What is Third-Party Data? – Definition
Third-party data (or 3rd-party data) is data that brands purchase from other sources, which were not the original collectors of that data. Third-party data is only used if the brand doesn’t have their own original data, and can be less accurate since it is not taken from a direct source. Data is usually bought from aggregators that pull data from various platforms and websites.
Third-Party Data vs. First-Party & Second-Party Data
First-party data is information collected directly from the source. Any information a company learns directly from their customers, prospects, or anyone associated with their brand is considered first-party data.
Second-party data, as the name suggests, is one step removed from first-party data. Any time a company purchases data from a first-party source, they are buying second-party data. It’s not their own customer data, but it is only one step removed from the source.
As you might imagine, first-party data is the most accurate and precise, especially when it comes to audience targeting and segmentation. First-party data is always preferred. Third-party data can be useful in some cases, but it mostly fills the gaps in first- and second-party data rather than acts as the most important source.
Benefits of Third-Party Data for Targeted Advertising
Some companies cannot access enough first-party data to build campaigns around. Whether they are new to the industry or don’t have a product that collects customer data, they must rely on third-party data to run effective campaigns.
When it comes to audience segments, any specificity is better than generalizations. If a company can use third-party data based on real-world behaviors and intent, rather than online browsing, it is much more reliable and will make their marketing efforts more efficient. Find third-party data that relies on shopping habits or location, actions that prove the customer wants to take action on the business goals your company has, rather than just a general interest.
How Third-Party Data Integrates with Location-Based Advertising
The best way to ensure accuracy in third-party data is to integrate it and verify it with other, first-party data sources. For example, GroundTruth customers can combine third-party data with our proprietary Blueprint technology to identify new customers to target.
Another strategy is to leverage first-party location data with third-party data to try to convert some of your competitors’ customers into new customers for your company. The more you know about an audience segment, the more relevant and impactful each of your ads will be.
Challenges of Using Third-Party Data
The biggest challenge with third-party data is the accuracy. Often, companies don’t know where the data comes from, nor do they know the verification and data-cleaning process it went through before they got it.
Companies should stay up-to-date with data privacy regulations, customer privacy concerns, and data verification models they can use to verify any third-party data they use in their advertising.