Key Differences between First, Second and Third-Party Data in Programmatic Advertising

With programmatic ads, brands can now leverage rich data sets that enable them to reach target audiences at the most relevant time and place. While savvy advertisers know that audience data is at the heart of programmatic, many are often confused by the differences between the three main data types available for building custom audience segments: First, Second and Third-Party Data.

First-Party Data

First party data is collected directly from users, customers or audiences, and is owned, managed and controlled internally by brands. It is the most valuable form of data as it is reliable, accurate, detailed and driven by a consensual relationship of interaction and engagement between the user and the advertiser.

Sources of First-Party Data:

  • Mobile apps
  • Websites
  • Customer and user feedback
  • Customer Relationship Management (CRM) systems
  • Transactional activities such as product or in-app purchases
  • Contact center communications
  • Point-of-sale communications
  • Web and mobile analytics tools
  • Subscriptions and newsletter sign ups

While first-party data is mostly used by advertisers who are running re-targeting campaigns, the main drawback of first-party data is that it provides limited reach – as the data collected is exclusive only to users who interact directly with the brand. As such, this data set is not large enough to help advertisers scale campaigns aimed at reaching new audiences.

Second-Party Data

Seen as a way to mitigate first-party data limitations on reaching new audiences, second-party data involves buying from, or sharing internal first-party data, with another trusted partner advertiser who share common interests and objectives.

For example, a website selling shoes may share their first-party data with another website selling shoe polishers; or a website who sells clothes may share their first-party data with another website who sells accessories. In this instance, user cookie data may be shared between parties, whereby ads can then be served to the same user across both websites.

While second-party data essentially helps with expanding the reach and effectiveness of partner advertisers’ campaigns, promotions and user acquisition, it is still limited to the reach of your first-party data partners combined. There are also concerns on data privacy as partners do not have control over how first-party data is collected, processed and qualified.

Third-Party Data

Third-party data is collected by entities that often do not have a direct relationship with end users. This data mix typically consists of information collected externally from multiple sources, which include user site preferences, browsing behavioral patterns, interests, hobbies, demographics; and may also contain first-party data sold to advertisers.

Data from these multiple sources are then bought by data aggregators or data management platforms (DMP), who serve as a central data warehouse of third-party data. From the sheer volume and wealth of data collected, DMPs will proceed to anonymize the data and re-purpose them into many different groups of classifications or audience segments, preparing them for purchase by an advertiser looking to expand their ad targeting campaigns. Check out this DMP guide by BlueKai.

While one key benefit of integrating third-party data into programmatic campaigns is that it provides extensive reach (which addresses the main limitation of first and second-party data), the relevance of third-party data can sometimes be described as “hit and miss” – as information collected are often based on past user behavior and may not be completely representative of current behavior. Additionally, an advertiser will have no idea on the quality of data, where and how the data was collected, and if the data source is up to date.

Not all data is collected equal

When looking to partner with a data provider for your programmatic campaigns, be sure to check the quality of the data before agreeing to buying large data sets. Equipped with your understanding of first, second and third-party data, question the provider on how the data was collected and seek to determine the accuracy and reliability of the data source.

Always ask to test the data by running a small campaign and see if it delivers better metrics on click-through, engagement and purchase rates. Be aware that while buying data from one large provider that has been quality checked may be more expensive, long-term performance results will be more reliable than buying data from many smaller partners who may not be able to match the quality.

Finding the right audience segments is often a case of trial and error, as every data provider define and classify their segments differently. Be prepared to test data-sets from more than one provider and rigorously tweak your campaigns in order to find the right data partner that help maximize your return on ad spend.

13 Popular Growth Hacking Myths, Debunked

As the concept of growth hacking continues to gain popularity, plenty of information is being spread around the web. Some of it, of course, is accurate. But not everything you read on the internet is true. Below, you’ll find 13 of the “most popular” growth hacking myths around the web. See if you agree or disagree with them and leave your comments below!

1) Growth Hackers Are Marketers

Perhaps the most common myth you see online is that growth hacking, at its simplest, is just a new version of conversion-oriented online marketing. In fact, that statement could not be further from the truth.

Whereas marketers focus specifically on promoting a product or brand, growth hackers focus on the core goal of growing the company. That includes marketing techniques and goals, but is ultimately product-driven.

2) Growth Hackers Cannot Be Marketers

In direct opposition to the point above, some evangelists of the philosophy believe that marketers cannot be growth hackers because of their promotional focus. Don’t let these experts fool you.

As explained, many of the concept’s origins stem from marketing. Growth hackers may not be marketers, as they focus narrowly on company growth, but marketers are well-suited to make the transition into a growth-oriented environment.

3) Growth Hackers Are Programmers

I get it: it’s an easy connection to make. Even beyond the obvious hacking-coding implications, the fact that growth hackers have to take part in engineering the online experience leads many marketers to believe that without extensive coding experience, they cannot succeed as growth hackers.

In reality, though, growth hacking is a team experience. If you have someone on your team who can develop and code websites, you don’t need to be a programmer by trade.

4) Growth Hacking is Unethical

If your singular goal is growth, you may use any method possible to achieve your goal. That however, doesn’t mean that growth hacking is Machiavellian by definition.

Many growth hacking techniques — websites optimized for conversions, and analytics aimed to better focus your efforts — don’t even raise the question of whether your efforts are ethical or not. As long as you always keep your customers in mind, you’ll likely find the right lines to draw.

5) There is a Solve-All Blueprint

This is another misconception stemming from the concept’s name: finding a ‘hack’ implies finding a blueprint that allows you to engineer your efforts as you please. But that hack is very much company-specific.

There is no single growth hacking blueprint that, once implemented, will see your company follow the likes of Uber, Dropbox, Facebook etc. While there may be frameworks involved, implementing these processes and experiments may lead to very different results for your company than it would for others.

6) Creativity Takes a Backseat

If the goal is achieving company growth, and the approach is analytical, it’s easy to think that creativity will take a backseat in growth hacking. In fact, is a core required skill to succeed. As TechCrunch points out,

A growth hacker has a vibrant mental dexterity to think of new ways to acquire and loop in users. Growth hackers do not stop at data but build into new and unknown frontiers to find growth.

7) Growth Hacking is a Quick Fix

Your company is not doing as well as you’d like, so let’s just try some growth hacking! As you might imagine, that approach will not lead to success.

Growth hacking is not a quick fix to immediate company problems, but requires a company-wide commitment as well as the needed time to establish strategy, goals, run experiments, pivot (when necessary), and to see which tactics best help you achieve your goals.

8) A Growth Hacker Can Solve Everything

Simply bringing in someone who considers themselves a ‘growth hacker’ is not enough to successfully embrace the philosophy. A single growth hacker, no matter how accomplished, will not be able to implement the strategy without company-wide buy in and commitment.

As you begin to engage in growth hacking, make sure that your company and team is ready for the challenge. Focusing all efforts toward a singular goal can be challenging, but is absolutely necessary if you want to succeed both in the short and long term.

9) Growth Hacking Only Works in Startups

The concept has become famous through Silicon Valley startups, who used growth hacking techniques to achieve rapid and sustainable growth. Think Uber, Airbnb, and Dropbox.

But while it’s an undoubtedly good fit for new companies starting out, it can work just as well in larger corporations. Facebook, for example, still employs a growth team that is instrumental in helping the world’s largest social media network remain innovative and successful.

Larger corporations do face the challenge of reconciling the growth hacking philosophy with existing and possibly rigid company cultures. But if you successfully navigate that challenge, you can still take advantage of the many benefits associated with growth “hacking”.

10) It’s All About Growing Users

Here’s another one of my favorite growth hacking myths: it’s all about growing new users, which means that if your business relies on return customers and recurring revenue, you may want to look elsewhere for growth.

That, of course, is far from the truth. Growth hackers understand that their goals are nuanced, which is why every strategy begins with setting goals that are unique for the company that implements the concept. If those goals focus on retaining rather than gaining customers, the same steps in the process still apply and can be successful.

11) Growth Hacking is Tactics-Driven

A close examination of the growth hacking process reveals that at its core is a recurring loop of experiments, which consists of trying a variety of tactics and analyzing their success and scalability. That, in turn, has led some to believe that the philosophy is ultimately tactics-driven.

However, that is not the case. Growth hacking is process-driven, as ConversionXL points out:

Growth teams should be focused on creating and refining a systematic, scalable, repeatable growth process. A string of tactics is a string of shots in the dark. Even if you do hit your mark by chance, you won’t be able to repeat the success.

12) Growth Hacking Follows a Linear Process

Out of the debunked myth above comes a second: because growth hacking is process-driven, it’s a linear process. However, that’s not quite true either: while the process comes first, that process is not linear.

Every successful growth hack begins with defining goals and implementing the analytics necessary to track those goals. But that’s where it stops being linear. Proper growth processes often involve strings of experiments looping continuously in order to ensure that the best possible tactics are implemented. At the same time, constant analysis ensures that the first two steps can always be adjusted. Successful growth hacking is circular, not linear.

13) Growth Hacking is a Fad

I’ll end with perhaps the single most entertaining, and frustrating, growth hacking myth circulating around the web: the concept is a fad, promoted by some evangelists and bound to fade into the background as the next idea comes around.

But is that really true? As mentioned above, some of the most successful startups and corporations in today’s digital environment are built on a growth oriented philosophy. For decades, companies have prioritized growth-related concepts to elevate and scale their success. It’s the term that is throwing people off, isn’t it?

As we move further into the digital age, the concept may adjust to new audiences, technologies, and trends that shape our environment. But growth hacking will remain relevant, especially as some of the above myths get debunked on a more regular basis.

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