Second-party data is a well for businesses looking to enhance their audience insights without relying on third-party cookies. Simply put, it’s first-party data collected by some other business that’s being shared with you directly via a trusted partnership.
Second-party data is pure, high-quality, and legal, unlike third-party data aggregated from various sources.
Alternative?
If direct data sharing is not feasible, companies resort to first-party data (obtained directly from their consumers) or third-party data (bought from outside sources).
Keeping it private
- 86% of marketers report that data privacy concerns have caused them to rethink their data approaches.
- Companies using second-party data realize a 25% improvement in campaign performance due to better targeting.
- The death of third-party cookies has caused 60% of businesses to turn to other data alternatives, such as second-party data.
Remain compliant
Second-party data is GDPR-compliant if you share it within your company group.
Companies that share customer data within their departments (e.g., a parent company and subsidiaries) can do so without violating GDPR, as long as they practice transparency, consent, and security. However, when data is shared with a third-party company, GDPR restrictions are much stricter, requiring users to provide explicit consent.
Company collaborations
Airbnb collaborated with airline companies to obtain data on frequent flyers without booking accommodations. Using access to second-party data, Airbnb introduced hyper-personalized offers to travelers who require accommodation and experienced a conversion rate increase of 30%.
On the other hand, Nike shared customer behavior information with Foot Locker, allowing them to understand which products sold best in specific locations. This second-party data strategy saw both brands achieve a 15% increase in sales, illustrating the value of cooperation over competition.
Finding the right partner
Challenge: All collaborations on data-sharing aren’t created equal. You can end up with poor data or even regulatory risk if you don’t select the right partners.
Resolution:
- Ensure that they have high-quality, first-party data backing your goals.
- Have an open data-sharing agreement with privacy and security measures.
- Use privacy-safe settings like clean rooms to analyze collective data without exposing sensitive customer information.
Breaking it down
- Identify potential partners that have deep first-party data.
- Be data compliant (GDPR, CCPA, etc.).
- Use secure data-sharing platforms.
- Test and optimize data-driven campaigns for greater ROI.
- Be transparent to consumers about using data.
