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The Beginner's Guide to Data Parties: What You Need to Know

Although not as fun as this dog's birthday party, data parties and their strengths and challenges are crucial to your data and marketing strategies.


Data, Data Everywhere

In our post, The Challenges of Building Trust in the Data Economy, we discovered that individuals have become increasingly concerned with the privacy of their personal data and also much more critical in their expectations of personalized and relevant experiences provided to them from the businesses with which they interact.


Historically, businesses have relied on an assortment of data points and sources to gain a better understanding of their customer in order to inform their marketing strategies. However, all data points and sources are not equal, bringing to question accuracy, reliability, and even the legal and ethical considerations in which it was acquired.


Audience data types, or data parties, are nuanced. They each have their own set of strengths and challenges to your business strategies and real-world marketing campaigns. Additionally, customer preferences as to what data is used and how it is gathered vary greatly.


Data Parties Defined

Customer data comes in many shapes and sizes, but is relegated to four types - zero, first, second, and third. Let's take a look at the data parties fundamentals: how each is collected, what differentiates that party from others, and some examples of each.


Zero-Party (0)

  • Data that a customer intentionally shares directly with you.

  • It’s individual data collected with consent and isn’t shared with other parties. This data has high accuracy and reliability.

  • Examples include information used to create profiles like first name, email, as well as survey results and preferences information (ie. product or communication).

First-Party (1st)

  • Data that you capture from interactions with your customers on your own channels.

  • It’s individual data collected with consent and isn’t shared with other parties. This data has high accuracy and reliability.

  • Examples include purchase history, website activity, email engagement, demographics, and loyalty program info.

Second-Party (2nd)

  • Data acquired from a trusted partner via data marketplaces.

  • It’s individual data collected with consent and is shared with trusted partners. This data has high accuracy and reliability.

  • As second party data is another company’s first party data, it’s a great way to expand your audience if their customer profile fits your own.

Third-Party (3rd)

  • Data collected by a third party that doesn’t have a direct relationship with your customer and is purchased in aggregate.

  • Consent depends on the data provider and is shared with trusted partners. This data has a tendency to be of low accuracy and reliability, so it is important to vet any data partner to make sure they follow data accuracy and privacy best practices.

  • When used in concert with other data parties, third party data can help enrich your existing data, identify your next best prospects, and enhance your targeting. Examples include demographics, income, etc.


Relevancy and Reach

Per Omeda, focusing on growing zero- and first-party data is ultimately the healthiest strategy to protect against the disappearance of third-party cookies. Although zero- and first-party provide for increased relevancy, accuracy, and privacy for the customer, what happens if you need increased reach?


Now that we've covered definitions and provided some examples, let's take a look at the data parties in relation to relevancy and reach.

Relying on second-party data can be useful in increasing your data pool when your trusted partner has an audience with a profile similar to your own. As for third-party data, the amount of data may be enticing and can certainly help to enrich your own data set, but you stand the risk of inaccurate data.


Fundamentally, your goal should be to determine what balance of reach and relevance suits your particular business goals and data needs.


Dude, Where'd You Get My Data?

When it comes to data parties and marketing strategy, it's important to remember that the customer is (and should always be) at the center. Each data party comes with not only its own set of strengths and challenges but also user preference. By keeping that perspective in mind and leaning on our own experiences, we can craft thoughtful and relevant touchpoints that don't come across as creepy.


Here's a cartoon by Tom Fishburne that pretty much sums it up:


Individual-protection regulations (GDPR and CCPA), changes in the technology landscape, and the death of third-party cookies are forcing businesses to search for new ways to leverage individual data to create more personalized and relevant messaging.


As data privacy laws become more stringent, and as customers become more aware of the risks of third-party data, brands will need to increasingly rely on data that they can trust. So what do we make of the data parties?


As Forbes suggests, sights should be set on first- and zero-party data. Any business can benefit by collecting data directly from their customers through the use of interactive funnels to gather data that’s reliable, accurate, and engaging at every step of the customer journey. However, your data strategy will more than likely rely on a mixture of data sources.


Your Data Strategy

According to Treasure Data, your data strategy should be informed by your requirements for customer experiences across your entire organization. Only after understanding that can you sort out which types of data you'll need to implement those experiences. From there, you'll need to bring it all together in order to validate, cleanse, and standardize to make useable.


However, your data strategy should be more forward thinking as privacy becomes more important to customers and privacy regulations and technological changes challenge the way in which data has traditionally been acquired. Ultimately, we're looking at a cookieless and opt-out future that will force businesses to find other ways to track and personalize experiences.


As the relationship between businesses and individuals continues to evolve and challenges to this relationship arise, it is important to remember that it is a relationship that needs to be built upon trust and transparency. Leaning into first- and zero-party data will give businesses the opportunity to deliver unique, one-to-one experiences.


Meet Ownli

Ownli enables businesses to directly engage with and securely obtain certified unique data from potential and existing customers to increase personalization and relevancy, improve growth and retention, and unlock upsell/cross-sell opportunities.


We'd love to learn more about your business needs and how we can help you craft more personalized experiences with better data.


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