This post was first published on LinkedIn by Ankush Gupta.
In online advertising, we often use audience data segments or data lists to reach our prospective customers. Yet, it is not uncommon to find many experienced marketers confuse how the data lists work. So, I wanted to use this chance to elaborate on what is the difference between “1st, 2nd and 3rd Party” Data Lists and when / how would you ideally use them for targeting purposes in online advertising.
Before we get into definitions, it is important to understand that there are 2 important aspects to data lists: data collection and data organization or classification.
- data collection: it refers to “how & from where” data is collected
- data organization: it refers to “how” is data organized into segments
First Party Data
First-Party (1st-Party) Data is YOUR data. This can include data from behaviors, actions or interests demonstrated across your website(s); or data you have in your CRM; or cross-platform data from mobile web or apps. Basically, any data owned by the advertiser and directly collected from the customer, is defined as the First-Party Data.
Data Owner: Advertiser (internal)
Attributes: High in Quality, Low in Quantity
Control: Advertiser has full control over data collection & data organization
Points to note: This is the most commonly used form of data-targeting for “retargeting campaigns”. There are many ways of organizing this data in audience lists (for example: by demographic, geographic, behaviors, etc.), however, irrespective of how the data is organized but as long as you are using YOUR data – it would be called as First-Party Data.
Second Party Data
Second-Party (2nd-Party) Data can be simply defined as someone else’s 1st-Party Data [ref: econsultancy]. This is a relatively new type of data-targeting, where a company is buying/trading the 1st-Party Data of another company. In theory, it enables brands to exchange data with each other in situations where it benefits both parties. For example: a “hotel website” may choose to inter-share the data with an “airline website” to mutually benefit from each other’s data sets. In this scenario, the 1st-Party Data from one company would be called as Second-Party Data for the another.
Data Owner: Advertiser’s Partner (direct relationship)
Attributes: Medium in Quality, Medium in Quantity.
Control: Data collection is largely dependent on what advertiser’s partner allows, meanwhile, an advertiser has some control over data organization.
Points to note: This tactic can help in expanding the reach of your retargeting campaigns, so it’s sometimes called as “quasi-retargeting” – as it allows you to retarget your potential customers who have engaged with your partner. This would be a very good tactic if you have an existing relationship with an advertiser that receives high proportion of overlapping customer audience.
3rd Party Data
Third-Party (3rd-Party) Data is any data collected & organized by a vendor that has no direct relationship with you (For example: Google, Acxiom, BlueKai, Lotame, etc.). The data is collected by an external vendor and made available to the advertiser for freeor on a pay-per-use basis in the form of audience segments or data lists.
Data Owner: External Vendor (no relationship)
Attributes: Quality can vary, High in Quantity.
Control: Advertiser has no control over data collection & little control over data organization (pre-defined audience segments).
Points to note: This is the most commonly used form of data-targeting for “prospecting campaigns”. Every time you’re looking to reach new users based on matching audience-profiles you would be using, 3rd-Party Data.
You may notice that I’ve included “Google” in the above list of external vendors, this is because interest audiences (affinity & in-market) made available through AdWords GDN are effectively 3rd-Party data lists – where data is collected by an external vendor and organized into pre-defined audience segments [ref: thinkwithgoogle].
Frequently Asked Questions
Question: What is the difference between DMP data lists & Google audience lists?
Generally, it is believed that DMPs have better technology in data collection and organization, such that, they are able to read data from many different touch points across the web & devices (or, ad networks) to identity users & collect them in their custom data lists as audience segments. On the contrary, Google audience lists (very limited) uses only Google technology & networks to identify & build audience profiles.
Additionally, Google audience lists are only available through Google platforms (like: AdWords GDN or DoubleClick) for targeting purposes – so, there is an incentive for Google to provide these audience lists for free to their advertisers. On the contrary, DMP data lists are often available for targeting in many formats and is not restricted to any platform – so, most DMPs often charge a fixed CPM fee for providing data lists.
Having said that, we can easily see from the above discussion that DMP data lists & Google data lists are both a subset of 3rd-Party Data lists (as they clearly do not fit in the definition of 1st-Party or 2nd-Party Data).
Question: What about Placements, Contextual / Keyword or Topic Targeting?
In most of the cases above, the data is collected by an external vendor and organized based on the matching-audience or user profiles (behaviors). However, in this case the data is organized based on the “publisher-content” profile – making it a very unique form of 3rd-Party Data targeting.
Question: Is 2nd-Party Data sharing secure?
Mostly, Yes. The shared data is not “emails or contact of your partner’s customers” but rather audience profiles built using a “data collection method” (like: Analytics tag). So, 2nd-Party & 3rd-Party Data are usually anonymous user data.
Related Links: DMP Demystified by BlueKai
Related Links: Why You Need a DMP
Related Links: Definitive Guide to Programmatic Advertising
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