In this age of data-driven marketing, the importance of data quality should amaze nobody. Even less surprising, the information that a business can generate on its own generally offers the most relevant and precise data to help inform marketing.
For almost everything in life, quality costs more. First party data offers an exception to that rule. It’s actually more abundant and cheaper to obtain than most other sources of information. Find out why a CPG marketing agency would urge any business to value first party data over other sources of information.
What is First Party Data?
The kinds of first party data available to an organization may depend upon what they collect and the nature of their business activities. Some common examples include consumer demographics and behavior. This can cover everything from location, age, and interests to website visit and purchase history.
First party data comes from these kinds of sources:
- Business websites, social media, and advertising platforms
- CRM and other marketing, sales, or customer service software
- Surveys, focus groups, and market research communities
Why Would a CPG Market Agency Encourage Using First Party Data?
First party data stands out for several reasons.
First party data offers relevant, accurate information.
First, a company’s own customers and prospects generate it. Since the company generates its own information, marketers can ensure its accuracy and most of all, its validity for that type of business. That makes first party data the most accurate and relevant information a business can obtain.
First party data costs less.
Beyond some investment in collecting and analyzing first party data, it comes for free. It breaks the rule that high-quality information must cost more than data of lower quality. Failure to collect and use this information leaves money on the table. This business intelligence can tell businesses how and why their own customers and prospects discover brands, which products they purchase, and what motivates them to return for more.
Less reliance on cookies makes first party data more valuable.
Website cookies refer to small files that allow for tracking, and they’re commonly used by advertising and analytics platforms. Justin Schuh, Chrome’s engineering director, discussed the ways that privacy measures may soon make most tracking cookies obsolete.
For one example, Google announced removing third-party trackers in Chrome within a couple of years. Apple has already announced banning cookies in Safari.
Large tech companies that rely upon tracking people for ads, like Google and Facebook, already have other solutions in development. To avoid totally relying upon the whims and prices of giant advertising platforms or data aggregators, retaining first party data will grow dramatically in importance for individual businesses.
What Other Kinds of Data Do Businesses Use?
Of course, businesses may have a use for other data sources beyond what they can collect on their own. Both second party and third party data may prove useful in certain cases.
Second Party Data
Second party data refers to another organization’s first party data. Some companies choose to maximize the value of their information by selling it. Just like a company’s own first party data, it could come from social media, mobile apps, business sites, surveys, and other sources.
As an example, an online beauty retailer may have done a great job collecting and using their own information to inform marketing campaigns. This retailer still needs to boost revenue to meet business goals, so the company chooses to sell selected information to other retailers. For whatever reasons, they decide that the income they can generate outweighs the chance of giving up a competitive advantage.
Some businesses have not had the opportunity to collect much of their own data. In that way, second party data can offer a bigger picture. While second party data may lack the precise relevance and accuracy of first party data, it can come close. Businesses that lack much first party data may get better results by adding second party data to their analytics.
Third Party Data
A market research company or other aggregator may pull information from multiple sources. In turn, they combine all of this data and offer it as a package for sale. Benefits of buying third party data could include its massive scope and size.
On the other hand, buyers generally don’t get exclusive access to this information, so their competitors will have a chance to purchase the same dataset. Because it comes from multiple sources, it will also lack the precision and relevance of first party data or closely matched second party data.
Buyers can maximize the benefit of this kind of data by combining it with inside information to look for opportunities to uncover new audiences and expand their reach.
Where to Obtain Second Party Data and Third Party Data
Sometimes, businesses can buy external information directly from the source. As an example, A broker called Lotame Private Data Exchange connects buyers and sellers of second party data and third party data. In other cases, a consumer research agency may generate its own data and offer to sell it.
Before purchasing information, marketers should take the time to understand any restrictions on use, collection timeframes, and how the source obtained its data. The broker, seller, or consumer insights agency should offer transparent information about the nature of the datasets they offer.
Maximize the Value of All Marketing Data
Almost every marketer would agree that first party data offers the most value. In light of recent online privacy measures, the benefits of collecting internal data have grown even more acute.
At the same time, second party and third party data can add scale and perspective. It helps to start with an inventory of existing potential sources of first party data to ensure nothing’s wasted. Perhaps it’s time to invest more in analytics, online communities, surveys, and other productive information sources.
After determining their needs, businesses may make informed decisions to collect information that they need to fill in gaps. An experienced CPG marketing agency can assist with evaluating information needs, methods of collecting data, and if needed, sources of external data.