Businesses may choose to collect first-party data on their customers, purchase third-party data, or some combination of the two strategies.
Personalization: first, and perhaps most importantly, first-party data tells you about actual customers. Third-party data sets will give you lots of information, but that information will be very general, rather than specifically describing your true customer base. The quantity of third-party data enables you to spot broad market trends and test whether these trends apply to your business. However, the specificity of first-party data enables you to generate insights that are based on your actual customers.
What is the difference between first and third party data
Simply put, first-party (or 1p) data is information that your business has collected on your customers, while third-party (or 3p) data are large data sets identifying customer trends that your company can purchase for use. These large data sets are created using third-party cookies that collect telemarketing leads for sale behavior across the internet. Although many businesses have relied on third-party data in the past, there’s good reason to move away from third-party data and double-down on first-party data.
First party data can help you confirm or identify in the first place
The characteristics of your target audience—what do your customers have in common? Are there any surprising characteristics that can guide future marketing? Which CU Lists factors predict whether someone will be a good customer or a great customer? How are customers finding you? How are they navigating your website? Relying on third-party data means you miss the opportunity for these personalized insights on your customers and how they are interacting with your business.
Quality: when purchasing third-party data, you will likely have to guess at which characteristics best define your target audience and hope that the data you’ve purchased will give you insights into your customers. You must also trust that the data you’ve purchased is high-quality and accurate. With first-party data, you will know exactly how the data was collected, when it was collected, and why it was collected. Knowing this enables you to accurately evaluate the quality of the data you are using.