First-Party vs. Second-Party vs. Third-Party Data: What’s the Difference?

For brands to deliver outstanding customer experiences and keep buyers coming back, they need data. In general, more is better than less — when backed by the right analytical approach, large data sets can provide insights about current consumer preferences and emerging purchase trends.

However, not all data is created equal. Rather, data collected by companies is divided into three broad types: first-party versus second-party versus third-party data.

Explore what defines each of these data types, how companies commonly use each, and what sets them apart. Ready? Let’s party.

What Is First-Party Data?

First-party data is data collected directly from customers, including first-time buyers, long-time customers, and members of your target audience who engage with your brand.

Direct Contact

There are several common ways to collect this type of data. First is direct contact, which includes everything from customer surveys to emails to social media and in-person conversations.
For example, you might send out a survey to all current customers asking about their most recent experience with your brand, then use this first-party data to create new engagement strategies.

Tracking Pixels

The second way to get your hands on first-party data is by tracking pixels that automatically collect information from websites, product detail pages (PDPs), and social media profiles.

Here’s an example: A potential customer visits your website and clicks through to a product page. They stay on this page for five minutes, interacting with both descriptions and images of your product, and then they leave.

Automatic first-party data collection records any actions taken by the user, along with the total amount of time they spend on your page.

Consent Is Essential

It’s worth noting, though, that because first-party data comes directly from customers, it’s critical to obtain consent before capturing and using any of this information.

If companies don’t have consent, they may run afoul of compliance regulations, such as the General Data Protection Regulation (GDPR) in the European Union or the California Consumer Privacy Act (CCPA) in the United States.

Security Measures Matter

Brands must also ensure that they securely collect and store first-party data. While PWC notes that 82% of Americans are willing to share some type of personal data for a better customer experience, and the Data Protection Network reports that 46% of U.K. buyers will share data if there’s a clear benefit for doing so, it doesn’t take much to break consumer trust.

As CDP points out, 79% of business-to-consumer (B2C) companies believe that customers trust their brand, but just 52% of customers agree. In practice, this makes transparent data collection practices essential for first-party success.

What Is Second-Party Data?

Second-party data is information you obtain from a trusted partner that sells its first-party information to your brand. While this data is similar to first-party data — it may include customer surveys, social media activity, and website activity — it’s considered second-party because your brand didn’t directly collect and curate the information.

Carefully Vet Data Sources

Using second-party data is a great way to augment existing first-party databases. The caveat? Every company has its own approach to data collection and storage, so it’s worthwhile for brands to ask for data specifics before buying any second-party sources.

What Is Third-Party Data?

You can collect third-party data from businesses that have no direct link to your brand, such as data aggregation firms or large companies like Nielsen, Google, or Amazon. While third-party data often includes surveys, interviews, and feedback forms, it’s not specifically related to your audience.

Instead, it’s data from random sample sizes and demographics, which in turn provides a broader market context.

Third-Party Data May Lack Relevance or Consent

As a result, however, there’s no guarantee that third-party data will be useful to your company. It’s also possible that aggregators might have gathered this kind of data without customer consent or awareness of how brands might use the information.

Wherever possible, look for third-party data providers that offer some measure of assurance that they collected the data ethically.

First-Party vs. Second-Party vs. Third-Party Data: What’s the Difference Between These Data Types?

First-party data vs. second-party data vs. third-party data: Which one is right for your brand? They can all help you build better marketing and sales campaigns and improve the customer experience. But there are significant differences between these three types that you should keep in mind.

Specificity Varies Between Data Types

The first is specificity. Because first-party data comes directly from your target audience, you can prioritize the collection and analysis of data that is relevant to business goals.

For example, if you’re looking to improve customer service, you can use a combination of historical service data and new survey data to identify opportunities for improvement.

Second- and third-party data don’t offer the same level of specificity. While some of the second-party data you collect might be relevant, for example, other pieces of data may not matter for current campaigns. Third-party data, meanwhile, is often anonymized before companies sell it, making it great for broad trend tracking but less useful for customer-specific campaigns.

Cost Varies Between Data Types

In addition, both second- and third-party data typically cost money to purchase. As a result, brands are best served by asking for a data preview before making any big purchases. And they should always consider a vendor’s regulatory compliance process before partnering with them.

Compliance Must Be Considered

Compliance should always be top of mind. When it comes to first-party data, brands can ensure they have consent documentation and opt-out options in place before collecting data.

For second- and third-party sources, however, brands must rely on assurances by partners or providers that they’ve done the work to ensure compliance. If this isn’t the case, brands could face legal challenges for unauthorized data use.

Delivering on Data Potential

While first-party data offers the biggest benefit for brands, all three data types can help build better campaigns and create more personalized experiences.

When it comes to remembering the difference, think of it like this: First-party data provides content — the who, what, when, and where of customer behavior. Second-party data offers additional connections that help companies expand current audiences and find new customers. Finally, third-party data provides a broader context that helps brands stay competitive.