What is First Party Data & How to use it

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First party data is the data that your organization collects directly from the customer. Marketers collect the first party data to understand their customers better. This is considered to be the companies most valuable data because they collect it directly rather than relying on an outside party in which the original of the data can be questioned. 

First party data is the information that companies collect directly from the user. This information can be collected using a mix of online and offline channels like mobile app, websites, social, or surveys.

First Party Data Examples:

The first party data can include the following:

  • Unique visitors & interactions.
  • Demographic data (includes age, gender, income, education, employment, etc).
  • Purchase history
  • Interests
  • Time spend on site
  • more

Using 1st party data allows companies to personalize their experience and advertising efforts. However, a research survey conducted by programmatic agency Mightyfive found that while advertisers crave for first-party data, they often struggle with it.  The research found that marketers realize the opportunity but aren’t always executing. What’s more, they uncovered data-related problems marketers are facing, how they employ data in their jobs, how confident they are in their data abilities, and how they plan to budget their data-minded investments going forward.

But nearly 60% of the respondents felt somewhat confident or less about their 1st party data delivering a strong ROI. 

How to collect first party data?

Organizations can collect first party data from different sources like mobile apps, websites, 

social media, SMS, email, surveys, beacons, customer service interactions, CRM systems, point of purchase, and direct mail (using digital data to inform your offline campaigns). 

Companies can also collect first part data using a data management platform. The platform allows you to not only gather data but store it in one centralized platform. The data management platform allows organizations to create audience segments and run personalized campaigns. 

But data management platforms can be a little expensive for companies with smaller budgets. We recommend that you read our article on how much does a DMP cost and whether it is right for your business to learn more.  

What is the value of first party data?

First-party data helps companies with the following benefits.

  • Improve performance/ROI
  • Accuracy and data quality
  • Lends to more precious targeting
  • Improved measurement and attribution

Lends to more precious targeting

To achieve true addressability and targeting efficiency, organizations have to shift away from cookie-based tactics toward strategies that leverage a brand’s own 1st party data to identify real people across devices and channels. Organizations that adopt data-driven marketing are six times more likely to be profitable year-on-year. 1st party data helps marketers enhance accuracy and relevancy, reduce ad waste and, ultimately, drive ROI.

Accuracy and data quality

First party data delivers the most accurate intelligence and inspires new ways to tailor messaging and shape the customer experience. It is also more accurate than other sources of data, considering the company collects it directly from the audience. Based on what a brand knows about its customers and their behaviors across touch points, marketers can design unique brand experiences customized to specific interests, preferences, location, purchase history and more.

Improve Performance/ROI

Each customer is represented by multiple individual, anonymous profiles as they engage with a brand offline and online across the web, mobile apps, email, brick-and-mortar stores, call centers, and other touchpoints. Merging these profiles into a single customer view allows marketers to understand what inspires customers to take action across different channels, devices, and platforms.

Improved measurement and attribution

First-party data helps organizations to understand their customers better and to uncover touchpoints that are most important to them. Nearly 58% of marketers agree that 1st party data is a strategic asset that informs their decision making. Insights from 1st party data can be employed to influence media allocations and budgets. Understanding how each point in the customer journey affects conversion provides a more accurate way to analyze attribution and discover how budget shifts affect online engagement and in-store sales.

How is 1st party data different from the 2nd party and 3rd party data?

Before we explain the difference between Second and third-party data, let us set the context.

Second party data is similar to first party data, but it comes from a source other than your audience. This requires you to work with a data provider by building a relationship with them. In most second party data, exchanged there is no middle man involved.

Second party data is a relatively new concept, but it is beneficial if you can find a relevant audience platform.

Third party data is data that you can buy from external sources. These can be aggregators who pay publishers and other data providers to purchase first party data. Various companies provide this service – Lotame Data Exchange, Oracle Blue Kai, MediaMath, etc.

After aggregating this data, the aggregators organize the data based on categories based on industry, interest, audience behavior, and demographic characteristics like age and gender.

Third party data is usually brought and sold programmatically. Third party data is beneficial if you are aiming to reach a large volume and have a broad scope of targeting. The downsides of using third party data are that you don’t know the actual source of the data.

First Party DataSecond Party DataThird Party Data
Primary SourceDirectly from
customers
Trusted partners with
similar data base
From multiple
data sources
Use CaseRe-targeting
existing customers
Targeting data
partners customers
Targeting a completely
new set of customers
Data QualityHighMediumVariable
Targeting ReachExactNarrowBroad
Why is First Party Data important?

With Google announcing that it will phase out third party cookie from Chrome Browsers by 2022. First party data has become even more crucial for organizations. Chrome still makes up 56% of the web browser market as of late 2019. New regulations like the General Data Privacy Regulation (GDPR) and the California Consumer Privacy Act (CCPA) have also led to companies moving away from collecting third party data.

Data privacy and security concerns are among the biggest hurdles faced by marketing when it comes to optimizing advertising performance. 1st party data makes it easier for companies to comply with regulations. Considering users generally agree to process their data when they are making a purchase from your company.

First party data is essential for organizations to deliver a personalized experience to end customers. First party can be used targeting audience based on demography, interest and purchase intentions.

1st party data also allows you to store users’ data and analyze their user’s profiles by integrating it with a data management platform. DMP helps organizations can further enrich the data to fill gaps in the user’s profile. By using DMPs organizations can easily create audience segments and send personalized ads to your customer even if they leave your website. It is a powerful platform to gain knowledge about your users and deliver them a unique brand experience.

Conclusion

There’s no doubt that high-quality data is essential to the success of your organization. Yet with changes to data policies and consumer behavior, the viability, and reliability of your brand’s 1st party data matters more than ever.

Marketers who don’t take advantage of their 1st party data for all it is worth are missing out on significant opportunities to deliver exceptional customer experience. It’s imperative for marketers to do just that because happy customers are everything – after all, it costs six times more to acquire new ones. For today’s marketer, 1st party data should be viewed as the premium fuel for customer retention that drives relationships and sales. 

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