Why first-party data is essential

17 augustus 2021

Steeds meer grote bedrijven stappen af van het gebruik van third-party data. Nieuwe wetgeving, zoals An increasing number of large companies are abandoning the use of third-party data. New legislation, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), will reduce the use of third-party data by businesses. These regulations restrict the use of data sources other than first-party. We will explain exactly what this means in this article.

First of all, what is first-party data?

First-party data is data that comes directly from your prospective customers or current customers. This includes:

  • Data derived from behaviour, actions or interest recorded on your website or other channel;
  • Data from your CRM;
  • Subscription data;
  • Social media data.

Offline data such as surveys, customer feedback and other data from your CRM can also be included.

First-party data comes directly from your prospective customers and current customers, and is generally seen as more valuable than second- or third-party data. The reason for this is that the data comes directly from the visitor on your own sales channel. So there is no intermediary or company involved. This data is stored and organised in a data platform. If your company does not collect and activate first-party data, you are basically missing out, the collection and organisation of first-party data should be a priority for every company in today’s market.

What is second-party data?

Second-party data is really someone else’s first-party data, but in the shape of a purchase or as a mutual data exchange with a similar company. You buy or receive this data from or exchange it with the company that owns it. You are sure that this is accurate data, and that no intermediary is involved in the purchase or acquisition. The prerequisite for this is that you select companies with data that you know is valuable. Look at companies in the same industry to exchange data that can be used within your company.

Second-party data therefore has many similarities with first-party data, but comes from a source other than your own data platform. Data that falls under this category includes:

– Website activity;

– Mobile app usage;

– Social media;

– Surveys.

Visitors agree to the company’s privacy agreement for the collection and sharing of this data. Without the explicit consent of the relevant user, a company may not store this person’s visitor data.

What is third-party data?

In short, third-party purchased data files. The purchase of this data takes place from an external source that has not collected this data itself; a third-party data provider. This data provider in turn retrieves the data from a variety of websites and platforms, for a fee, and stores it in a data platform.

Third-party data may include:

Identification data (name, address, age, etc.);

Social media accounts;

Purchase history;

Browsing data;

Website behaviours.

Third-party data can be useful if you want to learn more about the behaviour of (potential) target groups. You can then purchase data files with comparable customers or prospective customers based on your current target group.

The costs are quite significant. In addition, it is important to organise the data properly and to organise it in such a way that the resulting insights can actually be used. A good data management platform is important in this regard.

Why is first-party data the most important?

Due to the new regulations, companies are being pushed to abandon a third-party data strategy. Gathering as much data as possible will become more difficult in the future. The starting point here is the privacy of the user; any form of data collection must be an “opt-in”, whereby the user gives explicit consent. The bottom line is that the user partially regains control over which data is or is not shared.

Companies will therefore be able to use data files from third parties to a lesser extent and will have to focus on the use of second- or first-party data. By collecting the data yourself, instead of being dependent on an external party, you can optimise the user experience. This is because you know exactly how a user interacts with your website or other sales channel.

The main reasons for using a first-party data strategy are:

  • Collecting data directly from the source. These are reliable and relevant because you know that the interaction took place on your own website or sales channel.
  • Cost reduction. Purchasing data files costs money. If you collect the data yourself, the costs of storing the data in a data platform will be lower.
  • Privacy Guarantee. Your visitors can be sure that no one else will receive their data if your company does not use third-party data files.
  • Companies or advertisers own the data collected about their visitors.

The data strategy for your business

The great thing about the transition from third-party data to first-party data is that not everything needs to be changed at the same time. Is your company still focusing on only third-party data? Try to combine this with first-party data over time, or get closer to the source by using second-party data. This will help you achieve a 360-degree customer view. By cleverly using this data, you can then use persuasion principles on your sales channels.
For example, you can make sure that visitors have a personalised experience and interaction with your sales channel tailored to their needs, while fully complying with the new GDPR legislation. And without your company having to make sacrifices. In fact, your data strategy will only improve!

Would you like to know how to best apply first-party data? Request a demo to see our data platform in action.