Third Party Data

What is third party data?

Third party data refers to information about a person that has been collected and distributed by external data providers that have no direct relationship with the subject. Unlike first party data, which businesses collect directly from customers or prospects, or zero party data, which consumers share proactively with companies, data providers source it from platforms, apps, websites, and more then aggregate it into datasets.

While brands do not collect third party data directly, and instead rely on intermediaries, collecting this type of data has historically been an effective way for brands to better understand their customers. Data sourced from a third party typically provides insights into customers’ interests, intentions, employment, and lifestyles.

The 3 steps of delivering third party data:

Collection: Suppliers known as data providers collect information from a multitude of sources for the purpose of providing it to the businesses that use it to inform marketing activities. Data providers specialize in collecting diverse datasets.
Aggregation: Data providers aggregate collected data and systematically compile it, organizing information from different sources into coherent datasets. This aggregation process creates a consolidated pool of information that can cover a wide range of demographic, behavioral, or interest-based attributes.
Packaging: Once aggregated, data providers package third party insights into sets that businesses can access. These packages are often categorized to serve specific purposes, allowing marketers to select datasets tailored to their campaign objectives.

Why is third party data important?

Broad audience insights

Data purchased from an outside party provides a broad perspective on audience behavior, preferences, and demographics. By tapping into datasets sourced from diverse sources, businesses can gain a comprehensive understanding of the audiences they want to reach.

Augmented first party data

While first party data is invaluable, supplementing it with third party insights enhances the depth and breadth of customer insights. It allows businesses to enrich their understanding of existing customers and identify new prospects.

Time savings and efficiency

Acquiring data directly from external providers can save companies time and can be more efficient than collecting it themselves. Doing so allows brands to focus on applying the insights to cater their products and experiences.

Market trends and benchmarks

By tapping into data from outside providers, businesses can gain insights into broader market trends, benchmarks, and industry patterns. This macro-level understanding is crucial for strategic planning and staying competitive.

How to use third party data in marketing

Audience segmentation

Utilize this data to segment your audience based on various criteria, such as demographics, interests, etc. This segmentation allows for targeted and personalized marketing campaigns.

Lookalike modeling

Identify high-value prospects by creating lookalike models. Use third party insights to find individuals who share characteristics with your existing customers, expanding your reach to potential customers who are likely to be interested in your offerings.

Ad targeting

Enhance your ad targeting strategies by incorporating third party data. This data enables more precise reach, ensuring that your ads get to the most relevant audience across different digital platforms in compliance with increasingly strict data and privacy regulations.

Market expansion

Explore new markets and demographics with the insights derived from outside sources. Identify untapped opportunities and tailor your market expansion strategies to resonate with diverse consumer segments.

Campaign optimization

Improve the efficiency of your marketing campaigns by refining your approach based on third party insights. Adjust your messaging, channels, and timing to align with the preferences of your target audience.

Predictive analytics

Leverage it for predictive analytics. Use historical patterns and trends to forecast future customer behavior, allowing for proactive and strategic decision-making.

Challenges and considerations

Data quality concerns

Ensure the quality and accuracy of the data you acquire. Inaccurate or outdated information can lead to misguided strategies and wasted resources. As the market and customer behavior and preferences change, the data previously purchased can quickly become outdated and the company must continue to purchase new data for insights to remain up-to-date.

Relevance

Data collected from a third party may reflect the industry or consumer trends as a whole, but may not necessarily reflect your customer base. For example, insights about fashion as a whole may not be relevant to every fashion brand.

Privacy and compliance

As consumer privacy laws and regulations rendered third party cookies obsolete, marketers must adhere to privacy regulations and compliance standards when using outside data. Though external providers collect this data, businesses must ensure they are ethically and legally sourcing and utilizing the information.

Data security

Prioritize data security when dealing with third party data. Ensure that the providers have robust security measures in place to protect the information they share.

Third party data marketing best practices

Choose reputable and trustworthy data providers. Research their data collection methods, sources, and the accuracy of their datasets before engaging in partnerships.
Seek transparency from data providers regarding the sources and methodologies used in data collection. Understand how they aggregate and package the data to ensure its relevance to your marketing objectives.
Implement data hygiene practices to filter out irrelevant or inaccurate information. Regularly cleanse and update your datasets to maintain their quality.
Look for data providers that allow customization of datasets. Tailor the information to align with your specific campaign goals and target audience.
Ensure that the data you use complies with privacy regulations and industry standards. Stay informed about data protection laws to mitigate legal risks.
Test the effectiveness of outsourced data before implementing large-scale campaigns. Validate its accuracy and relevance through small-scale trials to minimize potential risks.
Foster collaboration between marketing and data teams. Ensure that the insights derived from this data are effectively integrated into overall marketing strategies. Integrate third party data seamlessly with first party data for a more holistic view of your audience.
Educate your marketing teams about the nuances of third party data. Develop a comprehensive understanding of its strengths and limitations to make informed decisions.
Implement mechanisms for continuous monitoring of third party data performance. Regularly evaluate its impact on marketing outcomes and adjust strategies accordingly.
Have contingency plans and risk mitigation strategies in place. Be prepared to adapt if there are unexpected shifts in data quality or if regulatory changes impact the use of certain datasets.

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Third Party Data

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