With the ever-increasing drone of industry rumblings about the demise of the third-party cookie, many ad tech players have begun highlighting “first party” prominently as a key buzzword in their positioning.
Frequently, this is used in the context of “first-party data” and, in some cases, “operating in the first party” for online advertisements.
This has led to a lot of confusion around the term “first party.” Every advertiser wants it, but ad tech vendors are offering multiple, disparate solutions under the umbrella term “first party,” when these solutions actually have very little in common.
First, Second & Third-Party Data – What You Need To Know
First-party data is generated and owned by the entity that is using it for its own ad targeting. First party is most often Customer Relationship Management (CRM) data that is gathered either from online or offline transactions with brand or behavioral data taking place on that brand’s website.
If this data is somehow transferred or brokered to another entity, it then becomes second-party data.
Third-party data is typically behavioral data tracked by a third party via a collection of sites that is then brokered to anyone who creates a relationship with that third-party vendor via a Demand-Side Platform (DSP) or other source.
Let’s break this down. In the advertising ecosystem, there are several participants, including:
- Ad provider/network/vendor
Why The “Real” First Party Matters
Any marketer or advertiser gains an advantage from utilizing first-party data from both a data purity perspective as well as an operational/competitive perspective. After all, first-party data is the only data that competitors will never have access to.
Technology vendors that are positioning themselves as “first-party providers” can only be first party to one of these groups: either an ad provider, a publisher or an advertiser (though they may give a different impression). For entities they are supporting down the line in the chain, they are operating in the second or third party, depending on how many hands touch the data.
To clarify further, a publisher or ad tech vendor may state they are “operating in the first party” or “using first-party data” (these phrases are often used interchangeably) — when, in actuality, they are operating in the first party on behalf of themselves. Unfortunately, these two little buzzwords have given advertisers a misguided belief.
Let’s dig into this a bit deeper to fully understand and leverage first party.
Operating In The First Party is typically defined by the domain (e.g., target.com, doubleclick.net or cbssportsline.com) that is technically serving the ad. The usual suspects in the ecosystem can be first party in this operation which I have detailed the mechanics of below:
- The Ad Provider/Network/Vendor: An example in this area would be doubleclick.net, which is serving all of the ads from its domain. The ads are being served in the first party by the ad-tech vendor (e.g., DoubleClick), but they are third party to both the advertiser and the publisher.
- The Publisher: The publisher/website could be serving the ads and using their own first-party data to target these ads. These ads would be served in the first party to the publisher in this case, but they are third party to the advertiser and ad-tech vendor.
- The Advertiser: The advertiser would be operating in the first party when serving the ads from within their domain using first-party cookies to target ads with their own first-party data secured in the domain, and the ads would be third party to the publisher and the ad-tech vendor in this case.
So how does one cut through the hype and determine if a vendor is first party for you? I’d take a minute to ask these fundamental questions:
- Which participant in the ecosystem is this service operating in the first party on behalf of?
- If it is not first party to my organization, why not?
- If I start using my first-party data with their product or service, will it ever be shared and become second-party data or even worse, third-party data to someone else?
It is useful then to discover internally:
- What services that I currently use are operating in the first party within my domain (www.domainname.com), and which are operating in the third party (from outside of my domain and infrastructure)?
- How should my data and technology strategy change as a result of these findings?
The industry is beginning to realize the power of first-party data, and with good reason. But as with any emerging topic, it can be difficult to see through the misinformation and misunderstandings. Knowledge is power — so arm yourself with the most accurate information.
Opinions expressed in the article are those of the guest author and not necessarily Marketing Land.