Understanding the Difference Between Zero, First, Second and Third Party Data

With changing global data privacy regulations, burgeoning customer expectations on how data is handled, and continual advancements in technology, now, more than ever, where you get your data matters. That’s why understanding the difference between the different types of data — zero, first, second, and third party— is critical to plotting out the right strategy to keep your data secure and your customers happy. While first and third-party data are the most commonly discussed, it’s also important to understand the value and benefits of zero and second-party data.

While third party data has comprised the majority of the data that marketers and analysts work with (because it was easy and readily available), the evolution of data privacy regulations and the rigors of crafting personalized customer experiences are elevating the need for first party data.

Understanding the Different Data Types

This table provides an overview of the different data types, how they are used, and examples of each.

Market Forces Impacting Customer Data

Let’s first take a look at the market forces driving the use and availability of different data types

Zero Party Data, though limited, is still important.

Zero party data is very straightforward. Since consumers are sharing this data intentionally and with consent, there is less concern about violating consumer data protections and establishes trust between a consumer and a business. The critical element of zero party data is that it contains data a consumer has voluntarily provided versus cookies which contain consumer data not necessarily provided with consent. This makes the data valuable to marketers and since it’s given voluntarily, zero party data is more likely to be accurate. The downside is the data is limited – often just names and email addresses. The upside is that zero party data is highly trusted and creates the most accurate personalized customer experiences.

First Party Data is most important.

With the looming demise of third party cookies, businesses need to get comfortable relying on first party data to drive their marketing and customer experience strategies. First party data gives you insight into how consumers are interacting with your brand and can therefore be used to enrich customer profiles and build audiences. First party data is considered the most important data type since it objectively shows customer interactions with your brand and is collected through customer consent, be it through engagement with your website, mobile applications, social media profiles, purchase transactions, or any other event when a customer directly interacts with your organization.

Second Party Data is gaining importance and traction.

With the deprecation of third party cookies, second party data is growing in importance as well. Second party data is shared between companies that have a trusted partnership with one another. Second party data is more useful than third party data because it is less risky. And since it is shared between trusted partners, it’s easier to audit the lineage of the data.

Third Party Data is quickly becoming second class.

Third party data is less than ideal to meet the twin demands of stringent data privacy regulations and consumer expectations of a highly personalized and trusted customer experience. It can be risky and error prone, and for companies that rely on it, that data will be harder to come by and work with in the future as Google and other web browsers are sunsetting their support of third party cookies. The CCPA defines the structure and handling of third party data to ensure that it is anonymous and never “de-aggregated,” making it more arduous and expensive to manage.

The Benefits of a First Party Data Strategy

Switching to a first party data strategy isn’t swapping out one set of data for another. It’s complementing your existing approach with richer and more strategically-aligned data that maps to your organization’s revenue goals. Building a first party data strategy requires a robust yet adaptable customer data supply chain to move from collection to unification to activation.

Turning to a first party data strategy unlocks a host of use cases that can help you unlock long-promised business goals like digital transformation.

Benefit 1: Scalable Customer Acquisition

Collecting first party data is the first step— an email address or behavioral data— but getting them to become customers is another hurdle. As consumers bounce between touchpoints, companies need to be able to react across channels in real-time. By integrating all of your data sources into a vendor-neutral customer data supply chain, you’re better able to analyze and engage individual users’ actions.

Benefit 2: Real-Time Insights and Activation

First party data is great, but there is so much data in so many places that generating high-quality insights can be slow and laborious without the right strategy in place. With a real-time, vendor-neutral customer data supply chain, you can reduce the time-to-insights needed to generate revenue. If you can identify and engage consumers from the first moment instead of seven days later, then you’ve got a much better shot at striking while the proverbial iron is hot.

Benefit 3: Govern Data Use According to Customer Consent

One of the inherent challenges of third party data is managing the complexity of consent and various overlapping regulations. The same goes for first-party data, though you’ve cut out the middleman (which is very helpful). When consent is captured on your website (via those ever-present banners), the opt-ins and opt-outs must be tied to a profile and acted upon. Because there are a variety of things to opt-in or opt-out of, managing what data needs to be shut down and what data can continue to be collected gets tricky. With a Customer Data Platform (CDP) linking consent data to the customer profile (which is tied to all of your data sources) the labor involved with complying with regulatory privacy legislation is drastically reduced, making data auditing and traceability scalable.

How Tealium Helps You Wrangle All of Your Data

Tealium helps you maximize your data collection needs through our products Tealium iQ and EventStream.  Together they form the Event Data Framework that is the basis for the larger 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 that the loss of third party cookies and browser restrictions resulted in.

We Work With All yYur Data Sources – In Real-Time

  • Client-side (tag-based) and server-side (API-based) data collection in a single platform for richer customer data
  • True real-time (we are talking milliseconds) collection, standardization and delivery
  • With Tealium’s flexible architecture you can mitigate risk and reliance on third party data by building a first party data foundation

 Data Accuracy and Quality

  • Filter and monitor event data streams in real time
  • Augment and monitor data quality as data flows into the system
  • Configurable deterministic identity resolution

1,300+ Turnkey Integrations

  • End-to-end customer data collection and activation
  • Marketer-friendly, no-code integration workflow
  • 1300+ integration marketplace including deep server-side integrations with the world’s largest media partners like Facebook

Privacy and Security

  • Governance & Automation  – Tealium’s data collection technologies collect the consumer datasets alongside their privacy preferences, in real time, on any type of devices.

Consent Management – Easily collect and enforce privacy preferences with Tealium’s built-in consent and privacy manager or integrations with your preferred consent management platform.