Understanding the Language of Data

Privacy: What to Keep in Mind as You Build Your Data Stack

The recently released IAB guide “Defining the Data Stack” provides a framework for both advertisers and publishers to build or enhance their data stack, depending on where they are in their data capabilities journey. They can gain a baseline understanding of their needs and resources through this guide, as well as learn how each different type of data can enhance business performance when used properly. Before diving too deeply into the intricacies of the data stack, let’s review the various basic data types.

Understanding the language of data:

Consumers are constantly evolving and their habits ever-changing. Connecting with them is more difficult than ever with the constant stream of information in today’s world. To reach the right users at the right time, the ability to leverage data has become increasingly important. Before an advertiser can develop an effective data strategy, though, one needs to have a strong foundation of the “language of data.”

Understanding 1st, 2nd, and 3rd party data

First Party Data
In an industry that LOVES acronyms, there are quite a bit that pertain to data. But before we get into DMP, CRM, CCPA, GDPR, and PII, it’s important to understand the distinctions between first, second, and third-party data.

First party data is, in a nutshell, your own data. Information that you own and collect directly from your customer base that you can leverage across various platforms. This data can come from a variety of places, for example your website (online) or collected in-store (offline). This data is rich and very accurate since the customer is directly inputting the information.  However, it can sometimes be small in scale.

Online Examples:

  • Website visits
  • Product registrations
  • Online transactions

Offline Examples:

  • Sales flyers
  • Loyalty cards
  • Coupon mailers

One of the places where customer information is stored and managed is a customer relationship management system (CRM). It helps manage your offline and online first party data.

Now that you have this great, rich data at your fingertips, what do you want to do with it?  Do you want to reach those customers that abandoned the shopping cart? What about those who signed up for more information on your product?

If the answer is “yes”, then your next question is, “how?” You’re in luck. There are companies that enable you to make your first party data portable so that you can share and use it with other vendors. For example, these companies can take your customer emails, “hash” them (a process by which the personally identifiable information (PII) is anonymized), and then send it back to you to either target or suppress (exclude) those users in future marketing efforts.

If you already work with a data management platform (DMP) then you have access to the tools you need to activate the data. A DMP helps you organize, create, distribute and activate these defined audiences for targeting in your next campaign. For example, you can create a “lookalike audience.” Lookalike modeling is used to create lookalike audiences which are based off characteristics of the original “seed” audience.  The benefit is the ability to scale the audience beyond your direct customers to new users who resemble your current customers.

If you are not taking advantage of your first party data, you are missing out!

Second Party Data
Another option is second party data. Second party data is someone else’s first party data. Typically, a company makes their first party data available to another company for a defined purpose in a contractual agreement. This can take place in the form of a co-op. For example, a shoe company with multiple brands may want to share their data among them in order to cross-sell products or gain additional insights about the market.

Third Party Data
Need more scale to supplement your first party audience campaign? Don’t have first party data to leverage? This is where third party data comes in handy. Third party data is data that has been sourced and aggregated by a company who is not the original collector of the data. The advantage of this dataset is the depth and breadth of the segments that exist. If you need to reach owners of pet snakes, that drive minivans, and have an interest in yoga, you will be able to target segments that include these users. Third party data categories typically include:

  • Demographic
  • Psychographic
  • Firmographic
  • Interest
  • Intent

Now that you understand the language around data, the next step is understanding privacy when it comes to building your data stack.

Download Defining the Data Stack 

View the previous post in the Defining the Data Stack series, Privacy: What to Keep in Mind as You Build Your Data Stack.


Cortney Banashek
Senior Director, Data Partnerships
at Taboola