For several years, marketers have relied on third-party data to gain insight into their demographics and target their customers. This method of data collection was in demand for its subversive nature. Let’s take a deeper look into what is third-party data, its drawbacks, and the best alternative to third-party data.
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What Is Third-Party Data?
As a brief introduction, companies collect third-party data from a variety of sources with no real connection to the consumer. It includes names, addresses, social media contacts, ages, genders, and even buyer behaviors.
Marketers will typically purchase this data to learn more about current customers or build new consumer databases in a way that doesn’t alert the individuals.
For a while, people see this as an easy way to improve a brand’s knowledge of their target audiences and increase its reach to bring in new customers. Unfortunately, this goal wasn’t always achievable.
What Are Its Drawbacks?
There were huge variations between the third-party data collection companies and factual information supplied by the individuals themselves. Sometimes, one person could fall into multiple competing categories for marketing campaigns.
Thus, the brand would have no real way of knowing the gender or age of a customer, causing them to waste money on marketing campaigns that didn’t provide expected returns.
This is because data collection is imprecise by nature. Because the third-party data provider has no relationship with the person, they’re forced to collect data and draw conclusions — which are often inaccurate. While they may know that this person visited a specific website or filled out a contact form, but they don’t know the specific circumstances of those behaviors.
In short, third-party data providers make guesses. While those guesses could be right, but they’re often incorrect. They lack context and first-party verification, which makes this data a lot less unreliable (and a lot less valuable) than many people think.
Therefore, it’s no wonder that many experts are now identifying the demise of third-party data.
Which is an Alternative To Third-Party Data?
Fortunately, there is a substitute to third-party data that won’t require businesses to waste their resources on data they can’t feasibly use. It is the first-party data that is precise and compelling.
First-party data is the most valuable to brands. The end-user examines it and also gets at a much lower cost to businesses. While the brand might provide some incentive (like a coupon code or exclusive access to sales) in exchange for the information. There is no direct payment required for this information.
Brands can use first-party data collection to connect with their customers. They can increase their existing customer knowledge. It means they will find new ways to reach those consumers and keep them coming back. Businesses can also form databases for new customers, increasing the brand’s insights, and overall reach.
By inviting customers to provide data — like an email address, for example — you will gain instant entry into their world. And while taking on that data collection, yourself might seem more interfering at first. However, it provides a way to create and strengthen a mutually beneficial relationship with customers.
The Bottom Line
If you are looking to increase your customer databases and insights, start with first-party data collection. Although third-party data might sound easier to come by, it’s important to remember that this shortcut won’t provide the tools you need for a successful marketing strategy. You want accurate and verified information that can help your business thrive — and first-party data is the key.