Today, more than ever, data is critically important for businesses. Thriving businesses run on data—much of which comes from customers, websites, app users, and other sources.
Those companies who know how to capture and leverage data can make better-informed decisions, giving them a competitive advantage, while their competitors are left guessing and making decisions based on assumptions.
Consumer data comes in many different forms. It can be very detailed, giving marketers explicit information such as names, home addresses, email addresses, phone numbers, household income, and other demographic data.
It can also be less detailed, such as IP addresses, which are Internal Protocol addresses for computers or devices, with a unique IP address assigned to each Internet or network device. Google Analytics, for example, can tell you where your website visitors are coming from by leveraging IP addresses, but they don’t tell you who they are.
Another form of less explicit data is MAID (Mobile Ad IDs), which both Apple and Android have created to uniquely protect the identities of their users. MAID data is stored on a user’s mobile device and can be retrieved by an app or browser for ad targeting, tracking geo-spatial location data in programmatic campaigns, for example.
Zero-, first-, second-, and third-party are terms used to describe the different types of data used in digital marketing, analytics, and, most importantly, the source of that data.
Let’s break down the differences.
Zero-party data is a relatively new term in the marketing lexicon. Originally coined by Forrester in 2022, zero-party data is information a customer voluntarily provides by actively sharing it with you. Zero-party data is often described as the “Holy Grail” or future of marketing. What makes it so special is that consumers provide their own data to improve their shopping experience and relationship with the brand. This data can range from contact information and birthdates to preferred product categories.
While third-party data has long since been regarded as the king of the hill, zero-party and first-party data are quickly becoming the challengers. Brands that want a competitive advantage should start paying more attention to these often-overlooked data types.
Zero-party data is often gathered from many sources, including during the check-out process of purchasing a product online, when signing up for an offer or newsletter, or taking an online survey.
One of the key benefits of zero-party data is that it’s more trustworthy than second or third-party data. Two other benefits of zero-party and first-party data are the quality of the data and the fact that both minimize privacy concerns because you know exactly where the information came from.
According to Vlad Gozman, serial entrepreneur and founder and CEO of involve.me, recently stated that “zero-party data is the new oil.” Zero-party data is more engaging, and brands that use it properly can create more personalized customer experiences, which leads to higher engagement rates and increased customer lifetime value.
Qualifio, a Belgium zero-and first-party data collection platform, highlighted a great example of zero-party data that can be leveraged. Their client Purina asked customers what breed and age of dog they have so they can send them appropriate coupons and newsletters. Here is a great example of using a soft, subtler mechanism to ask customers to provide intimate data—in this case, about their beloved pets.
While zero-party data is willingly provided by consumers, often reflective of their shopping preferences, interests, and intent, first-party data is gathered from user interactions with a company’s website, mobile apps, or brick-and-mortar stores, providing indirect insights into consumer behavior.
First-party data is essential because it’s collected directly from your own audience. The biggest benefit of zero- and first-party data lies in its accuracy, because you know the source and manner in which it was collected versus purchasing it from another source.
First-party data includes such things as:
First-party data is important because it’s collected from the people you have the most to learn from—your own prospects and customers. Access to this information allows you to nurture your audience based on what you've learned from them. Most importantly, first-party data enables you to personalize your client communication.
FACT: 66% of consumers expect companies to understand their unique needs and expectations.
Perhaps that’s why Google and Boston Consulting Group, both brands using first-party data, achieved 2.9X the revenue lift and a 1.5X increase in cost savings.
While each data type has its benefits, second-party combines many of the best aspects of first-party and third-party data. So, what is second-party data?
Unlike first-party data, second-party data is information a user has not shared with you directly but, instead, you were able to access legally via a direct relationship with another business. An example of second-party data is customer loyalty data sold by a grocery store to a credit card company.
Second-party data became all the rage because it was billed as a regulation-compliant way to target ads to consumers without requiring explicit permission.
“With second-party data, you’re buying someone else’s data so you know how they obtained consent to share it,” said Stuart Colman, VP of Sales at ad tech vendor InfoSum. “The trust and addressability of that data is better than when you’re buying data that’s effectively aggregated from different sources.”
Third-party data was once all the rage until the European Union adopted the General Data Protection Regulation (GCPR) in 2016. Subsequently, California legislators passed the California Consumer Privacy Act (CCPA) on June 28, 2018. The law creates an array of consumer privacy rights and business regulations regarding the collection and sale of personal information. CCPA went into effect on January 1, 2020.
Third-party data will gradually be phased out starting sometime in 2024 when Google eliminates third-party cookies used in its Google Chrome Browser. This comes after a few delays, primarily because Google wanted marketers to have more time to adjust their advertising approach using less intrusive targeting advertising technologies.
Third-party data is derived from unknown sources. It’s collected by a third party, such as a data aggregator or data broker, and bundled and sold to businesses for their own use. This data can be useful for companies looking to expand their reach and target new audiences, but it is not as reliable or accurate as zero-party or first-party data.
Examples of third-party data include demographic, consumer behavior, and market research data.
The difference between zero-party and first-party data is a blurry line. The reality is that both types of data are collected directly by the brands and often collected simultaneously as they go hand-in-glove. If you’re collecting first-party data, it’s more than likely you’re also collecting zero-party.
A simple way to think about zero-party and first-party data is that they’re the perfect companions when getting to know an audience better.
We understand the challenges that brands are facing in our new cookie-less world. Let us demonstrate the real power of unlocking your first-party data by utilizing SAVVY DATA AI's online visitor identification technology. If you are interested in driving more sales and giving your businesses a real competitive advantage, drop us aline and let’s chat.
