The sheer volume of data that continues to emerge on a day-to-day basis is – to put it mildly – jaw-dropping. In fact, Forbes.com reports that as of 2018, more than 90% of all data recorded in human history was produced in the previous two years alone. As you navigate this expanding universe of digital possibilities, you need to find efficient and innovative ways to make sense of all the chaos so you can make smarter decisions for your brand. That’s where third-party data comes into play.
It wasn’t too long ago that audience insights were limited to basic demographics (such as age, sex, gender, household income, etc.) because that was all that researchers could observe. And while this data informed brands directionally on how they should build and execute marketing strategies, it fell far short of painting a high-definition picture of target audiences.
Nowadays, we can observe consumer behaviors based off their digital signals. From GPS locations, to online behaviors, to media consumption and offline purchases, virtually everything we do is digitized in some fashion. Aggregators come along to gather, organize, and package all of these digital signals along with survey, sales, and demographic data to produce what’s known as third-party data.
It helps to think of third-party data as the stars in the digital universe that you connect to form a constellation of your target audience. From a wide perspective, all of these stars may appear disorganized and chaotic. But with enough focus, you can identify patterns that start to take form.
For example, if you’re a pet food company pursuing a direct-to-consumer strategy, you need to identify where those prospects are likely to be consuming media. After identifying those customers through your surveys, you can append media consumption behaviors (such as their preferred TV networks) and social media preferences (Instagram vs. Facebook vs. Twitter) to determine the right channels to place your message. Sometimes you may find that these pet food buyers are likely to visit logical channels (like Animal Planet or ASPCA’s Facebook page). But the real ah-ha moments come when you see your prospects are likely to frequent unrelated outlets like MLB Network or LinkedIn.
The pet food example is just one way companies can use third-party data to their benefit. Smart businesses have found powerful uses for third-party data in everything from recruiting, to finance, to sales. But, in general, there are two business areas where third-party data is most useful:
As new digital touchpoints and channels emerge, users will generate more data. And while more data can lead to more opportunities, it also provides new challenges. Government bodies have become more attuned to potential privacy issues in the digital space, which has led to sweeping regulations such as GDPR and CCPA. These regulations give consumers more control over personal and behavioral data that can be bought and sold by third-party aggregators.