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What Is Third-Party Data? The Complete Guide

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Third-party data is information collected by a third-party data provider across other company’s websites, apps, registrations, etc. The provider gathers this data from several businesses with no direct relationship with the customer. These data sets are broad and come from various sources. They may be obtained from companies, but could also come from governments, non-profit organizations, etc.

If you own or manage an eCommerce business, you’ve probably already heard of third-party data. This kind of information is very relevant for businesses that want to expand their reach, find new audiences, and increase revenue. However, there have been many controversies lately regarding privacy and General Data Protection Regulation (GDPR).

So, before setting up your ad campaigns using this type of data, it’s important that you understand what it is, how it is collected, its compliance with privacy rules, and, most importantly, how it can be used without causing you any problems. Keep reading to learn more about it!

 

What Does Third-Party Data Mean?

Third-party data is collected and aggregated data from various sources, such as websites and platforms. It usually comes in large data sets and can be customized to suit one’s needs before acquiring it. These data sets are generally sold on data marketplaces or exchanges (more on that later). The sets are used to expand and discover new audiences, improve targeting performance, and more.

It’s important to remember that this data can only be obtained and used with the user’s consent. Therefore, the information sold legally is sold to companies in segmented data sets of anonymized data collected throughout the user’s online and offline experience.

 

Third-Party Data Example

Third-party data providers collect information across the web, meaning they don’t collect it from a single website. This way, they have a more complete picture of the user’s behavior and interests. Here’s how it works:

Let’s say a user visits a blog about hiking in Italy; then, he checks out some information about bookstores in the city where he lives. Later, he logs on and fills out a loyalty card application for a supplement store, then he buys some vitamins and supplements.

The provider collects all of these types of data from the same user, which forms a more complete picture of that user’s interests, preferences, spending habits, and demographics. The consumer data is later sold in data sets for companies interested in that data.

Image: zithas.com

 

Problems with Third-Party Data in 2022

Third-party data has long been the preferred type of data to collect, manage, analyze and get insights from. However, due to various privacy concerns and regulations, this kind of data now has limited uses, and it is no longer advisable in all situations. In fact, Google plans to end third-party cookie support in 2023 (note: this does not apply to first-party cookies).

In addition to that, there are problems regarding data transparency since we can’t know how that data has been collected. Finally, the information you receive is not unique, meaning your competitors also have access to the same data sets.

 

Why Is It Important?

Even though third-party data has its problems, it can still be a valuable component of your marketing strategy. It can provide information you couldn’t get from zero, first, or second-party data. Here are a few reasons why this kind of data is so important:

  • It gives you information that you couldn’t get from a single entity because the data collected is broad and tracks the user’s behavior across multiple websites.
  • It helps you identify potential customers and target them in your marketing campaigns, or you can even use the data to target lookalike audiences.
  • There’s not a lot of ambiguity since you can buy specific audience segments that take into account key characteristics that are important to your business.
  • Since the data sets are segmented in advance, it saves you time since you don’t need to analyze, organize, or clean up the data yourself.
  • It improves audience targeting by allowing your company to create personalized ads, reaching the right people with the right offers.

 

How to Collect It

As an eCommerce business, you won’t collect third-party data yourself. Instead, you will buy it, typically through marketplaces that sell this kind of data. Here’s a list of sources:

  • Lotame
  • Eyeota
  • Oracle
  • Adobe
  • On Audience
  • Acxiom
  • DataSift
  • Salesforce
  • Dawex
  • Snowflake
Image: onaudience.com

 

How to Choose a Third-Party Data Provider

When choosing a third-party source, make sure you find one that:

  • Has a good data range and prices.
  • Has several audience segments available.
  • Offers the option to create customized segments.
  • Offers you a support team.
  • Has a data management platform.
  • Complies with GDPR/CCPA.

 

How to Use Third-Party Data for ECommerce

You can use it in several ways to grow your eCommerce business and boost sales and revenue. Let’s discuss just a few of the ways you can use these valuable insights to increase your competitive advantage and grow your business.

  • You can target ads based on the user’s location, spending habits, shopping history, interests, and more.
  • Use detailed insights from a specific target audience to pinpoint the best time to create an offer or allocate your ads budget.
  • Choose the right channel to advertise based on the insights you get from your target audience, mixed in with your zero and first-party data.
  • Create personalized ads, changing images and copy based on that audience’s interests and preferences.
Image: groupfio.com

If you’d like to know more, you can read our articles about each of these topics:

FAQs

The difference between these four types of data is mainly in how the information is collected and by whom. Here’s a summary:

Zero-party data: this is the information a customer actively shares with a business. This data collection often happens through quizzes, registrations, questionnaires, polls, etc.

First-party data: this is the information a business collects from their customers while they use the company’s website, apps, or email marketing. The user does not actively provide this information, as they do with zero-party data.

Second-party data: this is data you didn’t collect yourself but bought from another company. Essentially this is another company’s first-party data which has been sold to you.

Third-party data: this kind of data is collected and aggregated from various sources such as websites and platforms by a third-party aggregator, which doesn’t have a direct relationship with the customer. The customer data usually comes in large data sets and can be customized to one’s needs before acquiring it.

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