In the programmatic advertising space, we often throw around terms that are foreign or unfamiliar to the layman. For example, you’ve probably heard advertisers and publishers referring to 1st party, 2nd party and 3rd party data.
If you don’t understand what those terms mean, this post is for you. I am going to outline exactly what those people are referring to in a simple way.
Let’s start with 1st Party Data.
1st party data is, quite simply, data you capture based on the actions someone makes when interacting with your business. This could be a user filling out a sign up form on your website – i.e. name, address, phone number; it could be the online and offline purchasing transactions your customers make – i.e. what types of products or services they purchased from you; or it could be as simple as gathering information about how users interacted with your website – i.e. how they arrived at your site, what pages they went to, how long they spent on those pages, etc.
We can use this type of data for remarketing. For example, when a user leaves your site without making the action you intended them to, we would advertise to them using a tactic known as Site Retargeting.
For Site Retargeting, you add a piece of code to your website, sometimes referred to as a pixel. Every time a new visitor comes to your site, a small file called a cookie is downloaded onto their computer, mobile phone, or tablet. Cookies let us identify someone who has visited your site wherever they go on the web so we can serve ads to these users in a different context online and be confident that your ads are only served to those people who have previously visited your site.
Here are just a few other examples of ways that we can use 1st party data:
Social retargeting – Social sites like Facebook and Twitter allow you to retarget people from your site in a social context. Both platforms display your retargeting ads as native advertising, so it can be very valuable in reaching your audience in the proper context.
Video advertising – We can use 1st party data to show video ads to your audience, which can be an incredible conversion tool. Tying 1st party data into your video strategy can help bring audience members who left your site back into the sales funnel.
You can also buy 1st party data from websites in order to market to those audiences.
When you purchase audiences on sites, CRM retargeting lists, site retargeting lists, etc., this is most commonly referred to as 2nd party data. Essentially it means utilizing someone else’s 1st party data for your own marketing. For instance, if you wanted to be able to target people who read a specific publication, you could buy that publication’s 1st party data to be able to market to those people in a different online context.
3rd party data is similar to second party data, but without the direct relationship.
3rd party data is good for demographic, behavioral, and contextual targeting. It is also a good way to ensure that you are reaching real people in an online context. The main benefit of using 3rd party data is the incredible options that you have access to. There are a number of different companies that provide this type of data – Acxiom, Bluekai, Lotame, Datalogix, Experian, TruSignal, Alliant, IXI and comScore to name a few.
So, how do these companies gather 3rd party data?
It’s a bit complicated.
This is data compiled by DMPs and data aggregators – online and offline – and from other websites that sell data to marketers. Say one publication has information about a user and they have identified that user in their system as “User ABC”. Well, another website has been aggregating information about that user as well, and they have identified that user as “User XYZ” based on actions they made in their environment. Data aggregators cross-reference this information to find correlation between these fragmented pieces of data and they put them together to give a viewpoint on this person based on known online and offline actions.
Being able to utilize 1st, 2nd, and 3rd party data from many different touch-points is extremely valuable to online marketers. If you can have access to online and offline behavior, you can tell a much more intricate story about that user – and in turn, market to them more intelligently and efficiently. That is essentially the programmatic mantra – show the right ad to the right person in the right context.