Finally, as we wrap up our lessons on data, we want to talk about the different types and quality of data you may use as a marketer or analyst, as determined by how you collect it. If you ever had to write a report for school that involved research, you know that using primary sources like journals or firsthand accounts were always the best sources to use, because they got you the closest to what actually happened. Secondary or tertiary sources were fine, but weren't as factual, or helpful as primary sources. The same is true when you're working with first-party, second-party, and third-party data. Not all data is equally as useful or helpful. So it's important to know the difference between the three, how you obtained each, and when you would use each one to help in your marketing efforts. We'll start with first-party data, since that type of data is going to be the most valuable and relevant to you. First-party data is simply data you've collected about your customers directly from your customers. This can be through the offline and online sources we mentioned in previous videos, like tracking site visits, social media follows, or via sign up in store. Examples of first-party data could be the name and address of a customer who signs up for a rewards card at a store location. The amount of unique visitors your homepage received last year, the information a customer fills in about their interests when they fill out a newsletter sign-up form. The average age of Facebook users who clicked on one of your ads, or the customers who purchased a specific item last month. Because first-party data directly reflects your audience or customer base, it will show you customers' behavior and actions, purchase history, and how your audience engages with your brand. This kind of information can help you plan campaigns and new strategies, and continue deepening the relationship with your current audience. Additionally, because first-party data is data directly collected from your customers, you know that it's going to be accurate, and provide a lot of rich insights. But one of the drawbacks is that it's only limited to your audience, so you aren't necessarily getting insights from potential audiences, or able to engage with new customers. Still, first-party data is going to be the most useful to you, and the most accurate representation of your audience. Second-party data is essentially second hand data, or data you did not collect yourself. Think of it as another businesses' first-party data that they're sharing with you. Or, if you share your first-party data with another business, that would be their second-party data. Why would businesses willingly share data with one another? If two businesses cater to a similar demographic or audience, they may partner in sharing their data, which may give insights into potential new audiences or trends. For example, there's a coffee shop on one block, and a bakery on the next block, and the owners are friends. The coffee shop only focuses on coffee, no baked goods. But sometimes, people come in with bags from the bakery. Similarly, the bakery just focuses on baked goods, and doesn't want to branch into coffee. But they often see customers come in with cups from the coffee shop. Even though there is some overlap, there are still bakery customers that may not yet have tried the coffee shop, but may enjoy it. And there are coffee shop customers that may not yet have tried the bakery. The businesses then share their first-party data with each other, so that each business can now target more people who may be interested in their products, and bringing more new customers. Businesses may also choose to purchase second-party data they believe could help them in their marketing efforts. This approach is certainly easier, but unless you're able to preview the data first, you may not be getting ahold of useful data for your business. You may also run into privacy issues, based on how the data was originally collected. Finally, third-party data is collected not by you or another business you partnered with, but by a third party not directly linked to the end customer. That data is then sold to businesses who can use it to expand their targeting efforts. Third-party data is collected using similar approaches to first-party data, like through customer surveys, feedback, or tracking of online behavior. But the data is typically collected through random sampling. In other words, it won't be your particular audience, but across the general population. For example, a new restaurant opens in a neighborhood, and they want to target an audience within a specific zip code. They may buy data about everyone within that particular area. They, of course, wouldn't know if the population on the list would even like their restaurant, or be in their target audience. But they can use the data to do an all encompassing campaign, or add the data to their current customer data to increase their reach. When you buy third-party data, you may not have as much insight into how the data was collected. And the data may be incomplete, or of lower quality than first-party data. Additionally, any organization can purchase the data, so it wouldn't be uniquely yours. There may also be further privacy risk around how third-party data was collected as well. While third-party data may not be the primary data set a marketer uses, third-party data can be useful to round out first or second-party data, or for comparison. So acquiring third-party data may be worth it. What data will be best for you? You will probably find reasons to use all three in your marketing efforts and planning. But it's going to be best to emphasize first-party data, since that will give you the most accurate reflection of who your customers are, and provide you the most accurate insight into their behaviors.
