• by Jason Downie , September 27, 2018

There are three major types of data that brands and businesses can use to provide engaging and compelling customer experiences: first-, second- and third-party.

First-party data is the information you collect through your own systems, including information from your company website, sales and marketing stats from your online storefront, in-store purchase data, CRM data, and more.

Third-party data comes from a variety of sources, which you can guess are rightful “third parties” in the transaction. It’s usually a collection or aggregation of data sources, from anonymous parties, as compiled by a data vendor or offered in a DSP. For these reasons, it’s not always transparent, depending on the provider.

The final data type is second-party. Second-party data is high-quality data you’re accessing — directly from the source — that you don’t own. Think about it as first-party data to someone, just not you. It has been collected directly by the data owner and is sold directly to the buyer.

For that reason, it’s more reliable for publishers and offers better performance and higher engagement ratings. It also leads to happier advertisers. The latter contributes to return customers, stronger partner and client relationships and much higher budgets, thanks to an ROI boost.

But how is it so effective? And what can second-party data truly do for publishers?

Second-party data creates value.

By nature, data creates value where traditionally there is none. For decades, customers were customers and products were products. Now, it’s about more than that. It’s about the information and insights marketers can gather from customers and products, too, and feeding that back into the marketing cycle to give consumers what they want.

For example, if you know males between the ages of 25 and 35 spend the most time reading the content on your site, that knowledge is valuable in and of itself. Use it to create more ad space or advertising opportunities your customers will be interested in buying and using.

But the information alone also has value. Create a brand-new revenue stream by selling these insights to partners and other organizations to improve their own business strategies. Also, marketers know it’s useful, and it’s coming from a trustworthy and reliable source – you.

With second-party data, the buyer knows exactly what they’re getting, which can make it more valuable than the other forms of data. Publishers have full transparency, and buyers can choose what information they need or value most.

Further, it’s already organized and sorted into a usable form. With first-party data, analysts and data scientists will pore over the information and translate it into something usable, or a tech vendor will do it for you. Second-party data comes pre-analyzed and organized, generally by the data owner.

It will strengthen relationships and trust with key partners.

Buying, accessing and sharing second-party data is networking. If a marketer or brand is looking to buy data directly from the source, they must first research providers. Then reach out to them using a marketplace or community forum, and finally, facilitate the transaction.

Another option is to go through a second-party data exchange, a service provider that will facilitate the relationships for marketers and publishers. This cuts down on the required investment and eliminates the need to do added research. These exchanges can make more quality recommendations for publishers and in turn provide reliable, trustworthy insights for buyers.

Reaching out and engaging with a potential customer is the start of the relationship, but once they access and use data they have purchased, you begin to build trust with your customers.

This kind of data will help improve campaign performance.

Because you can better target the correct audience through second-party data, it directly contributes to better-performing campaigns and actions. How? Higher quality data means more accurate data, which means your campaigns are hitting their intended targets. If the right people are seeing your ads, engagement will go up. And this means more repeat customers, who are satisfied and happy.

Better performing campaigns mean advertisers end up happier. Because their campaigns are successful, they are more likely to offer you repeat business or increased budgets, building a stronger relationship with you in the process. This leads to a much higher ROI for everyone, including you.