What is 0, 1st, 2nd and 3rd party data?
In a soon-to-be post-cookie world, third-party data is on the way out. But that’s not the only reason for its demise. The customer journey is no longer transactional. Instead, it’s increasingly marked by an expectation for personalization and respect for user privacy, meaning priorities around data collection are changing. In other words, first party data is becoming an indispensable resource for driving effective data capture strategies. This blog post takes you back to the basics, walking you through all the different types of data, as well as outlining why zero and first party data are the gold standard of data collection.
What is 0 party data?
‘Zero party data’ or ‘explicit data’, a term coined by Forrester Research, is data that a customer proactively or deliberately shares with you. The collection of zero-party data rests on ‘self-reporting’, where the customer dictates exactly how a brand can interact with them. Zero-party data is a highly reliable source for mobilising hyper-personalized subscription funnels and advertising. In addition, because zero-party data is entirely elective, users are empowered with a choice about what information (and when) they share with you.
Examples include a customer’s individual account preferences or configurations, as well as information collected through quizzes and surveys.
What is 1st party data?
First-party data is information about your audience’s behaviours and interactions with your site that is collected directly. It includes minute details such as a user’s clicks, where they hover, how they scroll, how much active time they spend, the context of their session, and the depth of their engagement. These insights are highly accurate and help you to profile individual users effectively.
Examples of first-party data include user emails, phone numbers, and their purchase history.
What is the difference between 0 and 1st party data?
You may be finding it difficult to distinguish between 0 and 1st party data. That’s because there is only a very subtle difference: first-party data is passively collected, whilst zero-party data is actively received. Both, however, are data that is exchanged directly from user to publisher. First-party data is automatically collected by publishers about any visitor to their site, whilst zero-party data is predicated on the consent and involvement of the user in question.
Given the extent of the similarity, many would consider zero-party data a subcategory of first-party data.
What is 2nd party data
Second-party data is data that you purchase from a trusted partner. It is similar to first-party data in that it is information gathered directly from the users. The only difference is that it is collected by an intermediary, but reliable party. Purchase of second-party data can be equated to an ‘exchange of first-party data’. Though you know and trust the provenance of the data, the purchase of second-party data does not give you exclusive rights to it.
Website activity, social media profiles, customer feedback, customer surveys, and purchase history are all examples of second-party data.
What is 3rd party data
Third-party data is data you purchase from a third-party source with whom you have no relationship. Generally, it is purchased from aggregators who collate large data sets from a diverse range of sources. Third-party is therefore not the most accurate nor reliable. In addition, with the gradual phase-out of third-party cookies, third-party data is also nearing its demise.
Demographic data such as income, age, and education, are all examples of third party data.
1st vs 3rd party data?
First party data is collected directly from users on your own digital ‘territory’, be that your website or app. By contrast, third party data is collated by a separate entity, usually a ‘data aggregator’, from a number of different sources and then available for purchase.
Whilst you alone own any first-party data you collect, third-party data is available to anyone and therefore are not ‘unique insights’.
Which type of data is the most important?
In a landscape where data privacy is the buzzword of the moment and evermore vital, publishers should be thinking about shifting their focus to zero and first party data. The so-called third-party ‘cookie-pocalypse’ marks a simultaneous “privacy milestone for website users” and huge potential damage to publishers’ revenue if they don’t have an alternative in place. Zero and first-party data are not only reasonable alternatives but surpass both second and third-party data across a number of factors:
High accuracy & reliability
Since zero and first-party data are collected directly from your specific audience, they are highly reliable and accurate. These trustworthy insights into your readerships’ behaviours, preferences, and interactions with your content are high-value assets for shaping content strategies and subscription funnel. Publishers no longer have to, or should be, inferring or extrapolating their readers’ intentions or desires.
Cost-effective
Unlike second and third-party data, you don’t need to pay to acquire zero and first-party data. You can collect what you need without paying an intermediary. In addition, you’re able to dictate what kind of data you collect, explicitly targeting information that will help you enhance your content offering, refine your digital strategy, and maximise conversions.
Hyper-personalisation
According to Accenture’s Interactive Personalisation Pulse Check, consumer expectations for personalised experiences are outpacing businesses, with 91% of those surveyed more likely to shop with brands who recognise, remember and provide them with relevant offers and recommendations. Luckily, zero and first-party data are the key to success when it comes to personalising user experiences. Drawing information straight from the source, publishers are able to leverage these insights to create truly personalised customer interactions and subscription journeys.
Transparent collection
With rising awareness around data collection and privacy, the value of transparency cannot be understated. Users are becoming more protective over when they share their data and with whom. In fact, of the 27% of consumers surveyed by Accenture that said a brand experience had been too personal or invasive, two-thirds stated that it was because the brand had information about them that they didn’t share knowingly or directly. Therefore, it is imperative that publishers integrate respect for their consumers into their data collection strategy. Zero and first-party data are inherently more respectful because they are predicated on the user’s consent.
Build a relationship with each reader
The collection of first-party data constitutes a genuine value exchange that is of mutual benefit. By electing to share personal data with you, your reader facilitates an enhanced and bespoke experience with your content, helping to improve your overall relationship with them.
How can publishers leverage data?
To harness the power of data, publishers need to take a proactive approach to data collection. Direct data collection is not a transaction, but rather an open and value-rich exchange that should aim to enhance a user’s relationship with a publisher’s content, resulting in maximum conversion rates and CLV for the publisher, and a wholly satisfactory experience for the reader.
Tracking should no longer be from afar, but rather up close and personal with the direct participation of your audience. In a post-cookie world, it’s clear that digital publishers have no choice but to invest in hyper-personalised experiences powered by first party data.