Identity Resolution Demystified: Definitive Guide to 1st, 2nd, and 3rd Party Data

Data is a vital part of creating a clearer picture of each customer, which in return, allows marketers to provide targeted campaigns that are sure to engage and bring in revenue. But with all of the different types of data out there, it can be hard to keep them straight.

To help you sort through them, we’ll explain first-, second-, and third-party data and when (and how) to use each type.

What are the differences?

It all comes down to the source of the data. Let’s go ahead and break them down.

First-Party Data

This is the data you’ve collected directly from your audience (i.e. the data you own). The best part about first-party data is that you know it’s accurate because you collected it. Plus, you don’t have to pay anyone else to collect it because you’re doing it yourself.

A few examples include data that comes from your CRM, website (ex. user behavior), point of sales system, social profiles of customers, email marketing apps, mobile apps, surveys, or customer feedback. As the future of third-party cookies is doubtful, the value of first-party data continues to increase.

Here are ways to put this data to work:

  • Accurately predict future behaviors of customers
  • Seed lookalike audiences to find more customers like your own
  • Create extremely personalized experiences

However, the downside of first-party data is that it’s limited because of its scale: You only have what you have, since you can’t buy first-party data from anyone — because then it would no longer be data that you’ve collected firsthand, which brings us to the next type.

Second-Party Data

Second-party data is acquired when you purchase or use someone else’s first-party data. It’s not freely available, nor is it highly commoditized. So, another company is using the tools mentioned above and then selling or sharing that information with you. 

Often, companies with similar goals will partner with each other to share second-party data to broaden and improve their marketing efforts. For example, an athletic shoe brand could benefit from data from a fitness facility — or vice versa.

Use cases for this type of data include:

  • Targeted audience expansions
  • Removing friction in the sales process
  • First-party data enrichment for tighter segmentation and lookalike audiences
  • Monetizing your own first-party data by selling it

With this data coming from another organization, it may be easier for you to uncover trends or other patterns that may have been overlooked with first-party research. That can allow you to spot customer interests or needs that might have otherwise been missed.

Third-Party Data

The last type of data comes from outside sources who aren’t the original collectors of the data, making them known as data aggregators, who then sell it to others. Third-party data is anything that’s collected by another entity that doesn’t have any direct link to the visitor or customer. They collect this data using a variety of sites, platforms, feedback forms, and other methods to gather information on large audiences. 

You can use third-party data for:

  • Enriching first- and second-party data
  • Demographic, contextual, and behavioral targeting

The main benefits of third party data are:

  • Volume
  • Scope
  • Price 

However, it’s not good for outright prospecting because everyone is buying the same data and it’s very commoditized. Also, while the data may be larger than the other options, it doesn’t necessarily make it more relevant to your company. Most identity graphs give you the ability to enrich first party data with second- and third-party data to make it more actionable.

So, which one is the best?

Each type of data has its own list of pros and cons, but when you combine the use of all three, you can create a more complete picture of your targeted audience. They all go hand-in-hand with one another to expand audiences and create tighter, more targeted segments.

And that’s what a good chunk of marketers do: 46 percent of U.S.-based marketers rely on both first- and third-party data equally. Only 36 percent rely on first-party data alone.

Also, most identity graphs allow you to enrich your first-party data with second- and third-party data sources to make your data more actionable.

With multiple data options that bring different strengths to the table, you can get the best of both — or three — worlds with first-, second-, and third-party data.

Table of Contents