Acquiring the right data can help your business reach new audiences and provide a better experience for your current customers. Many companies do this by buying third-party data. Let’s look at what third-party data is and how it works.
[Read more: How to Protect Your Business Against Fake Data]
What is third-party data?
Third-party data is purchased from a data broker that didn’t play a role in collecting the data. Data brokers typically aggregate data either by accessing what is already available online or by buying it from other organizations.
However, third-party data can only be obtained with the user’s permission, so it’s compliant with privacy rules. Equifax, Experian, Acxiom, and Epsilon are some of the largest data brokers in the country.
Businesses can use third-party data to identify new audiences or build on the information they already have about their current audience. This data may be already segmented, so you won’t have to sort and analyze it first.
[Read more: How Data Provenance Can Protect Against Fraud]
Other types of data
Knowing how other types of data work and are collected will give you a better understanding of third-party data. Here are three different types of data and how each one compares to third-party data:
- First-party data: First-party data is data your
business collects directly from its audience. You can collect
first-party data from website visitors, social media followers, and
email subscribers. Unlike third-party data, this is raw data your
business can collect, store, and manage, making it more accurate. - Second-party data: Second-party data is another
company’s first-party data that they decide to sell. That seller
collected the data directly from its audience without a middleman.
Second-party data can be valuable if you purchase it from a business
with a similar audience. - Zero-party data: Zero-party data is data a consumer
willingly provides to a company through a survey, form, social media
quiz, or some other format. Customers give this information in exchange
for a better user experience with that company.
If you choose to purchase third-party data, it’s crucial to research and find a trustworthy provider.
What are the benefits of third-party data?
Third-party data provides valuable insights you may not be able to get from first- or second-party data. Here are the biggest benefits of third-party data for businesses:
- Comprehensiveness: Third-party data tends to be more
comprehensive since it tracks that individual’s behavior across multiple
websites and platforms. - Identifying new audiences: Third-party data allows businesses to identify new potential customers to target in a marketing campaign.
- Relevance: You can specify the types of data you’re looking for before purchasing it, ensuring it’s relevant to your business.
- Time-saving: Third-party data has already been collected, sorted, and segmented, which can save businesses quite a bit of time.
- Targeting your audience: You can use third-party data to create personalized messaging and relevant marketing campaigns for your audience.
[Read more: How to Protect Company and Customer Data as a Small Business]
What are the drawbacks of third-party data?
Here are some of the biggest risks of purchasing third-party data:
- Reliability: Third-party data is purchased from a
company with no direct ties to the consumers that provided the
information. That means the data is often less reliable and more prone
to errors. Using inaccurate data can undermine your company’s long-term
marketing efforts. - Security concerns: Third-party data can expose your
company to privacy risks. Companies like X (formerly Twitter) and Facebook have
experienced similar problems with third-party data. - Regulatory concerns: Laws dictating how businesses can acquire and use data can make acquiring third-party data more complex.
How to choose a third-party data provider
If you choose to purchase third-party data, it’s crucial to research and find a trustworthy provider. Look for providers that offer a variety of datasets for different types of businesses. It’s also a good idea to look for providers willing to provide custom data sets depending on your business’s needs.
Most importantly, choose a provider with a reputation for abiding by data privacy laws. The right provider will always collect data legally and follow any compliance guidelines that are in place.
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Published
Emily Heaslip
