FAQ: What Is Second-Party Data?
By Indeed Editorial Team
Published April 8, 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Many businesses rely on customer data to learn how to better engage their audiences and improve their business performance. There are several data types companies use, including second-party data, to gather more information that they might need from other organizations. Learning about this term can help you understand why businesses use it and how you might explore it with the company for which you work. In this article, we share answers to several frequently asked questions about this term, like "what is second-party data" and "how does it differ from first- and third-party data."
What is second-party data?
Second-party data is a marketing term that describes data a company can acquire and use from another company. This is often data gathered from a publisher that a company might use to reach its customers. Although users might not share data with a particular company, they might've shared it with the publisher, who then shares it with a company for marketing purposes. You can also see this data model in second-party marketplaces, where companies sell their own data while purchasing others. This helps learn more about customers and how they might market or advertise to them.
How can you use second-party data?
There are several primary uses for second-party data:
Advertisers often use second-party data to combine information with what they already have. For example, advertisers may have data on their customers' purchases and website visits, then combine this with other information from publishers, like social post interactions. This new combination of data can help a company build new datasets that can determine future business decisions. Additional data can even mean new user information to expand a company's reach and customer list.
Understanding customer behavior
By understanding customer behavior better, companies can predict how they might act. With second-party data, companies can learn more about the times they interact with posts and how they shop. For example, if a user browses for new item releases every Monday, they may learn this through publishers' data. They can then time advertisements that run based on items they are likely to purchase.
Related: What Is Data-Driven Marketing?
Designing marketing campaigns
With this additional information, companies can design new, targeted marketing campaigns on several publishing platforms. Many companies create advertising and marketing campaigns from the data they gather, like demographics and preferences. With second-party data, you can expand campaigns to reach potential customers. As second-party data comes directly from publishers, it's likely to be accurate and specific to help you adjust any campaigns.
Second-party data can help you increase your revenue in several ways. With more targeted marketing, you can reach customers that show patterns of purchasing that match your efforts. You can also sell your own first-party data on some publishing sites. This can help you earn additional revenue as other companies, including the publisher can purchase this data. Some other companies might also be more likely to purchase this data as it comes directly from a source rather than a third-party data aggregator.
How does it differ from first- and third-party data?
To understand some differences between first-, second- and third-party data, you can first learn the different definitions:
First-party data: First-party data is the information a company gathers about people from themselves. This includes website visits and purchases.
Third-party data: Third-party data is information from another source gathered from various locations. Data collectors often sell this to companies.
Though there can be many overlapping data points, there are several essential differences between the three:
As you gather data directly from your audience with first-party data, companies often use this to predict customer behavior, learn consumer insights and personalize advertisements. Though you might do these with second-party data, too, these help you understand your current audience better. Second-party data also provides some of these same benefits, but with new customers where you might not need to collect and organize data manually. Companies often use third-party data to expand their audience and narrow their target customers. As this often comes with larger data packages, this can help companies grow faster in these areas.
Companies receive each package of data from different sources. For example, first-party data often comes from channels like customer relationship management platforms, social data and website information. This is from a company's own sites and profiles, so they often gather and organize it independently. Companies receive second-party data from sources like mobile application use and customer surveys. Third-party information comes from various sources, including publishers and private companies. They often package these for particular company needs.
There are several ways to collect each data type. For first-party data, you can enable tools on your website that can track engagement and visits that might have information like location and time of visit. You can also collect this through customer relationship management tools, like databases that capture names and emails from subscriptions. You can collect second-party data by approaching companies that own certain data. These are often publishers that companies build relationships with or second-party data markets where companies can share data.
Third-party data sites offer companies the opportunity to buy data packages from the information they've gathered. There are some platforms that companies might register for to provide their own first- and second-party data where they can access more third-party information that can quickly grow their audience.
What is zero-party data?
Zero-party data is another set of customer information that companies might use. This term means that customers voluntarily share data and personal information with companies. Rather than the standard data you collect through first-party methods, this can provide more context into who each customer is and what they may want. Companies often gather this information through sources like customized surveys, preferences, subscription models and quizzes. This helps companies cater experiences to specific people based on their personal preferences.
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