Zero-Party Data vs First-Party Data

The best marketing strategies rely on ethical data collection and usage to improve audience targeting. That’s why there’s so much buzz around zero party data collection right now. But can it really replace first-party data, or is it just one piece of the puzzle?

In this guide, we’ll break down the four main types of customer data. Then, we’ll compare zero party vs first party data to figure out what’s actually worth your time.

Key Takeaways:

• Third-party data is indirect information you collect from external sources (e.g., marketplaces) without the user’s consent.
• Second-party data is essentially another company’s first-party data accessible to you through a direct partnership.
• First-party data is collected directly from your own audience via paid ads or other marketing channels, making it more accurate than second or third-party.
• Zero-party data is based on the insights your customers provide willingly through filled-out forms, surveys, or other means, usually in exchange for something valuable.
• Instead of choosing between applying first party data vs zero party data, combine both for richer targeting, personalization, and improved campaigns with advanced tracking and attribution.

Understanding Types of Customer Data

Marketers have mostly focused on three types of customer data: first-party, second-party, and third-party. Let’s call these the “big three” to keep things simple. However, zero-party data is gaining ground, and many see it as a possible first-party alternative. Let’s figure out what makes each of them stand out.

Third-Party, Second-Party, First-Party, and Zero-Party Data at a Glance

Here’s a quick look at the key differences between zero vs first party data and others in the big three.

	Third-party	Second-party	First-party	Zero-party
Type of data	Indirect customer data	Indirect customer data	Direct customer data	Direct customer data
How it’s collected	Usually aggregated and collected without the direct consent of the user to share this information	Collected by another company about mutual customers	Collected with all the privacy regulations taken care of, and with the consent of the user	The user willingly shared this data with the brand
Data accuracy	Usually inaccurate and not reliable	Usually accurate, but only accessible through a partnership	Highly accurate and reliable for advertising and marketing purposes	Reliable for understanding the customer better, identifying preferred methods of communication
Examples	• Email • Income • Website visits • Search history	• Sales data • Survey responses • Customer demographics	• Click data • Live chat transcripts • Purchase history • Conversion data	• Language • Age • Communication preferences • Pain points
Use cases	• Market research • Audience targeting • Campaign testing • Expansion into new markets	• Market expansion • Co-branded marketing • Customer behavior prediction	• Customer retention • Product recommendations • Personalized offers	• Product development • Audience segmentation • Personalized communication • Content recommendations

As you can see, there are not many differences in the data itself, but rather in the way you gather and use it. Also, the trustworthiness of the data differs from one type to another. For instance, the info you collect directly from your audience is more reliable and accurate than those you get from external sources. Let’s go over each type and try to better understand how they work and why they matter.

What Is Third-Party Data?

Also called external data, third-party data is indirect customer data collected without the users’ intent or consent for using it.

If we compare 1st party data vs 3rd party data, the latter lacks user permission. Third-party data used to be collected through website cookies and included all the customer information. In the past, it worked the following way: various companies collected users’ data through cookies and then resold it through various third-party data marketplaces.

Currently, you can get it from data aggregators and advertisers. Plus, they’re easily resold through online marketplaces like DataLogix or Adobe Audience Marketing, where a lot of people can access them. But its reliability is really questionable.

Another way you might have been using this type of data is through the Meta Pixel, third-party cookies, and device fingerprints, which transmit data about user behavior across different websites.

Third party data examples include:

• email address;
• income;
• website visits;
• search history;
• social media data.

Advantages of Third-Party Data

Although typically questionable, there are a few good things about using such kinds of data.

1. Audience targeting — It enables you to target specific groups based on detailed demographic and behavioral profiles. You can easily reach customers you might not find through your data alone.
2. Market expansion — By tapping into broader datasets, you’ll find new audience segments, spot emerging trends, and break into new markets.
3. Time savings — Third-party providers have already done the groundwork for you. So, you only need to focus on launching your campaign while skipping the heavy lifting of data collection and analysis.

Disadvantages of Third-Party Data

Even though third-party data improves advertising and targeting, there are serious disadvantages to relying only on this type of data.

1. Irrelevant data — You might be spending your marketing budget on data that wouldn’t even match your actual target audience.
2. Inaccurate info — You’re also at risk of purchasing inaccurate or outdated data, which can wreck your ad performance and drain your budget even more.
3. Compliance risks — Data from shady sources that don’t comply with privacy regulations might land you in legal trouble and dent your reputation.

What Is Second Party Data?

Second party data is another company’s first-party data that they share privately with you through a mutually beneficial relationship.

When contrasting first party data vs second party data, the difference lies in the source (i.e., who gets the information: you or a company you’ve partnered with). It’s a solid middle ground between trust and scale. You can access customer information like:

• purchase history;
• shopping frequency;
• demographics.

With this kind of insight, you can create personalized offers that truly appeal to your target audience based on their shopping habits.

Advantages of Second-Party Data

What is 2nd party data useful for? Here are several notable pros.

1. Data quality — When you team up with a trusted partner, you’ll receive solid, reliable data accuracy and quality. These companies also rely on the info they share with you, so they have a strong incentive to keep it accurate.
2. Exclusive access — You’ll get data that not everyone can access, which gives you a bit of an edge over competitors.
3. Stronger partnerships — Data sharing can strengthen business relationships and create opportunities for cross-promotions, putting your products in front of a new audience.

Disadvantages of Second-Party Data

However, 2nd party data also comes with its own possible flaws, here are a few of them.

1. Cost factor — Second party data can be pricey, especially when you partner with reputable companies that share high-value details.
2. Relevance risk — Even with a high-end brand, there’s always a chance you’ll shell out for data that doesn’t reflect your audience.
3. Limited control — Since you’re not collecting data yourself, you can’t control how it’s structured or updated (and you can only use it within agreed limits).

What Is First Party Data?

First-party data is the information you collect straight from your own audience with the users’ consent.

You can gather this data from your website and other marketing channels, as well as through paid channels like ads or email campaigns. Or, you can use organic first-party data collection tools and means, such as signup forms, surveys, quizzes, and social media listening.

Examples of first party data include:

• website activity;
• live chat transcripts;
• purchase history;
• CRM data;
• email interactions;
• conversion data.

These types of first party data are incredibly important because they’re the most relevant to your business, offering unmatched quality.

Additionally, with privacy laws like GDPR and CCPA in place, marketers are now required to collect and use data more transparently. These regulations put more power in the hands of users. They can now see what you’re collecting, opt out of tracking, or ask you to delete their data entirely, which makes privacy-first tracking more important than ever.

Advantages of First-Party Data for Your Ads

Why does first party data collection matter? All the data collected from users’ interaction with advertising, the website, and the product is accurate and should be used for optimization, targeting, and remarketing. Here are a couple of benefits of raw first-party data.

1. Smarter optimization — First-party powers all those smart algorithms and optimization tools marketers love to brag about, improving your ROI over time through accurate marketing attribution.
2. Adheres to privacy regulations — 1p data is privacy-compliant, it ensures necessary privacy rules are followed, and helps avoid the difficulties caused by cookieless updates because data is gathered in a privacy-friendly way.
3. Future-proof tracking — Another good thing about this data source is that it lets you bypass ad block detection, and you won’t have to fret over browser privacy updates.
4. Relevant ads — With access to real user behavior (including clicks, page views, and cart additions), you can create relevant, personalized ads your audience cares about, which also improves the way you allocate your advertising budget.
5. Better retargeting — If someone leaves an item in their cart, you can follow up with that exact item. It can help you map a conversion path of the user by detecting every click on his/her way before they make a final purchase. Even when you run out of stock, first-party data lets you recommend similar products to win them over.

Disadvantages of First-Party Data

But is it really as good as it sounds? Of course, there are 1st party data examples that highlight a few imperfections.

1. Limited reach — You’re only targeting people who already know your brand, which makes it hard to grow beyond your existing audience.
2. Data quality — Data is only as good as the setup. If you’re not tracking the right behaviors, or if your data’s a mess, it’s easy to miss valuable insights or misfire with targeting.
3. Slow to scale — Unless you’ve got a high-traffic site or a large user base, it takes months of collecting data before machine learning campaigns become viable.

What Is Zero-Party Data?

Zero-party data is the information a user willingly shares with your brand. Typically, it’s the data you collect through live chat, surveys, or forms on your website.

It’s the data that the user has every single intention to share with your brand. For example, after a live chat, you could prompt the user to complete a survey that asks how satisfied they are and what could be better. Customers volunteer this data because they expect your brand to use it in their best interest. That means that you also have the consent to use it.

Here are several other zero-party data examples you can collect, including various personal details like:

• age;
• clothes size;
• skin type;
• employment status;
• place of residence;
• spoken languages.

Basically, you can gather any type of info that’s relevant to your brand. Combined with cross-device tracking, this source gives you a more complete picture of customer behavior across platforms and devices.

Advantages of Zero Party Data

Depending on the type of business that you run, you might find different ways to use zero-party. Let’s list a few main gains.

1. Better communication — When customers tell you how they want to be contacted (whether by email, text, phone call, or social media), your sales team can connect with them more personally, achieving better response and communication results.
2. Clearer audience insights — You get direct information on what customers really want, so your marketing campaigns can target their actual needs instead of blindly following assumptions.
3. Improved trust — When customers see that you use their data to improve their experience (not just push sales), they’ll feel valued and trust you even more.
4. Better product development — Real customer feedback points you to product improvements, and even new product development, that truly boost satisfaction and keep users coming back. You can use this data for better messaging, positioning, and overall understanding of your target audience.
5. Shorter sales cycle — Knowing your customers’ challenges and goals upfront lets your sales team tailor conversations from the start, cutting down sales cycles and wasted effort.

Disadvantages of Zero Party Data

What is zero party data not so useful for, and which weak spots are there? Keep in mind the following points.

1. Narrow audience — Since users have to willingly share their info, you’re limited to only the most engaged people, which can leave out a lot of potential customers.
2. Setup challenges — Creating surveys or preference tools that actually provide useful insights requires time, testing, and sometimes developer help.
3. Survey burnout — Overloading users with requests for info can frustrate them, causing lower response rates. Also, if you ask for data too often, you can disrupt the user experience and push people away before they convert.

Zero-Party Data vs First-Party Data Compared

You can probably see that these two types of data often overlap. As such, they both offer reliable insights, straight from your audience. So, what’s the main difference between first party vs zero party data?

When we put zero and first party data side by side, note that first-party is gold for advertisers. It can serve as a big boost to your efforts in advertising for better performance on every dollar invested in paid ads. When you feed it into advertising platforms using ad tracking software like RedTrack, you’ll see your ads perform better because you already know what moves your audience.

On the other hand, zero-party doesn’t directly impact ad optimization. Instead, it helps you understand your audience on a deeper level and create messaging that appeals to them.

What else should you know about zero and first party data? That these two types work well together in marketing and analytics. First party data shows you patterns in user behavior across your funnel, and then zero-party data throws in some qualitative insight to help you understand what drives these actions. Together, they sharpen your marketing efforts.

How exactly can you make the most of your efforts? Whether you’re using first or zero-party data (or a combination of both), follow these best practices for optimal performance:

• Gather relevant data early in the customer journey using lead forms, surveys, and tracking pixels.
• Automate follow-ups based on both data types (a customer who prefers same-day shipping should get a different email than someone who’s more price-sensitive).
• Be transparent about what data you’re collecting and why.
• Track your engagement metrics and double down on what’s working.

Is Zero-Party Data Worth the Hype?

Even though digital marketers are hyping up 0-party data like it’s the new black, it’s not enough on its own. Sure, getting information straight from your customers is priceless. It helps you create better buyer personas, tailor your messaging, and speak to your audience.

However, you can’t rely on zero-party data alone. Just because someone filled out a quiz doesn’t mean Facebook can magically optimize your ads. That’s where first-party data still pulls its weight. It’s what powers your ad performance, tracks behavior across your site, and helps you fine-tune targeting where it counts.

So, instead of taking sides, get the best of both worlds with a combo of zero and first-party data. Zero-party data will be serving on the front line, while first-party data will be contributing from the back end, helping you build unified customer profiles.

Concluding Thoughts on Zero Party Data vs First Party Data

After comparing zero party data vs first party data, we can sum up that zero-party is great for building trust with your audience and delivering personalized user experiences. But you still need first-party insights to optimize your campaigns and make data-backed decisions.

Ad tracking tools like RedTrack make it easy to improve your campaign performance. It gathers all your first-party data in one central dashboard, keeps an eye on your attribution, and automatically sends that data to your ad networks (like Facebook and Google), helping you understand which efforts to scale and which to cut.

If you want to improve your advertising efforts with the power given by first-party data and marketing analytics, sign up to take RedTrack for a free spin and see for yourself how you can turn insights into higher ROI without the hassle.