1ST PARTY VS. 3RD PARTY DATA: self comes first

[DorisRon]

Today only lazy ones do not talk about data, and those who do not understand that third-party data like first-party one, helps to develop more operative and personalized marketing strategies. But what should we bet on: to "cook at home" or still prefer to "go to the restaurant?"

For a start it is important to understand the difference between own and third-party data. Currently, third-party data is the basis of digital advertising ecosystem. This is the data of third parties, the source of which may be third-party sites and email-mailing services, data management platforms, companies specializing in the collection, processing and sales of data, payment systems, and others.

1st party data is advertiser's own data about users, which he collected in the process of interaction of the consumer with the web site: filling of questionnaires, participation in polls, shopping and more.

So, what do we need to know about 1st party data?

▪ Own data allows to save money, not spend it to buy third-party data.
▪ 1st party data is most valuable because it is your own unique data.
▪ As the owner, you know exactly the source where the data was obtained, and whether it has lost relevance.
▪ With the help of your own data, you can isolate the already existing audience (first data users) and to target the ad campaign on new users.

In turn, 3rd party data:

▪ comes from sources which reliability can not be assured.
▪ is considered relatively expensive.
▪ helps to cover a wider audience segments.

Despite the popularity of third-party data, many believe that its power has come to an end. No one disputes the enormous marketing benefits of 3rd party data. However, a competent strategy based on first-party data, seems to be a more reliable method of conducting an advertising campaign with a high probability of engagement and conversion.

Sometimes personal data can be anonymous, but, as a rule, companies know the identity of the website visitor, because he is either a registered user or provided his identification information previously. This helps brands to track the behavior of the user in the future, provide him with relevant information about their products or services.

Using of own data means that the company receives the data during analysis of direct customer's interaction with the brand. This is precisely the main value of the first-party data.

For example, own data reported the retailer whether the user liked the pink shoes during his current or past purchasing activity. Also, that data informs the advertiser if the purchase was made on the website of the company or the client made it using the mobile application. Usually, this approach is being implemented through first-party cookies placed by the company and almost universally accepted by consumers.

Those who use third-party data, also monitor the behavior of consumers using cookies files. However, these "cookies" are usually "baked" by the third party. Today, these cookies are often rejected by the parameters of user browser settings by default. Numerous studies on the subject indicate that almost 40% of third-party cookies are blocked, and 30% are altogether removed. But if all these files manage to break through the tight defense of privacy, they can help keep track of users on different platforms, combine this information together and form a user profile by adding a lot of other information, including his name, interests and preferences, as well as such delicate information, as medical data. And after all that, data aggregators which do not have any relationships with customers or their permission to use the information, sell that data to advertisers. And this is a clear violation of the rules. And when you consider the high cost of data security, targeted attacks, users mobility, rapid development of high technology, etc., the compliance to the rules looks, at least, hard performed.

Do not forget that third-party customer data may be wrong. For example, 3rd party data may push a news site to display an ad with female jewelry to the male user. And it is because a month ago he bought an anniversary gift for his wife. This practice is not only counterproductive, but also can undermine the consumer confidence in the brand.

This does not mean that third-party data is evil. A conscientious supplier guarantees not only the quality of the information provided, but also the privacy of the data. Today, however, the market is shifting towards using 1st party data. Any more or less literate marketer is aware of the importance of collecting, processing and use of own data, based on one-to-one marketing. Of course, you can rely on the fragmented information purchased from third parties, but marketing will be much less effective without own data.

Marketers need to develop a direct relationship with the customers and resort to the use of third-party data, when it is really necessary. By shifting the emphasis on the collection of the rich and better 1st party data, you can develop your own processes, ensure higher ROI and improve the quality of service without violating confidentiality, which consumers cherish so much.

Ronald Reagan once said that information is the oxygen of the modern world. And if you do not want to suffocate in a dynamic development of the advertising industry, provide yourself with a reliable own "photosynthesis".

 

[DorisRon]

FIRST-, SECOND- AND THIRD-PARTY DATA: DETAILS
The most important thing in the management of any advertising campaign is the use of all available methods of intelligence about the target audience. It is the only way to determine how to most effectively reach those people who in the future will demonstrate the highest conversion rates.

According to the fortieth president of the United States, information is the oxygen of the modern world. In fact, it is easy to believe that the world we know, will die without it. Our task is to transform the "information age" into a "knowledge era", and for this you need to take simple data to the rank of knowledge. To the data as the basis of everything. No wonder data science has recently been believed as an academic discipline and a specialization "data scientist" is considered one of the most attractive, promising and highly paid professions in the world.

It is believed that own data is much more important than, say, a third-party one. However, it is not so.

FIRST-PARTY DATA: THE BEST ONE
It's quite simple to give a definition of first-party data: it is the data about the audience that you collect by yourself. In the context of display advertising own data is more often based on cookies and can include information obtained through a variety of platforms involved in web analytics, CRM-system and business intelligence tools. In other words, this data sources are the advertiser's own resources. Such information is obtained, for example, during registration of the users or analysis of visits history.

First-party data is the most valuable data about the target audience, because it provides information about the specifics of existing users and customers, as well as is a key element of retargeting. Own data allows us to target returning customers, increasing the information that you have about their previous purchases and interests in a particular product. This strategy explains the runaway success of the US company Amazon, which is the largest in the world in terms of turnover among those who sell goods and services over the internet. Personalized recommendations of Amazon are a fine example of first-party data. In general, the more dynamic and personalized ads are, the more likely it is that the user will be "converted" into a customer.

Own data is always the most useful and valuable, but sooner or later, every marketer is in a situation when he wants to reach the target audience, not using the information first-hand. Then second-party and third-party data comes to the aid.

SECOND-PARTY DATA: BEST AFTER THE BEST
Indirect data is inherently first-party data, which belongs to someone else. Typically, second-party data is not commercialized, but it is always possible to conclude an agreement with trusted partners who are willing to share data. For example, a company that has been manufacturing high-precision and high-tech watches can cooperate with a blog about the yachts to find new customers, basing on socio-demographic targeting.

In addition, the company's own data, which was received in previous campaigns: clicks, readings, number of pages views and some kinds of social activity like likes and shares can be considered as indirect data . They play an important role in expanding the audience and targeting. Features second-party data are endless. The main thing to look for, build and maintain a mutually beneficial partnership.

THIRD-PARTY DATA: MOST COMMON
This kind of data is information obtained from sources, with which the advertiser has absolutely nothing to do. Many companies, which are known as DMPs or the data aggregators, today seek to sell third-party data. Segments of data that is provided by these companies, tend to be based on the raw data purchased from publishers. After collecting this information is unified, and the segments are formed. The advantage of third-party data lies in the fact that the advertiser can gain access to a huge amount of user data. However, you should take into account the fact that such third-party information is widely available to competitors, so that the question of intelligence, as a result of which you get a unique audience, is not discussed.

Third-party data ideally suits for the demographic, behavioral and contextual targeting, and may also be used to remove bot traffic. In addition, third-party data plays an important role in targeting and audience extension. Typically, third-party data providers charge a fee for the use of their information segments on the basis of CPM (cost per mille) or CPT (cost per thousand) models. Depending on the data, the rate can be from $ 0.5 till $ 5. This is one of the basic media indicators that compare the cost-effectiveness of different types of media advertising by bringing them to a single parameter - the price per thousand contacts.

IDEAL STRATEGY
To use the adjective "perfect" for your strategy, you must first define marketing objectives. What do you want - to focus on the coverage of new customers or still on the increase in revenue from existing customers? Then you need to define the data provider. In addition, a good partner must specialize in the optimization of the campaign, be able to carry out the filtration efficiency of web resources, carry out a comparative analysis of different providers, disabling communications service providers with less quality traffic, narrow audience segments, optimize mobile data traffic, limit advertisements frequency caps for one user in order to avoid excessive molestation of the content to be displayed, etc.

Once Francis Bacon said that whoever owns the information - owns the world. And Dexter Morgan, a fictional character in a series of novels by Jeff Lindsay, claimed that possession of information is not everything. In order to be successful, you need to fully understand the information you own and know how it is possible to use it. You need to know what type of data you want to apply in the framework of a given task, and it is a choice between the confirmed (own), as well as indirect or presumed (third-party) data. Data sources can always be combined, establishing a deeper interaction with the target audience, scaling it and increasing ROI. And remember that absolutely all information in our world is true. Only its perception can be false.

 

[eMonetize]

I've been monetizing 3rd party data for 16+ years.

I heavily promote PPL (pay per lead...lead generation) offers, because no credit card / purchase is required to complete an offer. All a user has to do is fill out a form, so conversion rates are typically much higher than offers that require a sale. All while segmenting the opens/clickers and removing the unresponsive users. Essentially converting it from quantity to quality.

I also work with companies that have 1st party data that aren't monetizing it to it's fullest potential and work out a revenue share. Which is how I have always looked at 2nd party data.

The above is really a business model rather than a traffic strategy, which is why so few really know about it (as it's really not mainstream or talked about much) and 1st party data is really all that is talked about.

I actually only generate a small amount of my own 1st party data in comparison.