The adoption of programmatic advertising has given rise to digital ad targeting that uses captured data for ad placement across ad exchanges and networks.
This captured data is referred to as first, second, and third party data. Depending on which side of the buy/sell equation you stand on — advertiser or publisher — these terms have different meanings. What is important to keep in mind is just about all programmatic advertising is data driven marketing, with the intent of making more efficient targeted ad buying.
Not all data is created equal
First party data
First party data refers to data gathered about you through a direct relationship. Even in its simplest form, there are two types of first party data — advertiser and publisher.
For an advertiser, this can be data captured through a registration, check out transaction, cookie content, purchasing history, or merchandise searches. Advertisers use this data in a variety of ways, including showing additional merchandise that may be related to your purchasing history.
Publishers also lay claim to first party data; however, most likely not due to a direct relationship with you. Publishers monitor their ad networks and store analytical information, such as age, gender, etc., to create interest segments, such as banking/finance, travel, autos, technology, etc. This data creates a behavioral profile of your interest that helps advertisers target their programmatic advertising purchases across the publisher’s network to the pages you view.
Second party data
Second party data refers to one first party entity – advertiser or publisher – sharing information with each other.
For example, Amazon might partner with the New York Times to gain access to its audience behavioral profile. Amazon considers this information second party because it did not collect it. However, Amazon uses the data to purchase advertising space and place a banner ad of items that you recently viewed on the Amazon site.
Third party data
Third party data is information that is collected by an entity that does not have a direct relationship with you. Third party data collectors pay publishers to collect data about their site visitors and create profiles on your tastes, shopping habits, and behaviors as you move around the web. This information in turn is sold to advertisers with the intent of making their ad buy more effective.
The current reality of the internet is that we provide advertisers, publishers, and third party entities with our personal information for free. In turn, our information is repackaged and sold to marketers that use it to provide us with a “more personalized” web experience. Depending on your point of view, this can a good thing or something we should be very wary of.