Data Strategy
April 18, 2024
Zero, first, second, and third party data are all terms used to describe different types of customer data that organizations may collect, use, or share. Global privacy regulations and customer expectations continue to shape the way organizations can collect customer data, and what types you are allowed to use for targeted marketing and personalization. It’s important that you understand the difference between these data types as you create a compelling and thoughtful data strategy. This includes knowing what data to prioritize (or de-prioritize), where each type of data can be used, and how to create data governance systems and processes that can be replicated across the organization.
Explaining the Difference Between Zero, First, Second, and Third Party Data Types
Zero Party Data: Zero party data is data that is voluntarily shared by consumers with a company or organization. This type of data is typically collected through surveys, questionnaires, or other forms of direct interaction with the consumer. It is called “zero party” because it is explicitly provided by the consumer, as opposed to being inferred or collected without their knowledge.
First Party Data: First party data is data that a company collects directly from its own customers or users. This data is collected through interactions with the company’s website, app, or other owned channels. First party data can include information about a customer’s behavior, preferences, and demographics.
Second Party Data: Second party data is data that is collected by one company and sold or shared with another company. This data can be valuable because it comes from a trusted source and may be more reliable than other types of data. For example, a retailer may share their customer data with a manufacturer to help them better understand their target audience.
Third Party Data: Third party data is data that is collected by companies that are not directly related to the consumer or the organization that is using the data. This data is often collected from various sources such as cookies, public records, social media, and other online activity. Third party data is usually purchased or licensed from data brokers or other vendors and can be used to supplement an organization’s own data.
The Decreasing Importance of Third Party Data
The use of third party data has been facing increased scrutiny and challenges in recent years. Many technology companies are moving away from third party data, due to the concerns around privacy, accuracy, and regulatory compliance.
How Tech Companies Are Moving Away From Third Party Data
In 2021, Apple announced that it would be making significant changes to its App Tracking Transparency framework, which requires apps to obtain user permission before tracking their activity across other companies’ apps or websites. This move effectively limits the use of third-party data by app developers.
In 2022, Google announced that it will not build or use alternate identifiers to track individuals as they browse the web, and will instead rely on its own privacy-preserving technologies to serve targeted ads. This move will significantly reduce the reliance on third party data for advertising purposes.
Mozilla, the company behind the Firefox web browser, has been a vocal advocate for privacy and has implemented features in its browser that block third party cookies by default. Mozilla has also launched several initiatives, including the Global Privacy Control, to help consumers better protect their privacy online.
And finally, DuckDuckGo, a search engine that emphasizes privacy, has built its business model around not collecting or sharing user data. This means that the company does not rely on third party data for advertising or other purposes.
Customers Have Driven The Move Away From Third Party Data
With the increasing awareness of data privacy and security, many consumers are becoming more concerned about how their data is being collected, shared, and used. Third party data, in particular, is often collected without the consumer’s knowledge or consent, which can raise concerns about privacy.
There are concerns about the accuracy and reliability of third party data, which is often sourced from various vendors and brokers. Without proper validation and verification, there is a risk that this data could be inaccurate or misleading. Additionally, regulatory changes like GDPR and CCPA have made it more difficult for organizations to use third party data, as they must now ensure that they have proper consent or legitimate interest to use such data.
As a result of these concerns, many organizations are turning to alternative data sources, such as first party data or second party data, to supplement marketing and advertising efforts. Additionally, some organizations are investing in new technologies, such as machine learning and artificial intelligence, to help better analyze and make use of their own data.
However, it’s worth noting that third party data is still valuable in some cases, particularly for smaller businesses that may not have access to as much first party data. Organizations that do use third party data should take care to ensure that you are sourcing your data from reputable vendors and taking steps to ensure its accuracy and compliance with relevant regulations.
Why It’s Important to Understand the Difference Between Zero, First, Second, and Third Party Data
Knowing the difference between the types of customer data at your disposal can help your organization make more informed decisions about how you collect, use, and share data. Each type of data has its own unique characteristics and can be used for different purposes.
By understanding the difference between zero, first, second, and third party data, your organization can:
And Of Course, Tealium Can Help
Tealium helps you maximize your data collection needs through our products Telium iQ Tag Management and Tealium EventStream. Together they form the Event Data Framework that is the basis for a comprehensive data collection strategy. When used together, the Event Data Framework will automate consent acquisition and the modern server-side data collection and distribution techniques needed to preserve data fidelity. This helps you overcome challenges presented by the loss of third party cookies and browser restrictions.
For more information on the difference between zero, first, second, and third party data types, check out our CDP Fundamentals Page that breaks it down even further (including a chart!).
