knowThere are different data types, with different meanings, that must be handled differently in today’s the digital economy that collects more and more data. Unfortunately, the terms are often confusing, which is why we decided to clarify today the difference between first, second and third party data, since it is crucial to know the difference when planning your data pool for specific campaigns.

The terms "first party", "second party" and "third party” data provide information on where the data comes from, or who has collected it, from a company's point of view:

1. First party data has generally been collected by the company itself: For example, a company that runs email marketing campaigns and processes the email addresses, as well as the name and gender of the users, as part of the opt-in process. The company has access to the respective data set at any time and can use the data within the user-consent declaration approved by the user.

Direct control and the independence of third parties are the main advantages of ‘first party data’. But to enrich and expand their very own data, companies sometimes must resort to data that they didn’t collect themselves, buying information e.g. from market researchers instead. This form of data is called second and third party data, which should always be exercised with caution as there is dependency on the provider of this data: Is the data correct and can be used legally compliant right away, are usually the crucial questions.

2. Second party data refers to data obtained from another provider: It can either be a one-time purchase or a lasting partnership where data is exchanged. For example, company A would like to buy the data set X from company B. For company B, this data set X is first party data, since the data was collected by the company itself. For company A, the data set X becomes second party data, since the data was not generated by B, but has been purchased. Thus, company A is the "second party".  Such an exchange or purchase is usually not a problem with general market research data. But when dealing with personal data, it can’t simply be assumed there is sufficient consents to use this data and caution is advised.  If a company buys data, it can always lead to dependencies or complications with the other company That’s why trustworthy partnerships are so important.

3. Third party data can be helpful but at what price? If a company needs very specific data records or a large amount of particular data, it may be helpful to access third party data that can be purchased from external sources - which might have also acquired or collected the data themselves. The business model of these external service providers is to collect, aggregate, and sell data from different sources.

A great advantage of third party data is the fast availability and the large amount on offer. However, not only the costs are affecting the use of such data adversely, its usage is often also questionable and risky, not only in terms of quality, but data protection.

For this reason, it is so important to stay informed about the usage rights.

By MediaBUZZ