Understanding Zero, First, Second and Third Party Data

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Data is the fulcrum of the fast-changing digital marketing landscape. It is omnipresent, and how marketers collect, analyse, and utilise it is vital. The changes in privacy laws worldwide, Google’s decision to finish the third-party cookie have sparked many discussions. While customers expect content to be tailored to their preferences and needs, they’re also demanding greater transparency and control over how their personal data is used. 

Data collection has traditionally been limited to first, second, and third-party customer data to personalise content and meet customer needs. With Google taking a stance for privacy and phasing out the third-party cookie, what are the options left for a marketer facing increasingly strict data protection laws worldwide? To answer that question, let’s look at first-party, second-party, and third-party data and understand them. 

Also Read: Strategies to Improve Data Quality in Enterprises

First-Party Data

First-party data is any information collected directly from the audience or customer base. It provides the most quality insights so marketers can create a personalised experience for their customers, improve the retargeting strategy to better performance, and predict future needs. Without a doubt, first-party data is best compared to other forms of customer data for several reasons. Data collected is authentic, as it has been collected by the marketer directly. There is no sale of data happening here. Lastly, the marketer has a complete onus on the data collected. The marketer has complete knowledge of how it has been collected, whether the marketer has the consent to use it. And finally, the data is owned by the marketer.

Marketers find value and are generally confident in the first-party data they gather from online and offline channels, with branded websites and mobile apps cited as top sources of insight. 

Despite this value, access to first-party data sources is inconsistent and lower than it should be in today’s online-offline world. Without a rich blend of first-party data, marketers miss out on the opportunity to improve personalisation and optimise their campaigns.

 Second-Party Data

Second-party data is any first-party information collected by an entity apart from your own. It comes from a source other than your customers but is still relevant. Second-party data is owned by an entity that sells the information to another organisation. The insights are given to advertisers by broadcasters, publishers, content providers about their audience. This data set is helpful because it can be customised and made available with precise insights. 

Third-Party Data

Any information purchased from data aggregators or sources who do not have a link or role to play in your business. Third-party data is collected by independent researchers, statisticians, brokers that use surveys, interviews, and feedback forms to gather information about a large sample of audience. The data is purchased in bulk, and one disadvantage is that many kinds of data come bundled together. While marketers choose one and discard the rest, the chances of misuse remain high. Third-party data will also be affected by Google’s decision to phase out third-party cookies for Chrome users. Cookies help marketers collect data about customer behaviour, product analysis, metrics processing, and ad retargeting.  

In all the data types mentioned above, we can see that the customer data is essentially being collected by various entities – either directly or indirectly. Each of these data types has usage restrictions. That is to say, and they can be utilised only if the customer gives their consent to data collection and processing. GDPR, CCPA and similar global privacy regulations reiterate the importance of data privacy and what information can be collected and what cannot. 

Also Read: GDPR: What You Should Know

Zero Data 

Data that customers willingly share with marketers is zero data. Simply put, zero data is not dependent on any marketer or data aggregator and originates from the customer directly. Customers share this data with marketers in exchange for a better quality of products or services. Unlike signals with zero data, marketers do not have to guess or draw inferences. With a clarion call being sounded by law enforcement agencies and Internet browsers, marketers increasingly turn towards zero and first-party data to fulfil their data input requirements. 

Experts have pointed out that customers knowingly and voluntarily share data that is not only personal but is far more reliable than any other form of data. A study by Forrester says that ‘Zero-party data is extremely valuable and will improve the effectiveness of marketers’ personalisation efforts…. Zero-party data can reduce marketing waste for a brand and improve the lives of its customers – a win-win situation for everyone involved.’

Collecting Zero Data 

Zero data can be collected from customers without remaining anonymous. Collecting zero data is advisable for customers whose identities are known and can be saved. What are some of the forms of zero data? Registration forms, application forms, newsletter subscriptions are all examples of zero data. One characteristic feature of zero data is that marketers can request precise information useful to them from their customers. Data overload or collection of non-relevant data can be done away with. Marketers need to remember that asking too much personal information or asking for information not relevant to the business can put off customers and take them away from your business. 

Social media is another valuable source of zero data. Engaging customers with polls, question-answer sessions, surveys, and engaging content can reveal more about the customer than any other data collection strategy. Engaging customers on social media and simultaneously collecting customer data requires some planning and skilful execution. The results thus obtained are very beneficial. Some of the other channels for zero data collection can include customer service interactions, feedback on email, etc. Marketers have to ensure that whatever the data source may be, storing them in unified customer data platforms or CRM is a must. 

What Sets Zero Data Apart from First, Second and Third-Party Data? 

As zero data is directly sourced from customers, it is customer-centric, transparent, and respects the customers’ privacy.

Now that you know the different data types be clear about the data you allow in our enterprise. For those who are still stuck with third-party data, it’s time to wake up and look for alternate data sources.