In a previous blog post I discussed why first-party data is the most valuable data asset today, offering companies valuable insights into their own media users to identify ad messages. Having said that, it is still important to recognize the pitfalls of relying solely on first-party data. While it allows us to better target existing customers, it falls short when it comes to reaching new potential customers, as it only reaches customers who have previously interacted with our data sources. Third-party data complements first-party data to expand reach and create opportunities to acquire new customers.

In the rest of this blog post, I will focus on combining both types of data. I’ll explain why advertisers can significantly boost the success of their campaigns and achieve greater customer engagement by taking a thoughtful approach and using relevant data strategies.

What is third-party data and why is it important?

Third-party data is a key source of information that iPROM has collected from the entire digital media market for the past 25 years. This advertising data allows us to profile users and create interest-based segments, creating the foundation for accurate targeting. In Slovenia, we have approximately 3.5 million such data points, allowing us to achieve excellent targeting using third-party data alone.

Identifying similar customer profiles using the similarity method

One effective sampling method used in digital advertising is the “look alike” approach that allows us to use third-party data to expand our target audience from first-party user data to the entire online population.

By using first and third-party data we compare new users’ online behaviour to the existing target audience and asses the percentage of similarity between them. This helps us identify new potential customers who behave similarly to our existing customers.

Increasing visibility and driving purchase intent among a wider audience

While first-party data helps keep the brand top of the mind for existing customers, third-party data is better suited for increasing awareness, improving brand affinity and driving purchase intent among a broader audience. First-party data is used to address customers who have already interacted with us or our brand, while third-party data is used to reach new, potential customers.

The combination of both types of data creates more targeted audiences, moving them further along the purchase funnel and driving purchase intent. This means that companies can use both types of data to create more precise and personalised ads targeted at both existing and new potential customers, increasing the likelihood of conversion.

Overly narrow segmentation can negatively impact effectiveness

Segmenting your audience too narrowly, by adding too many attributes, can have a negative impact on your targeting effectiveness. Adding too many variables can significantly limit the target audience and reduce the campaign’s impact. While precise targeting is important, too many restrictions can prevent ads from reaching a sufficiently large audience, ultimately reducing campaign effectiveness.

The key is balanced segmentation, where ads are tailored to key audience attributes without limiting the breadth of reach too much.

The combination of first- and third-party data is optimal for branding

A combination of first- and third-party data is more effective in improving brand perception while also being more cost-efficient. When advertisers use both types of data, they can more accurately identify the audiences that show a preference for the brand, increasing the likelihood of successful campaigns.

Additionally, the use of combined data improves cost-effectiveness, as the cost of persuading one consumer is lower when both types of data are used.

Today, when data is more valuable than gold, it is no longer enough to merely collect and use data. Instead, data needs to be analysed and used in a thoughtful and targeted way for data-driven strategies. While first-party data is key for discovering new segments, the combination of first- and third-party data is more effective for reaching new customers and improving brand perception. Using both types of data allows for better results in terms of brand awareness, popularity and purchase intent. To maximise the impact of advertising campaigns, advertisers must mobilise data strategically to avoid the potential pitfalls of over-reliance on any one type of data.