What is the difference between third party, first party, and zero party data?

“Without big data analytics, companies are blind and deaf, wandering out onto the web like deer on a freeway.” When author and consultant Geoffert Moore tweeted this in 2015, marketers didn’t know just how true that statement would turn out to be.

Today, data is one of the most important commodities a business can have. It helps organisations all over the world make more informed decisions and target messages to the people that need to see them the most.

If you have anything to do with marketing, you will have increasingly heard the terms ‘zero party data’, ‘first party data’, and ‘third party data’. But it’s all a bit confusing isn't it? The growing importance of these various data types has left an indelible mark on how we collect information today. Here’s an overview of what each term entails, as well as how to use each type of data when building out your digital marketing strategy.

Third party data

Third-party data has been a vital component of marketing data strategy in recent years, but with consumers more aware and concerned about the privacy issues surrounding it, marketers will have to rely increasingly on first- and zero-party data.

Third party (or 3rd party) data refers to any data collected by an entity that does not have a direct relationship with the user the data is being collected for. Because 3rd parties are created by someone outside of your business, these datasets need to be integrated into your marketing stack for you to be able to utilise them effectively. 

Common forms of 3rd party data include attribution data from vendors like Adjust or Kochava as well as audience segments from services like AdRoll or Segment. In both cases—and many others—you're purchasing access to these datasets rather than actually building them yourself.

First party data

First party (or 1st party) refers to a dataset that belongs directly to your business. It consists of information you have collected from a user or customer directly. It can include demographics, contact information, purchase history and a variety of other information that has been directly provided by a user. For example, if you own an ecommerce store then transaction data from its internal systems, that would count as 1st party data since it belongs directly to your organisation. 

Many marketers believe 1st party data is inherently more valuable than 3rd party due to fewer potential sources of bias and a deeper understanding of actual customer behavior. But while there's value in being aware of what type of customer interactions have happened within your digital systems, beware mistaking these interactions with actual behavioral signals related to specific audiences or individuals who may be worthy of targeting with ad spend or content promotion.

1st party data can be very valuable to marketers because it allows them to target users based on what they have done themselves in their online experience with your brand. You can use 1st party data for remarketing campaigns that give customers contextually relevant offers based on items they’ve already purchased from your website. 

These offers can entice a lost customer back to make another purchase as well as draw new consumers who might also benefit from those products and services offered. Perhaps most importantly, though, 1st party data provides context for not only past interactions but future ones as well. If you know who someone is and what they’ve done before, their expectations will probably remain consistent as long as those previous interactions were positive ones.

Zero party data

Today, more and more consumers have growing concerns about the security and privacy of their personal data. Since consumers have no control over how it’s used or who can access it, marketers can no longer rely on using 3rd party data. This is why zero party data has become the fastest-growing segment of all marketing data.

So what is zero party data? It refers to any information a business can collect from its own customers or prospects, such as customer email addresses. To see how powerful zero-party information can be, just look at email marketing software company MailChimp. In 2010 it began asking its customers for permission to add their names and email addresses to a mailing list when they signed up for accounts. Today more than 40 million users have signed up for these lists—giving MailChimp a rich source of zero-party information that it could never get from a third-party service like Facebook or Google. 

As consumers become increasingly aware of just how valuable their personal information can be, expect zero-party data sources to become even more important. To make sure you are maximizing your zero-party data potential, put together an email marketing automation strategy with best practices. 

Cookieless marketing tips

By 2023, Google Chrome intends to stop supporting third-party tracking cookies altogether.  So what does the future of marketing look like in a cookieless world? Cookieless marketing is all about respecting consumer privacy. With privacy growing increasingly more important to consumers and data restrictions tightening, marketers need to start looking at ‘consent-driven’ data. 

First let’s look at what cookies actually are. Cookies allow you to store information on your visitor’s browser as they move from website to website. This information can be used for targeting specific individuals or households with highly-relevant advertisements that may be more effective than those targeted at a broad demographic. Thus, cookies can lead to more sales and fewer wasted marketing dollars.

Some users will block them on their browsers or use privacy settings to opt out of cookie tracking—generally because they think cookies are too invasive. Now there are more sophisticated ways of using customer data that don’t rely on cookies, but which still provide powerful insights into consumer behavior without requiring anything added to a user’s browser. These approaches include using unique device identifiers (like Apple’s IDFA), social graph data (like Facebook engagement) and other kinds of zero party data. It's important to consider all three kinds when developing a cohesive marketing strategy. 

However, zero party data should always be viewed through an ethical lens; after all, none of these techniques should invade someone's personal space if it doesn't bring about an expected benefit in return. In fact, transparency is key when it comes to both disclosing what types of personal information you're collecting and how you're using it to connect with others online.

Big changes are coming fast for advertisers who rely on cookies from third-party players to power their online advertising strategies. It’s been a long time coming given the growing drumbeat of consumer privacy worldwide. 

At The Attention Agency, we are working with all of our clients to design ethical, data-driven approaches to their marketing in a way that suits their customers best, while driving great outcomes for the business. If you’d like to have a chat about how you can ready your business for a cookieless world, get in touch today.