3. What Are 1st-, 2nd-, & 3rd-Party Data?

Critical considerations for engaging with three types of consumer data.

If a critical step toward mobile-marketing expertise is for a brand to bring the mobile device ID into its mix, and another is to onboard the advantages of mobile software development kits (mobile SDKs) to create apps, another foundational element of mobile marketing is a deep understanding of the roles that first-party, second-party, and third-party data can play.

Defining Data: First-Party First

According to Ad Age, first-party data includes consumer purchasing habits and customer interactions through an array of resources including website analytics, in-store beacons, mobile apps, point-of-sale communications, and customer relationship management (CRM) systems.

A mobile marketer can leverage these information streams — all of which represent the most useful and valuable type of data — to reach and target specific customers in anticipation of their future shopping behaviors. This degree of predictive personalization leads to an increased likelihood of conversions.

In every instance, advertisers and publishers must approach the use of first-party data with absolute care. Opt-in and permissions-based engagements with consumers that choose to share their personal data in return for enriched on-device experiences are the only brand-safe — and the only ethical — approach to take.

Second-Party Data: Selection with Caution

There comes a point when mobile brands want to reach audiences about which it has less definitive intelligence (the kind of surety that first-party provides). That’s when second-party data becomes a potential consideration.

In essence, second-party data is another company’s first-party data; the other company can be a publisher, an agency, or an advertiser — possibly from an industry different than the one in which a brand operates — and the intention of having second-party data is to present the brand’s messaging to new audiences of consumers, hoping to win them as new customers.

There are risks that come with second-party data. When partnering with other vendors to trade data, brands must make sure that there is no conflict of interest and, in addition, since second-party data originates as first-party data from another company, the acquiring brand has had no input into how the data is collected and it can claim no control over second-party data quality. It should only be deployed after a brand’s data team has assured it as cleansed, de-duped, and double-checked against fraud and error.

Third-Party Data: With Scale Comes Additional Responsibility

Third-party data acts as a supplement. Data aggregator companies pay publishers and other data owners for their first-party data, amass large data sets and sell this data in bulk. As such, this third-party data is a volume play, whereas second-party data is not always about volume (it can be, but it’s also often a more selective acquisition).

While third-party data can enlarge a mobile brand’s marketing reach, this same volume of customer information is not exclusive to one purchaser and is publicly available to many competitors. Furthermore, it is difficult for a brand to trace the source of third-party data to confirm its reliability. This means third-party data is potentially laden with fraudulent or out-of-date information, necessitating a thorough cleaning and debugging by brands.

Party Mix: How to Frame Approaches to First-, Second-, and Third-Party Data

When diving into the pool of customer data, a mobile brand must first know its marketing agenda. Is the focus on customer acquisition, customer retention, boosting revenue from existing customers, or perhaps some other measurable, definable objective?

The goals of the brand will determine the exact composition of customer data to use.

  • As a general rule, first-party data is always preferable due to its proprietary nature.
  • Second-party data is best thought-of as a post first-party option, a component rather than a focus. Knowing the source and have a selective advantage is helpful, when it comes to second-party data, but it cannot be used without methodical cleansing, de-duping, and anti-fraud/anti-error measures being applied to what is acquired before it’s introduced to the brand’s marketing-data mix.
  •  Third-party data works best when dealt with extremely carefully. As with second-party data, it should be organized by specific categories (industry vertical, audience behaviors, age, gender, etc.). While it can fill in gaps and boost scale, it must always be cleansed, de-duped, and dealt with in conservative ways … scale can be an advantage, but third-party data is not a safety-assured commodity until the brand commits to ensuring its reliability and confirming it to be it fraud and error free.

As brands commit to their marketing strategies, optimizing for performance and scale — and as they partner with trusted data partners — they stand to build a business based on permissions-granted, fraud-free data that give them the best opportunity to create targeted and effective mobile campaigns.

Ideally, mobile marketers should rely on first-party data, always. The second and third tiers are augmentations of the reliable, brand-safe, and permissions-forward nature that first-party data represents.

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