What 1st, 2nd and 3rd party data mean, and how to use them

David Cockrell
by David Cockrell – Director


What you need to know about parties when it comes to data insight

This post is all about parties. Sadly, we can’t help with your social life – but we can help you make sense of an important distinction in data science.

Have you heard of first, second and third party data? Do you know what they are? Do you know whether or how you’re using them? And why does it matter?

Not everyone’s a geospatial native who eats sleeps and breathes data like we do. But these days, data, data science, reporting and analysis are crucial tools in many professional roles and organisations across every sector. The latest digital data analysis tools use incredibly powerful and sophisticated technology and algorithms. But you don’t need to be an expert to put them to work. Understanding the main principles of the three data types can help you make better decisions based on data.

1st Party Data

You collect this yourself. It could be from exit or in-store surveys of customers, from your EPOS system, your own website, from a loyalty card, your own mobile app, call centre records or customer newsletter sign-ups. These days, you may also collect it from Internet of Things (IoT) devices that carry sensors or cameras: carpark entry and exit data, camera records of footfall and flow or tracking devices on your vehicle fleet.

2nd Party Data

This is another company’s first party data – you may buy it from them or from a specialist data reseller. Sometimes, a reseller may enhance or add to the data by cleansing it, adding geospatial tags like addresses, sorting it or structuring it for easy use in your particular analysis applications or databases. For example, you could purchase data collected by a shopping mall owner, social media provider or technology provider. If you’re a tourist attraction, you might buy data from a train operator to help you understand more about potential visitors.

3rd Party Data

This might be publicly available information, such as Royal Mail address data, Land Registry or Electoral Roll records or data from the Office of National Statistics. It might be free or you might pay for it, if the supplier has worked on the data to enhance it. Examples of this are UK postcode data, Acorn consumer data and Paycheck household income estimates combined with Ordnance Survey maps, or HERE worldwide map content.

It could also be off the shelf data collected by a firm that specialises in this. Such companies may use telemarketing or online surveys to collect a wide range of data about individuals and businesses, then compile and sell it.

The Perfect Blend of Data

All these types of data can be very valuable and powerful, particularly if they’re used in combination. Some people say that first party data that you control is the only reliable source. However, it can limit the insight you can derive.

Your own data may answer questions about your existing customers. But adding second or third party data could help you understand more about them from different perspectives. It can also help you discover untapped markets and potential customers that you can’t identify from your current position.

Not All Data is Equally Good

The challenge is understanding the quality of data, what it tells you and what it doesn’t – whether it’s yours, someone else’s or in the public domain.

For example, government data may sound reliable and trustworthy, but there may be aspects of it that haven’t been collected comprehensively or checked for accuracy and relevance.

We recently looked at some national accident statistics provided by a government body. The data included information about the kind of area where incidents happen. When we checked the postcodes, we found that their definitions of “urban” and “rural” were quite different from ours. We had to check and correct the records to provide a useable and accurate data set for our client’s needs.

Does Third Party Data Deserve its Poor Reputation?

Some resellers provide vast but poor-quality data sets, with duplication, inaccuracies and outdated information. It’s very important to check the details of what you’re getting: how and when was the data gathered, exactly what it includes and down to what level of detail. For example, if you want to use customer data to look at a very small catchment, it needs to cover a high proportion of addresses in the area and include information relevant to your business.

Getting the Best From Third Party Data

This can be a good moment to call for expert help – perhaps from some of those people like us who eat, sleep and breathe data.

A specialist consultant can help you determine what second and third party data might be of most value for the insights you want to acquire. They can recommend trusted sources and enhance data so it’s compatible with your systems and other data you hold. They can suggest optimal combinations of the three data types to support critical business decision-making and growth plans. They can help you design reporting and analysis that will help you understand your customers better and focus on what attracts them and makes them loyal.

If my colleagues or I can offer any advice about data selection and combinations for your, organisation, please get in touch.
David Cockrell, Director, CACI Data Logistics Group