What is First-Party Data?

The problem: Third-party data is on its way out. The solution? First-party data — here’s why.

Here, you’ll find:

• How to define first-party data
• The difference between first-, second-, and third-party data
• Why first-party data matters
• Ways to gather this data

Customer experience management company Merkle recently released its 2021 Customer Engagement Report. Over half of the respondents surveyed said their organizations have prioritized digital experiences and/or strategies to collect more first-party data. 

Not only that, but they report that collecting and storing first-party data over the next 6-12 months is a high (58%) or the highest priority (30%) among marketers.

Third-party data is poised to go the way of side parts and skinny jeans — out of style (according to Gen Z, at least). Now, first-party data is expected to reign supreme.

MarTech explains it well:

“​​With the demise of third-party cookies and re-evaluating customer habits post-pandemic, this is the perfect opportunity to close gaps in consumer insights and understand how to build a data strategy to deliver meaningful experiences.”

Let’s dig into facts, best practices, and expert tips for leveraging first-party data successfully.

Third-party cookies are when an independent third party gathers data from a site they don’t own. (Image via Pexels)

What is first-party data?

You’ve likely seen pop-ups on sites you’ve visited online asking you to “accept” cookies in order to keep viewing a page. This is how sites get first-party data. 

First-party data is anonymous information a site gathers about its visitors while they’re on your website or app. 

This data helps the site owner improve user experiences, allowing them to better target their audience. 

First-party data vs. third-party data

Whereas first-party cookies are set and tracked by the particular website itself, third-party cookies are when an independent third party gathers data from a site they don’t own. Third-party data is aggregated by various first-party data sources. 

For example, an e-commerce brand gathering info from Facebook to show you ads with similar products you may like is leveraging third-party data. Brands will usually have to pay for this type of data, though the cost varies. 

The benefits of first-party data

Privacy rules are changing. Some of the biggest names in tech, such as Google and Apple, have recently made changes to their policies when it comes to how people are tracked via their phones and computers. 

Because of these changes, many third-party data options are becoming more limited or going away entirely. The problem with leaning heavily on third-party data is that browsers such as Google’s Chrome and Microsoft Edge have already begun or are planning to limit or block the use of third-party data. 

Google plans to block the use of third-party data in 2023. One of Apple’s most recent updates included a new transparency framework where apps have to request permission before they can track users. 

The good news: While third-party cookies are on their way out, first-party cookies aren’t. 

You can gather this data in a few ways, including:

• Tracking tools
• Hosting contests
• Leveraging lead gen forms
• Creating surveys
• Interviewing clients and/or prospects

Often, all it takes is a small incentive — such as the opportunity to win a gift card — to get someone to complete a survey, enter a contest, or participate in a brief phone call. 

Pro tip: While there may be a cost related to collecting and storing your data, it’s often more affordable than purchasing data from a third party. 

Second-party data can be useful because it can offer a new perspective on your target audience. (Image via Pexels)

How to leverage first-party data

Forbes reports that, because of the “willful relationship and implied or active consent” when it comes to first-party data, this data is often “more accurate, provides better insights, has higher conversion rates and is a priority for maintaining customer relationships.”

One of the most effective ways to use first-party data is for ad personalization. This data is often more accurate than third-party data because it’s coming straight from your users and visitors. Not only that, but it’s unique — meaning it’s not a carbon copy of the data your competitors are gathering. 

This data can enhance your ads by targeting more qualified leads, building brand awareness, and ensuring you’re targeting the right people at the right funnel stage at the right time.

Where second-party data fits in

Second-party data is, no surprise here, the middle ground between first- and third-party data. Whereas third-party data comes from multiple sources, second-party cookies are from a single source.

The upside of second-party data is that you can feel pretty confident in its accuracy, since it’s from a direct, known source. This data also comes at a cost. 

As HubSpot explains, second-party data can be useful because it can offer a new perspective on your target audience — “since it’s coming from another organization, you may uncover trends or patterns that you overlooked in your first party research.”

The takeaway

You know the phrase, “If you want something done right, you’ve got to do it yourself?” It applies here. 

First-party data is reliable. You can use it for everything from retargeting and nurturing to optimizing your client personas. Plus, with third-party cookies being phased out, you won’t have to rely on anyone else to gather the info you need.