First-party data has always been superior to third-party data. The reason third-party data had been so widely used is that it was easier to collect at scale, store, and manage. Data and marketing teams needed only to purchase the data, and that gave them massive amounts of information they could use to gain insights and make decisions.
To understand why first-party data is superior, we should first revisit how it’s different from third-party data. A simple way to do that is to think of an online news provider. Let’s say you subscribed to the news site’s daily newsletter by providing your email address.
To the news provider, your email address, name, address, and any interaction with their newsletter (clicks, shares, etc.) is first-party data. If the news provider then sells that data to an advertiser (with your permission, of course), that same data becomes third-party data to the advertiser.
To help you further understand those differences, there are four key ways that first-party data is better than third-party data:
Third-party data gets outdated over time, potentially losing its accuracy, because it’s not constantly updated. The problem is, you don’t know how outdated it is because you don’t have firsthand knowledge of when and how it was collected. But with first-party data, you have full control. You know when and how it was collected and how it’s updated. So, you have a strong idea of how accurate it is and how much you can trust it.
Third-party data is collected at a massive scale from a broad range of a platform’s users, so you have to extrapolate insights and apply them to your users. First-party data comes straight from your users, allowing you to derive direct insights into their behaviors and preferences.
With first-party data, you also have full control over what data sets you collect, so you can efficiently focus on what’s important to your business. With third-party data, you can only select from the data sets that are available.
As we’ve discussed, third-party data will get harder to obtain. But first-party data will always be at your fingertips, waiting for you to take advantage of it.
Third-party data is expensive. For context, a study on the usage of third-party marketing data in the United States found that in 2019, industry professionals in the country spent $5.1 billion on third-party data. Leaning on first-party data means that you get to save the outrageous cost of third-party data that is neither accurate nor effective. You’d never have to buy first-party data. You already have it. You just have to invest in tools to store, organize, and use it.