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“Party On” Defining Zero-, First-, Second-, and Third-Party Data

  • Gordon Kumpuris

    Gordon Kumpuris

    Senior Content Developer

Created at May 24th, 2022

“Party On” Defining Zero-, First-, Second-, and Third-Party Data

Marketers have repeated the phrase “data is the currency of digital marketing” countless times for more than a decade. We speak of it using grand descriptions, calling it “fuel” or an “asset” and that we must be “driven” by it. We use uncommon words such as “disparate,” and we insist it must go through a “hygiene” process where it is “cleansed” of evil impurities. We speak of it as a delicate resource that must be guarded. Of course, this is all true, but I think we could still stand to use some plain language when we discuss data.  

Something that causes confusion is the various terms we use to classify data at its highest level. For a while, we talked about it as either first- or third-party data. First-party data is information a brand has collected about customers or potential customers that helps in the essential business of connecting with them. There’s nothing new here. Brands have been collecting first-party information since the dawn of time. Examples are name, physical address, telephone number, and email address.  

Third-party data is classified differently, not because the information is necessarily different but rather because of how it is acquired. Third-party data is collected by a “third party,” go figure, that typically sells it to a brand for marketing purposes. Acxiom is, among other things, a third-party data provider. Examples here include much of the same information found in first-party data but often it’s information that speaks to individuals’ interests, desires, location, and habits.  

Some years ago, we began talking about second-party data. This is a little different. Essentially it is simply information shared in a collaborative way between companies. Sharing that data benefits both companies and their customers by improving their experience with both. Often, these companies use an intermediary like Acxiom to manage that data exchange to protect and benefit all involved.  An example often cited is an airline sharing frequent flyer data with a major car rental company or the car rental company sharing its frequent renter data with a major airline. You might see where both would benefit from the insights found in that data.

That brings us to the latest marketing term du jour, zero-party data. This one came on the scene a couple of years ago and immediately caused some to question why it was needed. This term defines the information a brand has, data provided willingly by the customer with an understanding that giving that data will improve his or her experience. For example, I happen to be in the market for an SUV. I use a car search app, and I willingly give that app some personally identifiable information (PII), such as my name, email address, and location, but I also provide them some preference information, such as that I am searching for a late-model, 4-wheel-drive Honda Pilot SUV, with leather interior, a tow package, and that I like the colors silver, gray and navy. I share all that information because I expect that app to provide me with a prioritized list of potential vehicles based on my preferences. That assumed and willing value exchange makes the information I provide zero-party data.  

Many argue that zero-party data is just an unnecessarily nuanced description of first-party data, and there is a lot of truth to that argument. But the term has merit, I think, because it’s becoming more and more critical to intentionally structure your business and your engagements with people to suggest that data willingly shared will be protected and that will in fact result in better experiences. 

For more information on how your company can harness zero-, first-, second-, and third-party data to delight your customers, reach out to info@acxiom.com.