Alex Sibois
Jun 27, 2017

The lowdown on second-party data

Lotame's Alex Sibois explains what it is, how you can gain access, and why you need it.

Alex SIbois
Alex SIbois

As a marketer, you have a lot of data at your fingertips. More every day, in fact. And while data creates unprecedented opportunities for audience insights and connections, there’s also an underlying problem with the ever-growing data deluge: most of that flood is poor quality data.

Marketers want to ensure their data is as relevant, high quality and scalable as possible. Both first-party and third-party data are necessary parts of the marketing data ecosystem, but they each suffer from certain limitations.

First-party data—your data, gathered from your owned, earned and paid efforts and properties—is incredibly valuable, but its reach and scope are limited.

Third-party data—purchased data generated on other platforms and often aggregated anonymously from many data sources, while the original source can be left unknown to the data buyer—helps bring scale to your efforts and is readily available. Third-party data is a valuable piece of the puzzle, particularly when marketers apply their expertise to this data via careful buying and A/B testing. However, your competitors often have the same access to third-party data sources that you do. Relying only on third-party data can restrict the competitive advantage you gain from its use.

What can a marketer do?

Welcome second-party data

It may be a confusing term on the surface, but the concept of second-party data is relatively simple: It is someone else’s first-party data that you access directly from that source. Such relationships put you in the driver’s seat in managing key data sources and allow you to understand exactly what data is being bought and from whom. Define and negotiate precisely what you need from the other party. During which, you forge direct relationships with publishers and other valuable industry allies that can benefit you and your business well into the future.

Need to reach a group of travel enthusiasts? Yes, a third-party segment of “travel lovers” might be available from an aggregator—the same data set everyone else can purchase. But why not go directly to the publisher of a travel magazine to negotiate exactly what you need? If the publication’s readers are the people you want to reach, you can go directly to the source and access this data in a private marketplace environment for full control. Best of all, the second-party data you’re accessing is not available on the open market. This gives you access to audience insights not available to your competitors.

Leveraging second-party data allows marketers to both purchase and monetize data in an efficient, safe way. Second-party data creates a marketing-friendly ecosystem. The data is unique, relationships are built, and quality is much less of an issue. Marketers can also leverage these relationships to improve their data diversity. Seeking second-party data sources that are generated from complementary activities to your own will add more value to your profiles. Otherwise you may end up spending money on data sets that will bring little to no incremental value.

Few marketers dispute the potential power of second-party data, but many are daunted by the prospect of directly forging such relationships. Until recently, the trading infrastructure for second-party data has been largely absent from our local markets. However, that’s changing. While marketers can look to establish individual relationships with second-party data partners, they can also tap into private-data marketplaces that power the seamless and safe exchange of first-party data among participating clients.

Open platforms are vital in this regard as they should be able to provide options for any configuration between data partners, whether they already run with a data-management platform (DMP) or whether an export is needed between a DMP and a demand-side platform (DSP) to optimize media buying. Within such a marketplace, a luxury auto brand might choose to share select audience data with an app that profiles five-star travel resorts. Both companies are targeting the same affluent audiences, but they’re not directly competing. For these brands, exchanging first-party data can help provide deeper audience insights.

In other words, with second-party data, everyone wins.

Alex Sibois is APAC managing director at Lotame.

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