Second-Party Data Can Help Brands Get Unique Information at Scale

But use and comfort are crucial first steps

When it comes to data-driven marketing, the conversation more often than not tends to focus on first- and third-party data. Why is that? Well, for starters, first-party data is free. More importantly, first-party data is unique.

Two mens faces in red and blue with dollar signs and numbers on them and a yellow up arrow in between.

Illustration: Aad Goudappel

A marketer or publisher’s competitive advantage comes from its ability to uniquely predict and act on a consumer’s desire. Even though first-party data is unique, it’s limited in scale because there is always more to know about your customer or prospect than you alone can know.

Third-party data, on the other hand, is really good at providing that needed scale. You can pay for and gain a lot of knowledge about your customers and prospects by employing third-party data. The issue, however, is that even though it can help add knowledge, that insight is available to the entire ecosystem, decreasing the unique value of that information.

What can brands do to get the best of unique information and scale? Enter second-party data. Here we have the promise of taking data marketing to a level that is both unique and scalable. It takes the most essential benefits of first- and third-party data to create an asset that is unique and that competitors don’t have. How so? Second-party data is someone else’s first-party data, so it’s a gold mine of unique information. It’s not generally sold, so not everyone can access it. The art is in structuring the right deals with your strategic partners that can be free or cost-effective.

Consider, for example, an airline and a credit card company. Based on a specific deal between the two companies, the credit card firm could gain access to the airline’s audience data to target cards specifically, tailored to the needs of specific travelers. When the credit card company wins a new customer, the airline gets compensated on the credit card acquisition. As a competitive marketing strategy, this can play out in almost every single vertical: brands and the retailers who sell their products, sports teams and leagues, retailers and publishers, even brands that operate on a local and national level, like auto manufacturers.

What it basically boils down to is that second-party data is creating a truly integrated co-marketing ecosystem involving marketer to marketer and marketer to publisher, potentially even publisher to publisher if the reasons exist. It’s teaching them how to better execute one-on-one deals, which has become pivotal as brands look to cut through the clutter of today’s highly fragmented data and media landscape.

But in order to maximize the advantages of this type of private data exchange, brands need to find the right platform that enables the trusted transfer and control of second- party data in a safe and actionable manner. Finding the right partner data assets is a key part of the equation, and that means finding a platform that has already attracted many desirable brands.

The opportunity with second-party data is that it completely disrupts the assumptions around data cooperatives. Common wisdom in the data world tells you that if you want to get data from beyond your own walls, you need to either participate in a cooperative or you have to buy the data. Cooperatives served a purpose, but they don’t really give you unique data access. They’re more like third-party data assets that are accessible to all participants.

The advent of second-party data management technology means you have finer controls over sharing while augmenting your data assets with new unique data. And with a management platform, you can exert user, segment, attribute and time-level controls on your data assets.

We’re breaking new ground with second-party data and have started to see this trend gain momentum in a measurable way. First-party data will always be unique and third-party data will always provide scale. Finding new ways to help businesses get smarter by utilizing unique knowledge about their audiences at scale is something that brands are actively seeking.

The rise in the use and comfort with second-party data is a crucial step in that direction.

Omar Tawakol (@otawakol) is CEO of BlueKai.