Some definitions 

First-party data: Data from your own audience (whether you want to call them users, customers, consumers, etc.). Because you collected this data, you are sure of its provenance and its quality is high. e.g. behavioural data on your ecommerce site, captured data via landing page forms etc.

Second-party data: Data from a partner (their first-party data). This is usually paid for or bartered e.g. a brand works with publisher audience data, or retailer data. A data management platform will allow you to use second-party IDs for ad targeting and to improve attribution modelling.

Third-party data: Data aggregated and anonymized by vendors such as comScore and Acxiom. Third-party data is by definition more opaque and is again often used to bolster first-party data when targeting advertising.

It’s all about data quality

It should be fairly obvious what the benefits of first-, second- and third-party data are. Data quality is inversely proportional to data scale – i.e. third-party data is vast, but not necessarily good quality and may be available to many more marketers, too.

Second-party data to some extent enjoys the best of both worlds. This data can expand a marketer’s audience segment, but it may also show overlaps. New insights can be uncovered when two companies within complimentary verticals partner up (e.g. hotels and airlines).

Krux’s Chris O’Hara, writing for AdExchanger, puts it like this:

Marketers, increasingly sick of all the fraud and junk in the programmatic ecosystem, are turning toward second-party data to access the same audiences they bought heavily in print 30 years ago…

On the flip side, quality publishers are starting to understand that, when offered in a strict, policy-controlled environment that protects their largest asset – audience data – they can make way more money with data deals than media deals.

Put simply, second-party data is heralding a return to the good old days when big marketers depended on relationships with big publishers as the stewards of audiences…

And it’s also all about transparency

Part of the current attraction to second-party data is that data sharing (particularly third-party data) is currently under the spotlight of the GDPR. Any business that has data subjects in the EU likely to have to tighten up their privacy policy around personal data sharing.

At the point of data collection, third parties will need to be named (or at least a specific category of businesses needs to be mentioned) in order to achieve indirect consent that is informed, something which could arguably be said not to be the case with lots of third-party data at the moment. Many data controllers may need to make changes to be GDPR compliant.

The point is that data subjects don’t have as much control over their data when it enters the third party market, and what happens to that data is less transparent. Transparency and accountability represent advantages that second-party data has over third-party data.

The opacity of third-party data also extends to difficulty with cross-device tracking. Third-party cookies are ineffective on the Safari browser, mobile apps and connected TVs, and don’t sit around on consumer browsers forever. Unless vendors can prove that their third-party data allows for an understanding of mobile customer journeys, marketers won’t have a full picture of a crucial sales channel.

For more on second-party data, download Econsultancy’s report, Second-Party Data: The sharing economy for customer insight