Key Differences between First, Second and Third-Party Data in Programmatic Advertising | 42matters
‍First-Party Data
While first-party data is mostly used by advertisers who are running retargeting campaigns, the main drawback of first-party data is that it provides limited reach - as the data collected is exclusive only to users who interact directly with the brand. As such, this data set is not large enough to help advertisers scale campaigns aimed at reaching new audiences.
Seen as a way to mitigate first-party data limitations on reaching new audiences, second-party data involves buying from, or sharing, internal first-party data, with another trusted partner advertiser who share common interests and objectives.
Data from these multiple sources is then bought by data aggregators or data management platforms (DMP), who serve as a central data warehouse of third-party data. From the sheer volume and wealth of data collected, DMPs will proceed to anonymize the data and repurpose them into many different groups of classifications or audience segments, preparing them for purchase by an advertiser looking to expand their ad targeting campaigns. (Check out this DMP guide by BlueKai, our esteemed client).
While one key benefit of integrating third-party data into programmatic campaigns is that it provides extensive reach (which addresses the main limitation of first and second-party data), the relevance of third-party data can sometimes be described as “hit and miss.” Information collected is often based on past user behavior and may not be completely representative of current behavior. Additionally, an advertiser will have no idea on the quality of data, where and how the data was collected, and if the data source is up to date.
Key differences between 1st, 2nd and 3rd-Party Data in Programmatic Advertising
When looking to partner with a data provider for your programmatic campaigns, be sure to check the quality of the data before agreeing to buy large data sets. Equipped with your understanding of first, second and third-party data, question the provider on how the data was collected and seek to determine the accuracy and reliability of the data source.
Finding the right audience segments is often a case of trial and error, as every data provider define and classify their segments differently. Be prepared to test datasets from more than one provider and rigorously tweak your campaigns in order to find the right data partner that help maximize your return on ad spend.
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