First-party data platform

What is a first-party data platform?

First-party data platforms connect to an organization’s data warehouse to execute data-driven marketing and sales campaigns without transferring or copying data.

Organizations collect customer data from many sources — including their website, mobile app, customer surveys, and partner organizations or third parties — to build rich customer profiles and target them with more relevant and personalized offers across channels (strategies known as cross-channel marketing and omnichannel marketing).

Marketers use first party data platforms to collect their customer data and then create and segment audiences inside a data warehouse. They activate those audiences to end destinations, and all audience data is available in the warehouse for measurement and cohort analysis.

First-party data platforms ensure organizations maintain the integrity of their customer data and enable customer 360. This creates a more fulfilling customer experience that nurtures loyalty — and enables more effective marketing strategies that drive results.

Importantly, these platforms also help marketers overcome the challenges caused by the death of third-party cookies, which marketers traditionally used to collect audience insights.

Types of data

Marketers rely on different data types to segment their customers and approach them with relevant and personalized offers. This data can include identity data, behavioral data, engagement data, and more, such as a customer’s name, IP address, contact information, and product interests.

What is zero party data?

Zero party data is provided voluntarily or proactively by customers. This makes it unique from the other data types, which are inferred or observed through customer behavior.

Customers share zero party data through surveys or feedback forms, during customer service or support interactions, or other chat or communication channels. 

Example: A clothing retailer sends a satisfaction survey to every customer three days after purchasing. A customer shares that they loved their new sweater, specifically saying that the fabric and color are their favorite. The retailer can then use this zero party data to share targeted ads and communications that feature other products in that fabric or color.

Pros of zero party data:

• Mostly accurate and reliable
• Organizations have direct control
• Compliant with data privacy regulations

Cons of zero party data:

• Potentially limited in scope

What is first-party data?

An organization collects first-party data directly from its customers or prospects across offline and online channels. First party data is also called 1P data or 1st party data.

First-party data channels commonly include an organization’s website, mobile app, email marketing, SMS, call center, social media, point of sale, customer relationship management (CRM) platform. It can also include in-store technology like beacons, which are WiFi or Bluetooth devices that enable retailers to send customers notifications or augment their shopping experience when visiting a physical storefront.

This type of data is most valuable to organizations given its accuracy and reliability, and it is typically cost-effective to collect with the right technology in place. Marketing efforts increasingly prioritize the collection of first-party data over other data types (see below for more details).

Example: A finance manager subscribes to a fintech organization’s email newsletter. The manager starts engaging with the newsletter content and clicks on several links to resources about how artificial intelligence can deliver cost savings. The finance manager then watches several videos on the organization’s website about its solution. The fintech company can use this first-party data to target the customer with more resources about implementing AI, especially in video form, given their demonstrated interest.

Pros of first-party data:

• Mostly accurate and reliable
• Organizations have direct control
• Compliant with data privacy regulations 

Cons of first-party data:

• Potentially limited in scope
• Potentially resource-intense to collect and maintain

What is second-party data?

An organization acquires second-party data from a source that has a direct relationship with a customer or prospect.

The data source is usually another organization they are in a partnership, collaboration, or have some mutually beneficial relationship with — such as a media outlet sharing audience data with an advertiser, or a retailer sharing its customer data with a manufacturer. 

Second-party data is owned by a different organization, however, it is still fairly reliable and is commonly shared during marketing partnerships.

Example: An international hotel chain enters a strategic partnership with an airline company to share select customer data, which helps each company better understand travel and booking habits of customers around the world.

Pros of second-party data:

• Accurate and reliable
• Combines data for better targeting

Cons of second-party data:

• No direct control
• Data may need to be cleaned

What is third-party data?

Third-party data is collected by a source with no direct relationship with the customer, which makes it the least trustworthy data. It is most often collected by data brokers or providers who collect and aggregate data from sources including website cookies.

Third-party data can create risk for organizations, as there are data privacy laws that govern the collection and use of personally identifiable information (PII).

Example: An advertising technology company creates audience segments that organizations can purchase as a third-party data set. Companies across industries might choose to purchase these segments, aiming to quickly augment their first-party data and activate a large-scale campaign.

Pros of third-party data:

• Greatest volume of data
• Easiest to access
• Can provide diverse insights

Cons of third-party data:

• Significant data quality and accuracy concerns
• Compliance risks

Shifting from third-party data to first-party data

Although half of digital marketing campaigns still used third-party data in 2023, there are several reasons why organizations are shifting away from third-party data:

• Limited cookies: Third-party cookies, which have historically been used to collect user data and understand customer behavior across the web, are being phased out by web browsers and mail providers.
• Privacy concerns: Organizations are increasingly liable for data privacy violations, especially as governments implement legislation like the GDPR or CCPA. First-party data addresses this concern when organizations receive consent from users to collect and use their data.
• Dependencies: First-party data is most powerful for companies as they have full control over it. Organizations that rely heavily on second-party and third party data create dependencies on sources that could become unavailable suddenly.

Data management platforms (DMPs) were commonly used to manage second- and third- party data, however, first-party data platforms are becoming increasingly popular because they can collect and manage all data types.

What is a first-party data strategy?

A first-party data strategy outlines how to collect, analyze, and use first-party data. It identifies how an organization will secure user consent to collect their data and the many ways that the organization will use the data throughout the customer journey.

A first-party data strategy is a key step in establishing and reinforcing trust with an organization’s customers. While most consumers (81%) are willing to share their basic personal information with an organization to receive personalized experiences, 66% are also concerned about how brands use their personal data.

Implementing a first-party data strategy helps organizations achieve notable benefits, such as more effective customer targeting, increased customer satisfaction, and greater flexibility to adapt to evolving privacy regulations.

Challenges to getting started with first-party data

Despite the benefits of implementing a first-party data strategy, there are several common obstacles that organizations encounter when getting started:

• Data management: Effective customer data management requires an organization to document its first-party data strategy, which will detail how it can collect, store, organize, and activate its customer information. If this plan is not in place, then the organization will likely be unsuccessful with its strategy.
• Data activation: Directly tied to data management hurdles, teams often face challenges accessing and activating the first-party data they collect. Many solutions require marketers seek help from data teams to create audiences or customer journeys. First-party data platforms can help with this, as they provide an interface for marketers to explore, segment, and activate the data, instead of SQL-based access.
• Data cloud: First-party data platforms require a data cloud to operate, which some organizations do not have yet. Selecting and setting up a data cloud can take time, however, there are resources that accelerate the process.
• Data centralization: Organizations rarely collect and store first-party data in one location, primarily because marketing and customer data platforms can store data in their own cloud/data warehouse. Implementing a central data cloud with a single view of the customer can help overcome this challenge.
• Identity resolution: Customer profiles are commonly fragmented or incomplete, and multiple profiles with complementary details for the same individual often exist in a data warehouse. Identity resolution is a necessary process to create a single view of each customer and ensure they do not receive duplicate outreach, however, it requires ongoing maintenance.

How does a first-party data platform work?

First-party data platforms sit on top of an organization’s data warehouse and allow marketers to activate the data directly. They are convenient because they do not require marketers to code or make a request to a data team. 

Marketers activate first-party data to create audiences and then sync those audiences to various destinations, such as an email marketing tool, sending a push notification, or a CRM platform.

First-party data platforms commonly include data collection, data storage and modeling, and data activation features.

Benefits of using a first-party data platform

First-party data platforms are the only way to own and fully take advantage of a first-party data strategy. Unlike DMPs, first party data platforms can manage first-party, second-party, and third-party data.

These platforms are purpose-built for marketers and can drive value in under three months (if not within the first weeks). Because first-party data platforms sit on top of existing data architecture, there is high data trust and reliability. These tools are also built to leverage AI and predictive models, which are becoming essential in a modern and competitive marketing strategy.

Importantly, first-party data platforms can help marketers execute more personalized campaigns faster, as they can pull real-time data from the data warehouse without data team support.

How to implement a first-party data platform

Organizations that implement a first-party data platform should complete the following steps to maximize their success:

Determine your goals

Identify the goals for activating a first-party data platform, ideally tying the goals to the overarching business goals.

Consider the following questions to establish your preliminary goals:

• What campaigns do you wish you could run now?
• What parts of your process do you wish were smoother and more efficient?
• What business outcomes (like revenue or cost savings) do you hope to drive?
• What would cross-channel marketing look like in an ideal world for your organization?

The goals can evolve as the organization matures its strategy, however, it is important to have a clear definition of success when starting.

Establish your data strategy

Create a first-party data strategy to detail how the organization will collect, analyze, and use customer data responsibly and adhere to all applicable privacy regulations.

This step typically happens in phases. To fast-track the initial implementation, determine what data is necessary for the first use case and get that use case in place. Effective data strategies can enable an organization to stay agile and innovate, all while delivering consistent customer experiences.

Centralize your data

Organizations need to store customer data in a data cloud before employing a first-party data platform. Data clouds include options like Google BigQuery, Snowflake, and Amazon Redshift.

Data ingestion tools are often used to move data into a centralized location for the first-party data platform to access. One way to fast-track this step is to centralize the data needed for the first use case or campaign using data integration or data management tools such as Fivertran, GrowthLoop, Matillion, Metarouter, and Snowplow.

Find an activation tool

Once the data is centralized, seek out a first-party data platform to activate data stored in the warehouse. 

When considering first-party data platform options, consider the following factors:

• Features: Does the platform enable the intended use cases and elements detailed in the organization’s first-party data strategy?
• Integration: Does the platform integrate with the organization’s existing technology and marketing platforms?
• Usability: How intuitive is the platform to use? Does the provider guide users through the initial implementation?
• Security: How does the platform ensure compliance with privacy regulations and protect customer data from breaches?
• Scalability: Will the platform scale with the organization’s growth?