What Is First Party Data?

As you probably are very well aware, first party data is information a company collects themselves directly from their audience or customer base and is data they own. With this new guide our focus is to inspire you with the endless possibilities working strategically with first party data.

We’ll uncover; how first party data differs from 2nd, 3rd and zero party data? Why is first party (and zero party) data so important? And how can you collect the data that matters and customers are happy to share – whilst building a memorable experience for your audience?

Let’s dive in…

The cookieless world is here…are you ready?

For years, digital marketers have relied upon cookies as the primary tool for tracking and collecting consumer data online. This data is used for targeting ads to the right audiences, and improving the user experience. 

But the customer data landscape has changed. 

We, as consumers, demand greater transparency and control over how our personal data is used. As a result, Google is phasing out third party cookies by 2023 and Apple’s focus on data privacy is already giving consumers the ability to opt-out of tracking and third party cookies on Apple’s browsers and in Apps on iOS devices. Some of the first data on user behavior after the release of iOS 14.5 exceeds any advertisers worst fears: Only 4% of iOS users in the US opted in to ad tracking.

That sends a clear message. 

Google has announced (february 2022) that they will launch steps to restrict cross-app tracking on Android to improve user privacy.

From a consumer perspective it’s good. But from an advertiser perspective it can seem daunting. 

No wonder that:

  • 41% of marketers believe their biggest challenge will be their inability to track the right data
  • 44% of marketers predict a need to increase their spend by 5% to 25% in order to reach the same goals as 2021 (source: GetApp & HubSpot). 

With a huge percentage of users opting out of tracking, combined with an ongoing request for content tailored to user’s preferences and needs, marketers are faced with an imminent challenge:

How do they get the data they need to create more personalized experiences for their audience?

The answer lies in first party data.

What’s the difference between 1st, 2nd and 3rd party data?

Customer data comes from various sources. As mentioned earlier, the data that companies collect directly from their audience is first party data. The data companies source from partners or purchase is called second-party or third party data. And then there is zero-party data, that a customer intentionally and proactively shares.

The difference between zero, first, second and third party data
First party data

What is first party data?

First party data is better quality when compared to other forms of customer data, because it’s the most reliable data available to you (together with zero-party data.) First party data can be collected from various data points such as:

  • Website activity and transactions
  • In-store purchase data
  • Apps
  • Emails/newsletters 
  • Customer feedback / support interactions
  • Surveys 

For marketers, first party data is one of the most valuable sources of users’ data, as it provides quality insights into your audience. Every direct contact with a customer gives the opportunity to collect data and learn more about your audience. As a company, you can use this information (interests, behaviors, demographic, purchase history, sales interaction etc.) to create more personalized and tailored experiences, content and ads for your customers.  

Example: A clothing company collects first party data such as name, email address and date of birth on their website, in their App or in store. They then send an email to their customers a week before their birthday with a birthday voucher for their online store. 

What is second party data?

Second party data is any first party data purchased from another company, which you have contractual permission to use. It comes from a source other than your audience, but is still relevant. Examples of second party data could be:

  • Social media data 
  • Activity on websites 
  • Mobile app usage 

In a second party data transaction, the buyer and the seller agree on terms and exchange the data. Second party data is usually of greater value to you than third party data, as it’s not open for everyone to buy. Companies usually purchase second party data from another company that has a similar audience. 

get second party data

Examples: The clothing company might exchange data with a local shoe store to advertise outfits that match the shoes people buy. Or it could be publishers selling their first party customer insights to advertisers as second party data. 

illustration of customers

What is third party data?

Third party data is bought from other companies. It’s aggregated data collected from multiple sources, public or non-public, that the customer may not have given consensually. Third party data is information that’s collected by an entity that doesn’t have a direct relationship with consumers. 

Third party data includes information such as:

  • Demographics
  • Interests
  • Industry
  • Audience behavior

It can be collected by independent researchers that gather information about a large audience via feedback forms, interviews or surveys. Since the data is collected on random sample size the data might not be relevant for your business. 

Third party data has lower accuracy and reliability, and it’s used to target consumers that are assumed to be interested in your product. A Deloitte study reported that more than two-thirds of people stated that third-party data about them was only 0 to 50 percent correct.

Example: To reach a wider audience, a clothing company buys a list from a data company of people who have recently visited the website of competitors. The clothing company then shows ads to this audience on social and web channels.

illustration of zero party data

What is zero party data?

The new boy in class is called zero party data. 

Zero-party data is in many ways the same as first party data. It’s data that a customer intentionally and pro-actively shares with a brand such as:

  • communication preferences
  • product preferences
  • interests (such as tools for marketers, or things to do on vacation.) 

Collecting zero-party data enables you to create personalized, relevant experiences. 

The only downside of zero-party data collection is that if you ask customers for too much information at once your audience might feel overwhelmed.  

It’s not always easy to find the balance. 

But by applying game mechanics to your marketing initiatives you can engage with your audience in a non-intrusive way and collect the data that your customers are happy to share. Without feeling overwhelmed. And whilst having a memorable experience with your brand.

Example: A clothing company collects first and zero party data via an online survey or personality test to discover their customers’s preferences. They then create a segmented email campaign based on those answers. The game mechanics they could use here include: to be challenged, to have fun, and mirroring.

Here’s a real life example: 

Masai Clothing Company, an international fashion brand, were looking for a way to generate more leads, while simultaneously collecting both first and zero party consumer data. A personality test was the answer:

Personality test from Masai

For a brand like Masai that creates products that have so much to do with personal preferences, getting information that’s proactively shared by customers is invaluable. Gamification provides a channel for customers to share this information that otherwise wouldn’t be accessible. Consumers are directly telling the brand exactly what they want. And most importantly, Masai is listening and using those insights to create more of what their audience wants. 

Maria Stigsnæs-Eriksen, Head of E-Commerce Sales & Campaigns at Masai explains:

Game mechanics give us a way to listen to our customers’ preferences and use that information to direct products to the markets that they’ll perform best in. Gamification campaigns have also lowered our CPL and reduced a new customer’s first time to purchase. In addition to all of this, the data we gathered also enabled me to write a brief to our organization about what our audience wants from Masai.”

Read the full success story here.

Test your knowledge of first party data in this short game:

7 reasons why it is important to collect zero and first party data

Let’s explain a bit more as to WHY it is important to collect zero and first party data if you want to survive in today’s struggle to cut through the noise. 

1) Most effective data

Zero and first party data is clean, unaltered, accurate. It’s the most effective for all aspects of marketing because it’s gathered directly from your audience. You get the data directly from your most important source, and it doesn’t get any better than that!

2) Engage with your existing customer base

Zero and first party data gives you the opportunity to understand your customer’s interests, desires, activities and needs. You’re then able to engage with them in a way they want, need and anticipate without it appearing as spam.

3) Permission granted gives you better use of your marketing initiatives

You become the company where communication is based on trust. Customers know why you have information about them, and they allow you to use it (carefully). Custom-made and segmented marketing is non-intrusive and non-disruptive and it leaves you and your customers with a mutual agreement and clear expectations.

4) Collecting data in compliance with GDPR, and other regulations

Collecting data directly, as you do with first party data, allows you to gather necessary consent to use your audience data for marketing purposes in a targeted way knowing the data source was compliant and legitimate.

5) Using data that is safe on all browsers

Different browsers such as Safari and Firefox already block third party cookies, and Chrome is not far behind. Meaning your marketing initiatives are already likely affected. Using first party data allows you to use ads targeting segments created from your own data –  and those ads will be less likely to be blocked, as they are acknowledged as “ok” across the web.

6) Provide personalized customer experiences

Love your customers and they’ll love you back. Use game mechanics to collect the important first party data to gain deeper insights about your audience. Then engage them in an inclusive way to make them feel special.

7) The highest return on investment

Last but not least. Zero and first party data yields the highest return on investment of any data type. So why not focus more on the value of your loyal customers? As you probably already know it’s cheaper to retain a current customer than it is to attract a new one.

  • Depending on your industry and which study you read, it’s anywhere from five to 25x cheaper to retain an existing customer than it is to acquire a new one. So if you spend $1,000 to get a new customer, it will only cost you between $40 – $200 to keep a current one. 
  • Returning customers will spend 67% more on average during months 31-36 of their relationship with your company than a new customer will in their first six months (according to research done by Frederick Reichheld of Bain & Company.
  • The same research shows that a 5% increase in investment into customer retention can boost profit anywhere between 25% to 95%.
  • Not only will it take you longer to get your new customers to spend as much as repeat customers, according to research by Francis Buttle, it actually costs companies 16x more to nurture a new customer to the same level of revenue contribution as an existing, loyal customer. So if you spend $200 pr. existing customer, it will cost you $3200 pr. new customer to get them up to the same purchase level. 
  • And finally, existing customers are 50% more likely to try new products from your company, and they’re willing to spend 31% more when compared to your new customers (according to Invesp).

Needless to say that investment in retention, brand loyalty and getting those zero and first party data is super important if you want to grow your business. 

How game mechanics will help you collect the data that matters

So the writing is on the wall: 

It’s time for marketers to step up their first party data game!

Unfortunately, many marketers lack the right technologies and data strategies to leverage the potential of first party data. Marketers need to start planning alternative approaches to collect that important data. The key will be to develop new strategies to get first party (and zero-party) data. 

OK, but how do I do that?

One way to do this is to start implementing game mechanics such as challenge, reward, mirroring, compete and to have fun in your marketing strategy. These game mechanics are a mechanism for turning someone from unengaged to engaged, and they can be used in commercial activities throughout the customer journey. 

This way you will inspire customers to engage more with your brand. As an outcome you can collect more valuable customer data over time. With the attention span of human beings being around 8 seconds, and the attention span on social media even lower with 2 seconds, it is super hard to get people’s attention. 

But the good news is: when companies implement game mechanics in their marketing campaigns, we see an average of 67 seconds spent with the brand. 

67 seconds! That statistic needs a line for itself. 

It’s a proven fact: Interactive and more playable marketing initiatives inspire customers to engage more with your brand. 

For a visual overview of which game examples, you can use to engage your audience, and to get and nurture your leads and customers throughout the whole customer journey, download this inspirational guide: 

How gamification fits into the zero and first-party data universe

When you provide an experience that invites your audience to interact with you, you can keep your customers, grow your database, and ultimately increase sales. It’s a win-win, as the modern consumer expects an extraordinary experience. In fact, a study by Salesforce showed that: 

  • 59% of customers believe that companies need to provide cutting-edge digital experiences to keep their business. 
  • More so, 80% of customers say the experience a company provides is just as important as its products or services. 
  • 79% of customers are willing to share relevant information about themselves in exchange for contextualized interactions in which they’re immediately known and understood.

People engage again and again

When we combine this with our own data based on 300m+ campaign sessions, with 70+m users, 29m+ unique registrations, and +2.5m hours of engagement, we can see that people engage with the same interactive campaigns again, and again and again even when they have to give more details about themselves. 

And some of our most popular game types are actually quizzes (26% of total games used) and personality tests with 7% (of total games used). In these types of games the customer or potential customer often gives a lot of information about themselves to the brand they interact with. This way brands collect an immense amount of vital zero and first party data about their target group. The campaigns are literally spoon-fed.

Today, providing an excellent customer experience is an even more important success factor than price or product. 

But how do we create great customer experiences? 

We create great customer experiences when we understand our customers, and we understand our customers with the help of data. That’s why it’s super important to be data rich with content-driven experiences. 

How can you get the much needed insights about your customers? You can start by implementing playable mechanics to get your audience interested in what you offer. 

To get a little practical here, let’s look at the different places, where you can use gamification to both engage your audience and to collect more data:

Website:

Pick up online behavioral data to understand more about your customers / audiences’ needs and preferences. Add ‘always on’ games to your website to continuously gather data. 

An always-on gamified campaign helped cat litter seller Natusan to market a product with an educational message behind it, to communicate product quality and sustainability, as well as convenience for pet parents. 

Natusan’s ‘The Waste Calculator’ campaign has proved to be a great way to educate consumers on their waste contributions in a non-judgemental way while persuading pet parents to make a switch to something better for the environment. 26% of the game registrants signed up for the free trial.

natusan use game mechanics in quiz

Read the full success story on Natusan here.

Apps

By presenting fun and engaging games to your existing customer database you stay top of mind and build closer relationships with them.

On the right, you can see an example of how Coop Denmark used a stocking a Christmas time to engage people to play. A total of 700,000 people engaged with this Christmas-themed offering a total of 3.5 million times.

Coop App use game mechanics

Social media

Use game mechanics to gain higher engagement on your ads or organic posts on social media.

We just launched an international YouGov survey of more than 5,000 consumers to find out how they feel about playable marketing and the meaningful experiences it provides. The study revealed that on average, consumers are 56% more likely to click a gamified ad, as compared to a normal static ad. 

consumer report yougov and leadfamly

Emails/newsletters

By adding game mechanics to your email flows / newsletters you can intensify the engagements with your customers and learn more about their unique needs and expectations.

Instore – at store openings

Why not give your audience a full fun experience, when they are waiting in line in your store or even outside, if you have a new store opening? 

Do you enjoy waiting in line? 

No? Well, neither do most of your customers, so why not make the waiting time a fun and engaging experience, which will make your brand stand out. You can seamlessly bridge the physical and digital world and enrich the customer experience by giving your customers something fun to do, while they’re waiting in line. Let them scan a QR-code and play a game, just like Shaping New Tomorrow. Shaping New Tomorrow used a digital gamification experience to entertain and build brand loyalty at a physical store opening.

Shaping New Tomorrow using game mechanics

Read more about this story on this blog post.

The marketing team created a Wheel Of Fortune that people could play while they waited in line to enter the store. Within the first 60 minutes of the campaign going live, Shaping New Tomorrow already had 200 registrations. By the end of the day, there were nearly 600 unique registrations, each player averaging 32 game plays each! (yes, that’s really the right number!)

To sum up

The cookies are crumbling, and modern marketers are relying on other resources to get the data they need. Zero and first party audience data is more relevant than ever to fuel marketing campaigns, personalise content and to acquire new customers. 

Being able to analyse how customers interact with your brand and provide truly personalized experiences will help to retain existing customers, create new customer relationships, and ultimately drive revenue growth. 

In this age of consumer empowerment, brands that focus on driving customer loyalty, and responding to customer wants and needs with 1:1 interactive communication are the ones winning the game. There is no other way forward than to adapt and embrace these changes. The quicker you take action, the better.

One of the means to win your customers over is by implementing gamified marketing campaigns that your audience wants to interact with. 

As marketers increasingly adopt marketing gamification as a strategic discipline, we see more personalised and relevant marketing campaigns popping up. 

Try this swipe game about first party data, and see how many of the 10 questions you get correct. 

Let’s play: