When First-Party Data Isn’t Enough: Reasons to Look Elsewhere

Businesses go to great lengths to understand their customers, and for good reason. While first-party data can provide valuable insights, it isn’t always enough.

We look at first, second, and third-party data, with the pros and cons for each; then explain why modern organizations must use a blended approach where data sources are concerned.

There’s also a new kid on the block: zero-party data. Don’t worry; we’ll cover this too.

What is first-party data?

First-party data is defined as data that is collected directly from a company’s customers, website visitors, or mobile app users. It’s collected and owned exclusively by the company that gathers it.

First-party data examples

1. Email addresses collected through a subscription form
2. Phone numbers collected through a customer contact form
3. Website engagement metrics
4. Purchase history from an ecommerce store
5. Demographic information from an in-store survey
6. Customer feedback from a loyalty program
7. Social media engagement data
8. Referral data from an affiliate program
9. Product usage data from an app
10. Location data collected through a mobile app

Pros and cons of first-party data

Pros of first-party data	Cons of first-party data
You own the data and are in complete control of it.	It can be expensive to collect and maintain.
Useful for the optimization of campaigns and increasing conversions.	Requires significant infrastructure to store and manage information as part of a first-party data strategy.
Use it to gain a better understanding of your customers and target them with personalized messages.	Incomplete or inaccurate information can present itself in the data set.
Complete visibility into the data and how it is being used.	Difficult to interpret the data and draw meaningful conclusions.
Helps you gain insights into customer behavior and trends.	Challenging to keep up with changes in consumer behavior.

What is second-party data?

Second-party data is shared between two parties who have an existing relationship. It’s typically shared in exchange for a service or other value.

Second-party data examples

1. Website user-generated content
2. Social media posts
3. Aggregated reviews
4. Location data
5. Purchasing transactions
6. Demographic data
7. Third-party advertising data
8. Loyalty program data
9. Retailers’ inventory data
10. Online search trends

Pros and cons of second-party data

Pros of second-party data	Cons of second-party data
Can provide access to valuable data unavailable through other sources.	Often more expensive than other forms of data.
Sourced from trusted partners and is more likely to be accurate.	Not always available in the quantities or formats desired.
As data is shared mutually between closed parties, it’s not freely available to your rivals.	A challenge to determine the accuracy or reliability of the data.
Provides detailed insights into customer behavior.	Can be difficult to integrate with existing systems and keep up with changes in partner data sources.

What is third-party data?

Third-party data is collected by an outside entity and sold to companies for marketing and advertising purposes. It’s often used to target ads and can be collected from various sources, including online surveys and public records.

Third-party data examples

1. Online retail data
2. Weather data
3. Social media data
4. Location data
5. Demographic data
6. Audience segmentation data
7. Financial data
8. Mobile app usage data
9. Advertising data
10. Marketplace data

Pros and cons of third-party data

Pros of third-party data	Cons of third-party data
Often cheaper than first or second-party data.	Some sources of data are outdated and not reflective of current consumer behavior.
Usually available in large quantities in various formats.	Determining the accuracy or reliability of the data isn’t always easy.
Useful to gain insights into consumer behavior and market trends.	Integration with existing systems can sometimes be complex.
Helpful if you need to target audiences with precision.	It can be challenging to keep up with changes in third-party data sources.

What is zero-party data?

Zero-party data is intentionally and proactively shared by customers with companies in exchange for value. It’s usually obtained via opt-in surveys, quizzes, and social media posts and can be used to personalize and enhance customer experiences.

Zero-party data examples

1. Social media posts
2. Website analytics
3. Search engine queries
4. User survey responses
5. Customer support tickets
6. Browser cookies
7. App usage statistics
8. Video streaming records
9. Payment transaction records
10. GPS location data

Pros and cons of zero-party data

Pros of zero-party data	Cons of zero-party data
Highly accurate and reliable as it is actively gathered from customers.	Can be difficult and expensive to collect.
It is more current and up-to-date than most other data sources at the point it is obtained.	May not be available in the quantities or formats desired.
Helpful for building detailed profiles of consumers.	Difficult to interpret the data and draw meaningful conclusions.
Can be used to increase loyalty and engagement based on known consumer interests.	Customers must be willing to share their data, and privacy concerns can be an issue.
Enables better personalization, both in marketing and product development.	Doesn’t allow you to keep up with changes in customer behavior.

First-party data vs. second-party data vs. third-party data

First-party data is often the most valuable, as it’s company-specific and useful to draw insights into customer behaviors and preferences. It’s also data your rivals won’t have. However, second-party data comes into play for companies with limited access to their own customer data, and need additional insights into target customer segments. If you want to enter a new market or even start a new business, you might not have relevant internal data sets to use, and creating a first-party data strategy isn’t feasible or realistic.

Let’s say you want to gain insights into consumers’ behavior and preferences, first-party data would likely be the best option. Alternatively, if you want to understand the competitive landscape, second or third-party data could be the better choice. Ultimately, the best data for a company will depend on its individual needs and goals.

For a comprehensive view of a market, a mix of both first-party and third-party data is the best approach. By combining both types of data, you get a detailed view that accounts for your own customer data, along with key market intel in tandem.

First-party data vs. zero-party data

First-party data is useful for those with access to customer data and who need to understand their customers, preferences and behaviors better. Zero-party data is a relatively new type of data that’s best for companies that need to collect more detailed, permission-based customer data and gain deeper insights into customer behavior, preferences, behaviors, and intentions.

First-party data is just one piece of the data puzzle.

First-party data is important, and while it does provide valuable insights into existing customers, it is often limited in scope and accuracy.

Using a comprehensive range of data sources allows businesses to gain a complete understanding of their customers and the marketplace. Additionally, by using a mix of first, second, third, and zero-party data, businesses can ensure that their strategies and data-driven decisions are independent of any single data source.

Having overtaken oil, data is now considered the world’s most valued resource. But just like oil, data is of no use until after it’s been mined and handled (aka analyzed) correctly.

Information is the oil of the 21st century, and analytics is the combustion engine.” - Peter Sondergaard, Senior Vice President and Global Head of Research at Gartner, Inc. Tweet this

How Similarweb can help

Similarweb data provides a one-source-fits-all solution for any organization interested in learning more about its market, consumers, and competitors. Making it easy to turn data into actionable insights.

Whether you want to understand customers or a market more deeply, Similarweb Research Intelligence analyzes billions of digital signals daily. Customers get an unparalleled perspective of many combined data sources and types that tells a story over time and delivers insights that help organizations discover and learn about a market, its customers, and competitors.

1. Website traffic and engagement
2. Market segmentation
3. Traffic channel analysis
4. Market performance data
5. Market share and size
6. Industry analysis
7. Market trend data
8. App usage and engagement statistics
9. Audience demographics
10. Page-level performance insights

From early trend detection to measuring brand strength; for market sizing, and segmentation, to simply understanding and learning from the true actions and behaviors of people in a market, Similarweb’s data stands tall.

It’s all about our data

We take a proactive approach to data diversification to ensure data inputs remain resilient and robust. Our unique blend of data signals delivers a level of digital agility, unlike any other business in our market.

We collect billions of digital signals across various platforms and group these into four distinct sources, each of which plays a key role in measuring the digital world. With mobile app intelligence included, we cover the complete digital ecosystem.

• Direct measurement (first-party & zero-party data)

Millions of websites and apps choose to share their first-party data analytics (e.g., Google Analytics) with us. Similarweb makes it easy to connect Google Analytics to the platform. 

• Contributory network (second & third-party data)

We manage a suite of consumer products and aggregate, anonymous traffic device data at both a site and app level. 

• Public data extraction (third-party data)

Like search engines index the web, we use advanced algorithmic engines to capture and index public data from billions of websites and apps. 

• Partnerships (second-party data)

We partner with a global network of organizations that capture digital signals to help us understand how the digital world behaves.  

First-party data – summing it up

First-party data is valuable to any organization that has it. Making it work for you involves creating a first-party data strategy, which includes a tech stack and regular analysis. But even then, it only gives you a very small piece of the pie to review.

Similarweb data offers all the pros and none of the cons. For a complete picture, unlimited by first-party data constraints, partnering with Similarweb gives you an unbiased view of any market, audience, or company–fast.

The difference is our data: read more about Similarweb’s unique data methodology

FAQs

What is first-party data?

First-party data is information collected directly from a business’s customers, such as website visits, contact forms, customer surveys, loyalty programs, and transactional data.

How is first-party data collected?

First-party data is collected through various methods, such as a business’s website, customer surveys, loyalty programs, contact forms, and transactional data.

What are the benefits of using first-party data?

The benefits of using a first-party data strategy include gaining insight into customer behavior, increasing customer engagement, and improving the accuracy of targeting and personalization.

What does a first-party data strategy involve?

The five steps for creating a 1st party data strategy include: 1. Define the plan according to consumer objectives. 2. Offer something of value in exchange for data. 3. Utilize technology to manage the data. 4. Testing and review to establish activation points. 5. Refine processes and adapt as required.

What types of organizations use first-party data?

Organizations such as ecommerce stores, brick-and-mortar stores, media and entertainment companies, marketing firms, and software companies use first-party data.

How is first-party data used?

First-party data is used to gain insight into customer behavior, increase customer engagement, and improve the accuracy of targeting and personalization.

What are the limitations of using first-party data?

The limitations of using third-party data include incomplete data sets, data accuracy issues, data privacy concerns, and difficulty integrating data from multiple sources.