First‑Party vs. Third‑Party Data: What's the Difference?

What is first-party data?

First-party data refers to information a company collects directly from its audience, such as customers, site visitors, and social media followers. This information includes purchase history, website interactions, email engagement, and demographics. It also encompasses user preferences, subscription details, and customer survey or support interaction feedback.

As an example, consider a company tracking a customer's purchase history to recommend similar products or a media site analyzing which articles a user reads to suggest relevant content. Unlike second party and third-party data, which come from external sources or data providers, first-party data is gathered straight from the source. This direct collection ensures its accuracy and relevance.

As you learn how to harness first party data, you gain valuable insights into consumer behavior and preferences, helping your business create more personalized and effective marketing strategies. Additionally, first-party data forms the foundation of customer data platforms (CDPs), which help organize and analyze your information to enhance user experiences.

Third-party data refers to information collected by entities that don't have a direct relationship with the consumers to whom the information belongs. This data is aggregated from various sources by third-party data providers and is then sold or shared with other companies. Third-party data often includes demographic details, behavioral information, and broad consumer trends gathered from websites, social media platforms, and other digital interactions.

For example, a third-party data provider might collect and sell data about consumers' online shopping habits, such as the types of products they frequently search for or purchase. Also, consider a data provider compiling information about users' interests based on their social media activity, which businesses can use to tailor their marketing campaigns.

Additionally, third-party data can enhance your customer data platform by supporting your first-party data. This combined approach ultimately helps your business make more data-informed decisions. However, relying solely on third-party data can be less accurate and relevant than using first-party or second-party data.

First-party data and third-party data represent two distinct approaches to collecting consumer information. Let’s explore how these types of data are gathered to effectively target and engage your audience based on reliable insights.

How first-party data is collected

First-party data is collected directly from your audience through various touchpoints and interactions. Here are some common methods to collect first-party data:

• Website activity: Monitor user activities on your website, such as pages visited, products viewed, and items purchased.
• Email engagement: Track data based on open rates, click-through rates, and responses to email campaigns.
• Customer surveys and feedback forms: Capture explicit consumer data by asking customers directly about their preferences and satisfaction levels.
• Social media interactions: Collect data from likes, comments, and shares on your social media posts.
• Purchase history: Record detailed information on what customers buy, how often, and in what quantities.

Implementing a robust first-party data strategy involves integrating this information into your CDP or a data management platform (DMP), which helps organize and analyze the collected data. By focusing on how you gather first-party data, you ensure the information is trustworthy and reflects the behaviors and preferences of your audience, enhancing your overall strategy.

How third-party data is collected

Third-party data providers collect consumer information through a variety of sources, such as:

• Online activities: Data is gathered from internet browsing behaviors, including website visits, search queries, and content interactions. This helps build a profile of interests and preferences.
• Purchasing behaviors: Information about what consumers buy, how frequently they make purchases, and their spending habits is collected from retail transactions, e-commerce platforms, and loyalty programs.
• Social media engagements: Data from social networks includes likes, shares, comments, and profiles, offering insights into social preferences, affiliations, and activities.
• Public records: Information sourced from government records, demographic databases, and publicly available directories provides details such as addresses, income levels, and marital status, enriching consumer profiles with demographic and socioeconomic data.

These sources collectively enable third-party data providers to compile comprehensive consumer profiles that businesses use to refine marketing strategies and personalize customer interactions effectively. Unlike first-party data collected directly from customers or second-party data obtained through partnerships with other companies, third-party data is sourced independently to enrich and expand datasets.

First-party data and third-party data also serve distinct purposes in business strategies, each offering unique advantages based on how they are used. Understanding these benefits can help you further engage with your customers and shape your marketing efforts.

How is first-party data used

First-party data is a valuable asset collected directly from your audience through their interactions with your brand. This data provides unique insights into consumer behaviors, preferences, and interactions, offering your business a direct line to understanding your customers on a personal level.

Businesses primarily use first-party data to enhance customer experiences, refine marketing strategies, and drive personalized engagement. Here’s some further and more specific ways that first-party data is utilized:

• Customer segmentation: Businesses segment their customers based on demographic information, purchase history, and behavioral patterns derived from first-party data.
• Personalized marketing: This data enables tailored and customized marketing campaigns, including personalized ads, to satisfy individual preferences. As such, this improves relevance and engagement.
• Product development: Insights from first-party data inform product development strategies by identifying consumer needs and preferences directly from customer feedback and purchase patterns.
• Improved customer service: Understanding customer preferences and behaviors helps businesses provide better customer service, anticipate needs, and resolve issues proactively.
• Data-driven decisions: First-party data empowers data-driven decision-making across all aspects of business operations, from inventory management to strategic planning.

How is third-party data used

Third-party data plays a crucial role in modern marketing strategies by providing businesses with insights into consumer behaviors and preferences beyond their direct interactions. This data from external providers enriches customer profiles and expands the understanding of target audiences.

Businesses utilize third-party data in several key ways:

• Enhanced audience insights: Third-party data enriches customer profiles by supplementing first-party data with additional demographic, behavioral, and interest-based insights.
• Targeted advertising: Businesses leverage third-party data to create precise customer segments for targeted advertising campaigns. This allows for more effective ad placements and messaging tailored to specific consumer interests.
• Market research: Third-party data aids market research by providing broader insights into industry trends, competitor analysis, and consumer preferences across different demographics.
• Expansion of customer base: By identifying potential customers based on behaviors and characteristics not readily available through first-party data, businesses can expand their customer base and reach new markets.
• Strategic partnerships: Some businesses use third-party data to facilitate partnerships through data exchange or collaboration with other companies, enhancing their market reach and customer engagement strategies.

Incorporating third-party data into your marketing strategies requires careful consideration of data privacy regulations and ethical practices to ensure consumer trust and compliance. When used responsibly, third-party data empowers businesses to refine their marketing efforts, improve customer targeting, and drive growth in competitive markets.

Enhance your marketing with the right type of data

Unlock the full potential of your marketing efforts by leveraging first-party and third-party data. Think about the valuable insights you gain from data collected directly from your customers versus the broader perspective offered by third-party sources. For example, imagine knowing your customers’ preferences intimately through first-party data while expanding your reach with third-party data that identifies new audience segments.

Mailchimp's tools help you harness both types of data effectively. Utilize first-party data to create personalized campaigns and connect deeply with your customers. Tap into third-party data providers to gain broader audience insights and discover new audiences. Mailchimp’s customer journey builder also allows you to tailor interactions based on specific behaviors and preferences, driving engagement and conversion rates.

With the right data sources and Mailchimp’s robust tools, your business can make informed decisions and achieve remarkable growth.