brands to target and personalize their campaigns with reliable, recent, and accurate data. This type of data is more beneficial than both zero- and second-party data because it is based on interactions that have already taken place. With first-party data, companies can gain insight into user behavior that can help them create personalized experiences that are tailored specifically to each customer.
The challenges of first-party data
When it comes to collecting customer data, there is a risk of duplication, over-collection, and confusion without the right technology to create a unified view. Without such a holistic insight into each customer’s journey across multiple sources and channels, marketers are unable to orchestrate an effective campaign based on first-party data.
Third-party data
What is third-party data?
Third-party data is a type of data that is gathered externally from various sources, such as advertisers, aggregators and other external sources. This type of data is usually obtained indirectly and can be invaluable when used in combination with other first-party and third-party data sets.
The benefits of third-party data
Third-party data is a powerful tool for businesses, providing valuable insight on customer behavior and preferences. It has been effectively used to expand existing audiences through look-alike modelling, as well as to gain greater understanding of consumer intent. Furthermore, it can be used to augment existing data sets in order to more precisely define target demographics.
The challenges of third-party data
When buying third-party data, buyers have no idea about the source of the data, how it was collected, stored or if it is up to date. Unlike other types of data, third-party data is accessible to everyone – meaning that multiple companies could be using the same information. This raises a number of questions regarding accuracy and reliability of the data which buyers should take into consideration.
Do marketing teams need to reduce their dependence on any one kind of data?
As marketers strive to keep up with the ever-changing marketing landscape, they are turning to a variety of data sources to better inform their decisions.
By diversifying their data portfolio, marketers can take advantage of multiple sources of information and create a more rounded view of the customer journey.
This allows them to uncover insights that traditional single-source data may not have been able to provide.
Want to know how marketers are grappling with data privacy changes?
Data privacy legislative changes have sent shockwaves throughout the marketing industry. Marketers are scrambling to understand how they can continue to do their jobs while protecting customer data from potential breaches and misuse. Read our Privacy pain points report to learn about marketers’ growing data privacy concerns.
