Zero-party data, first-party data, second-party data, third-party data—the differences might sound like small degrees at first glance. But understanding the different types of data won’t only help you master the world of modern-day data privacy. It will define the marketing strategies necessary to grow in the post-cookie era of advertising.

Let’s start with the definitions.

• Zero-party data: Information customers explicitly hand over to you.

• First-party data: Information your brand collects implicitly from consumer actions and interactions.

• Second-party data: Information you acquire from a partner you trust, meaning you don’t collect the data first-hand. Typically, this strategy means you believe your partner is adhering to modern privacy regulations.

• Third-party data: Information that comes from indirect relationships with customers, such as purchasing from a data aggregation company.

For example, zero-party data might include customer surveys, or a customer’s email address when they sign up to download your latest webinar. First-party data could be something your customer service team learned when asking customers questions.

Second-party data can be a little murkier since you’re getting the data from somewhere else. You’re not getting it directly from your customers. The data sources here might be reliable and regulation-adherent, but you’re introducing data sets from a separate party for the first time.

As for third-party data? Regulations like the GDPR (General Data Protection Regulation) are cracking down on that. And Google and Apple are looking to phase out third-party data trackers from their enormous advertising platforms. Welcome to the first-party era.

Like in golfing, the lower your number here, the better you’ll adhere to the latest advertising standards.

But you’re not playing golf. You’re playing a new generation of advertising game where the rules will have you build a more organic audience online. And like any game, it helps if you start with a thorough understanding of the board. Let’s explore what style of customer relationship you’ll need in your data management platform to build an audience organically.

What is Zero-Party Data?

Zero-party data is any information customers willingly hand over to you. Of all four data types, it’s one of the cleanest, meaning it won’t run afoul of Google/Apple tracking rules. Customers will know, explicitly, that they’re giving you their data.

Let’s say you want to know your customer demographics, for example. You create a survey where customers willingly enter information like their age, income, and location. Maybe you incentivize these surveys with lead magnets like online quizzes, but either way—the customer knows you’re getting the data, and they’re signing off on it.

You can use zero-party data to build demographic profiles of your customers, or build lists like email newsletters for future ad campaigns. But when it comes to more subtle data, like customer purchase history or conversion rates, you’ll rely on the most valuable form of data: first-party.

What is First-Party Data?

First-party data is information you gather in customer interactions where permission is implicit. This is the information customers can’t help but hand over as they interact with your brand. They show you their interests when they buy from a specific product category, for example, even though they didn’t explicitly click a form that says: “Yes, I am interested in this type of product.”

This data might be the most valuable out of all four categories. Customers are willing to tell you all sorts of valuable things, but their behavior typically has more relevance to your bottom line.

A customer tells you a lot, for example, when they get to a checkout page. They’ve just demonstrated a purchase intention without filling out a form. Retailers will use this information to gently nudge customers: hey, we saw your shopping cart was full. Want to complete your order?

First-party data is a big category, so let’s consider a few examples of what you can gather from these interactions:

Social media engagement. What kinds of content draws the most engagement from your followers? You don’t need customer permission to add up all the likes.
Website activity. Where do visitors spend the most time on your website? Analytics and modern customer data platform tech can tell you this without tracking the individual customer.
Conversion rates. What customers typically complete the most orders? Newsletter subscribers? Webinar viewers? Long-time social media followers?

Because the information was firsthand, first-party data can give your company all sorts of personal data without feeling sneaky. Think of first-party data as the most direct way of studying your customer behavior, short of directly asking them. And in some cases, like studying which offers get you the highest conversion rates, it’s even better than asking.

What is Second-Party Data?

Second-party data comes when you enlist a trusted partner—for example, a company you’ve worked with before—and get their zero-or-first party data on customers.

You’re still trying to build your own audience here. But second-party data can provide an advantage: you acquire data on potential customers, not just existing ones. This provides insights into new audiences you want to acquire—without violating privacy laws.

Why is first-party data more valuable? For starters, it’s typically cheaper to gather your own firsthand data. There’s also the question of relevance: unless the partnerships you choose are spot-on for your demographics, you may acquire more data than your marketing campaigns actually need. Yes, second-party data-driven campaigns can succeed, but you always incur some risk when expanding to a new audience.

Second-party data can also vary in quality. Your existing martech stack may not match the second party’s tech stack. In other words, you have to acquire the right kind of data—data you can use with your own analytics platforms—to make sense of new data.

What is Third-Party Data?

Third-party data is data collected by companies that don’t have a relationship with their customers. It’s similar to second-party data, except in this case, you don’t have as much verification that the data comes from a direct, primary, trusted source.

In the past, a data aggregation company might use trackers to get as much demographic information on a market as possible. This would typically be without the user’s permission—for example, that third party might use a data tracker to monitor what a customer does. A customer might be perfectly happy to know that a store they willingly buy from knows their purchase history. But if an unknown third party isn’t only collecting this data, but sharing it, it can turn off customers. Even worse, it can potentially be against regulations.

Making Sense of the Different Types of Customer Data

How does it all add up? If it’s not zero-or-first-party data, your risk goes up. Second-party data can be reliable—assuming you’re working with a trusted partner. If not, you may have mixed results. And third-party data is the riskiest of all, possibly even violating data collection regulations.

Why First-Party Data is Important

Second-and-third-party data can be valuable, true. But first-party data is more than valuable: it’s important. With Google phasing out third-party cookies and enhancing privacy features in its Chrome browser, the landscape of the Internet is changing.

Those companies who have access to high-quality first-and-zero-party data will be able to build campaigns for their markets. But those who don’t own their audience—instead “renting” an audience on a platform like social media—have limited access to customer data. As the digital world evolves, your company shouldn’t rent.

How to Build a First-Party Data Strategy

That solves the “what” question. Next up: how? How do you build a first-party data strategy if you’re starting from scratch with the concept of an owned audience?

Make sure you’re GDPR-complaint. GDPR regulations were some of the first sweeping data privacy regulations to go into effect, so they’ve become something of a “gold standard” for how you should approach customer data. This means building a data collection policy that excludes third-party data and assigns rules for the proper management and storage of the data you collect firsthand from customers.

Prep your data collection. What kind of data do you want to collect, and how do you plan on collecting it? Introduce new sources of data collection: surveys, collecting emails, lead magnets, or even investing in customer support software that makes it easier to aggregate your data. In the new era of data tracking, you’re the one responsible for making collection happen.

Build a customer journey map based on your findings. Data isn’t worth much if it isn’t actionable. Invest in data platforms that make it easier to turn data into insights, mapping out a customer journey. Use this journey to find the pain points that you can improve to enhance the customer experience.

The Next Steps in Data Collecting

You can use CRM, ecommerce tools, point-of-sale systems, and loyalty programs to collect and parse out your first-party customer data. But none of it matters if you don’t commit to owning your audience. Become the primary distributor for your own content, delivering that content directly to your audience. It’s not just the quality of your audience that will improve. Your data will also get better.

That’s where the owned media strategy enters the picture. Join our waitlist at AudiencePlus and follow us for more updates on what’s happening in the world of data collection.

JK Sparks | About the Author

Head of Marketing, AudiencePlus

JK is allergic to the words “guru, ninja, and hack” when used to describe anything marketing related. Instead of chasing the latest “growth hack,” he’s focused on building sustainable and predictable levers that fuel long term success. By implementing this approach over the last decade, JK has helped organizations in both bootstrapped and well-funded environments scale from <$100K to more than $100M in revenue. You can follow him here.