Third-party data is information collected by a third party – beyond direct interaction with your customers – that fills in the gaps of first-party data. It’s aggregated from many sources, such as public records, surveys, and partner networks, and used to add to customer profiles for targeted marketing. In contrast to first-party data from direct interaction, third-party data offers a broader picture.
The second option is to rely exclusively on first-party data or cooperate with second-party data.
Deals that convert
- 75% of marketers utilize third-party data to enhance campaign targeting and segmentation.
- Global third-party data spending will amount to $48 billion in 2025.
- Companies that merge third-party data with first-party data experience their overall campaign performance increase by 20–30%.
- With changing privacy laws like GDPR and CCPA, 62% of businesses scrutinize data quality and regulatory compliance in their third-party sources more closely.
Get to know your customer
With Google having warned us for a few years now that third-party cookies would be removed, it’s inevitable that third-party data in totality will start to be done away with as a viable and ethical way of gathering customer information.
This quote points out that while Google is moving to eliminate third-party cookies – a primary vehicle for tracking user behavior and harvesting information – the broader system that relies on third-party information is in for a shake-up.
Making the most out of your sales strategy
Target employed third-party data to improve its predictive analysis and customer segmentation. Target could tailor product recommendations and promotions to individual customers by merging external data sets and its internal shopping histories. This resulted in a 15% increase in conversion rates and a 20% increase in average order size.
Another example is Spotify’s integration of third-party data to further its ad targeting and recommendation engines. Spotify optimized ad placement and content suggestions by combining listener behavior (first-party data) with demographic and lifestyle data from external sources. This combined approach increased ad revenue by 25% and user engagement by a substantial margin.
Don’t waste time
Challenge: The biggest challenge with third-party data is data quality and compliance. With increasingly stringent privacy laws (like GDPR and CCPA), businesses must be sure that the data they purchase or work on together is accurate, up-to-date, and morally sourced.
Solution:
- Use solid sources and verify their compliance with privacy laws.
- Enhance third-party insights with customer data for improved accuracy.
- Monitor and clean your data to remove inaccuracies and outdated information.
- Use tools that help ensure your data practices align with evolving legal standards.
Making sure you hit the targets
- Clearly define what additional insights you’re seeking.
- Ensure your data suppliers are trustworthy and comply with privacy standards.
- Blend third-party information with first-party information to enjoy a complete customer image.
- Set periodic audits to determine data accuracy.
- Track regulatory changes and adjust your data processes accordingly.
- Use advanced tools to extract actionable insights and drive personalized marketing.
