A Trifecta of First-, Second- and Third-Party Data Is the Foundation of the Data Economy
To be powerful in a marketplace, marketers need data. And as all sophisticated marketers know, a company’s most powerful data asset is its first-party data. This is the data it collects about consumers interfacing with its sites, mobile applications and other first-party channels. First-party data is the foundation for how companies understand their consumers.
However, even the most powerful data has limitations. For example, first-party data can’t provide information about consumers who are on different parts of their journey, and there never seems to be enough of this data. This is where third-party data comes in. This data augments and fills in the gaps around consumer profiles. Third-party data providers have a breadth of information about consumers, including behavior- and intent-based data. This is the traditional data management platform — powerful first-party data, augmented with third-party data available for purchase on the open market.
But if third-party data is available on the open market, couldn’t my company’s competitors buy the exact same information? Absolutely. There’s very little competitive differentiation to be gained from third-party data providers.
Creating competitive differentiation
Here’s the good news: Recent developments are making it possible for companies to capitalize even further on the power of first-party data in a more competitively differentiated way. Through strategic partnerships with other brands, companies can now buy or share that other brand’s first-party data — creating second-party data. Companies that strategically partner create value in two ways:
1. Financially: monetizing data assets they already have.
2. Reciprocally: accessing valuable information from a partner that they wouldn’t otherwise have.
This trifecta of first-, second- and third-party data is the foundation of the data economy — conducted on a single platform where all data is evaluated, transacted upon, and sold or shared within one market.
Like all game-changers, the data economy has some challenges, and significant among these are privacy and competitive concerns. To address these challenges, the data economy needs to take place on a privacy-friendly platform, ensuring that any entities partnering to share anonymized data have the proper controls in place. The model itself in the data economy is flexible, allowing strategic partners to determine how best to share their data.
The data economy in action
Online publishers today are losing money. With the boom in ad blockers, programmatic advertising and the resulting downward pressure exerted on pricing, publishers have to look beyond ad inventory as their primary asset. Why don’t they understand the value of their data and act on that value? Until now, there hasn’t been a marketplace with privacy and competitive controls in place to adapt to the changing advertising ecosystem.
In the data economy, publishers have access to a new line of revenue — the data they’re already collecting on their customers. That valuable data can be monetized and used as revenue. The single most valuable asset publishers have is the content they’ve created, and the most powerful information they can get is data collected on how their customers use their content. It helps them understand their customers’ intent, affinities, and preferences, and helps them predict what these customers might do next.
Engagement metrics are being captured on publishers’ sites, creating an untapped asset they can leverage to:
- Provide more relevant advertising on their own site by using the data they have (first-party data), and
- Sell their data to strategic partners (second-party data).
Within the data economy, publishers now have more flexible options around the value they can present to a marketer, both in terms of ad inventory and data.
The data economy only works if the appropriate controls are in place, and the transactions are monetized or reciprocal, strategic, and anonymized. These are all controls companies should look for in the tools they use for data sharing.
In the new world of ad-blocking apps and programmatic media buys, it just isn’t enough to sell ad space anymore. A website or app is more than just a billboard — it’s an ever-changing dynamic system that gathers valuable first-party data. We play in a world where, no matter how much the ad marketplace changes, marketers will always be hungry for richer customer data –and online publishers will always have plenty of that to sell.