Third-Party vs First-Party Data vs Zero-Party Data: Which is Most Valuable?

Data comes in all shapes and sizes. But as we know, not all data is created equal. The source of data is usually what determines its value — this is where the conversation on third-party data versus first-party data versus zero-party data begins. 

What is Third-Party Data? 

Third-party data refers to information that companies gather from external sources, rather than directly from their consumers. The data encompasses a broader audience then what a business may have access to on its own. Companies often acquire third-party data through marketplaces or exchanges, including data sourced from APIs or third-party cookies (FYI: third-party cookie tracking is going away). 

Examples of third-party data: 

  • Demographic Data: Like what you’d obtain from the census 
  • Behavioral Data: Data you’d get from third-party cookies that provide insight into user preferences, browsing history, clicks, and online activity patterns
  • Psychographic Data: Insights into individuals’ personalities, values, interests, and lifestyle choices obtained from surveys or focus groups
  • Firmographic Data: Data you buy from a marketplace or source online, such as company information like industry type, size, revenue, and location
  • Social Media Data: Insights gathered from social media platforms, including user engagement, followers, likes, shares, and comments

Benefits & Drawbacks of Third-Party Data

Third-party data provides businesses with access to a high volume of data, enabling them to pinpoint trends and gain valuable industry insights. Third-party data can provide businesses with the next best alternative if access to internal or competitor data is limited. 

However, the problem with third-party data is that it’s not always the most accurate. The way it’s aggregated can result in inconsistencies. Further, third-party data can quickly become outdated if it isn’t real-time or regularly updated due to changes in consumer behavior or external factors. 

However third-party data is still useful. Especially when combined with first-party data. It can enrich your understanding and provide additional context for unknown insights. 

What is First-Party Data? 

First-party data is the information that comes directly from your customers through your resources. This data is typically gathered from sources your organization owns and controls, such as its website, mobile app, email interactions, customer relationship management (CRM) systems, and other touchpoints. 

Examples of First-Party Data: 

  • Website Analytics: Data collected from website interactions, such as page views, clicks, and time spent on pages.
  • Purchase Data: Information about consumers’ purchasing behavior (e.g. transaction history, product preferences, and buying frequency) you’d likely buy from a syndicated data source 
  • Surveys and Questionnaires: Responses collected from user surveys and questionnaires designed to gather specific insights.

Benefits & Drawbacks of First-Party Data 

First-party data is crucial for creating personalized experiences, optimizing marketing campaigns, and making informed business decisions. It usually doesn’t cost you as much to collect, and is more reliable since it’s coming from your systems — you know where the data is originating. 

Overall, first-party data is valuable because it offers insights into the behavior, preferences, and characteristics of your customers. However, it has its limitations:

  • This data can be incomplete or biased: It provides insights solely from existing customers or users, potentially leading to a skewed understanding of the broader target audience. Additionally, first-party data’s accuracy can be compromised due to inconsistent engagements, seasonality, and subjectivity.
  • It comes with privacy concerns: Handling first-party data entails privacy concerns and regulatory responsibilities, requiring resources for compliance efforts.

To address some of these limitations, businesses often supplement first-party data with other sources — third-party data. Using both forms of data helps mitigate biases, provides a more holistic view, and can overcome the limitations of each type. By incorporating third-party and zero-party data, organizations can enhance their customer insights and make better-informed strategic decisions.

Zero-party data takes things a step further. 

What is Zero-Party Data?

Zero-party data is information that consumers explicitly share with a business. In other words, they’re offering it up of their own volition. Unlike first-party data, which is collected through user interactions and behaviors, zero-party data is provided directly by the individuals themselves, sometimes in exchange for personalized experiences, offers, or other benefits. This type of data can include preferences, interests, opinions, and other details that individuals willingly disclose to a business. 

The best example of zero-party data is feedback and reviews. The comments, ratings, and feedback provided by customers on products, services, or an experience is a prime example of zero-party data. 

Benefits & Drawbacks of Zero-Party Data (Why it’s Most Valuable)

Zero-party data is typically more accurate and reliable than even first-party data because it comes directly from the source and customers are actively involved in sharing the information they feel is relevant and valuable to them. In other words, zero-party data is the least biased. 

With first-party data like surveys, depending on how you ask a question and when can lead to biased answers. And unless customers are offering up information, sometimes you don’t know what you don’t know. For example, you could ask customers what options they prefer in a survey, including what you think is an exhaustive list — but with zero-party data, you don’t have to guess, you’ll know. 

Zero-party data is highly valuable to businesses as it enables them to create more meaningful and relevant interactions with their customers. When used appropriately and transparently, zero-party data can foster stronger customer relationships, enhance personalization, and improve the overall customer experience. However, businesses must ensure that individuals know how their data will be used and provide clear value in return for sharing this information. 

As a result, the biggest drawback to using zero-party data is following privacy laws and compliance requirements when it comes to actually using this data. 

How to Leverage Zero-Party Data — With GatherUp

Organizations that are leveraging all forms of data from third-party to first-party to zero-party data will be able to gather the most relevant insights for strategic decision-making. But as the world continues to evolve when it comes to technology and information sharing, zero-party data will become the most critical. 

With third-party cookie tracking going away, and new privacy concerns and regulatory laws cropping up, businesses face more challenges trying to track and understand consumer behavior. This is where being able to ethically and legally source zero-party data will become a competitive advantage.

GatherUp is already sitting on mountains of zero-party data. 

We make it easy for you to automatically gather zero-party data from customer reviews and feedback and engage with your customers in meaningful — compliant — ways. Schedule a demo with one of our product experts to learn more!



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