Quick answer
The difference between first-party and third-party data comes down largely to where the data comes from and the relationship the brand has with the consumer.
First-party data is collected directly by a brand through its own interactions with consumers.
Third-party data is collected by outside organizations and made available to companies that did not originally collect it.
For CPG brands, first-party data can be particularly valuable because it allows them to build an owned understanding of consumers based on direct interactions rather than relying entirely on outside data sources.
What Is First-Party Data?
First-party data is information a brand collects directly through its own relationship with consumers.
It can include:
- Name and email address
- Mobile number
- Promotion participation
- Purchase activity
- Rebate or coupon redemption
- Loyalty activity
- Product preferences
- Connected packaging engagement
- Website activity
For example, when a consumer enters a sweepstakes, submits a receipt, joins a loyalty program, or interacts with a brand-owned experience, those interactions can contribute to the brand’s first-party data.
The important distinction is that the relationship exists directly between the consumer and the brand.
What Is Third-Party Data?
Third-party data comes from organizations that collect or aggregate information and make it available to other companies.
Brands may use third-party data to help understand larger audiences, identify potential consumers, or support targeting and media strategies.
The brand using the data did not collect it through its own direct relationship with those consumers.
That is the fundamental difference.
Why First-Party Data Matters for CPG Brands
CPG brands often sell through retailers rather than directly to consumers.
That means the brand may sell millions of products without knowing who actually purchased them.
First-party data can help change that.
Consumer promotions, loyalty programs, rebates, digital coupons, sampling programs, and connected packaging can create opportunities for shoppers to interact directly with the brand.
Over time, the brand can begin learning:
- Who its consumers are
- What they purchase
- Which offers they respond to
- Which promotions they participate in
- How frequently they engage
- Whether they return
- Which products interest them
Instead of knowing only that products were sold, the brand can begin developing an understanding of the consumers behind those purchases.
First-Party and Third-Party Data Serve Different Purposes
This does not need to be an either-or decision.
Third-party data can help brands reach or understand consumers beyond their existing direct audience.
First-party data can help brands understand and engage consumers with whom they have established a direct relationship.
A simple way to think about it:
Third-party data can help brands find audiences.
First-party data can help brands build relationships with their own consumers.
Both can have a role depending on the marketing objective.
First-Party Data Can Become More Valuable Over Time
One of the biggest advantages of first-party data is that the consumer relationship can continue developing.
A consumer might first:
Enter a sweepstakes
Then:
Redeem a rebate
Later:
Join a loyalty program
And eventually:
Purchase repeatedly
When those interactions can be connected, the brand’s understanding of that consumer becomes richer.
First-party data is not simply information collected once.
It can become a record of the consumer’s relationship with the brand over time.
Quality Matters More Than Quantity
A massive dataset is not automatically a valuable dataset.
Third-party data may provide access to large audiences, while a brand’s first-party database may initially be much smaller.
But first-party data can provide something different: information based on actual interactions between consumers and the brand.
The question should not simply be:
How much data do we have?
It should be:
How useful is the data we have?
Key Insight
First-party and third-party data are not competitors. They serve different purposes.
Third-party data can help brands understand and reach broader audiences.
First-party data gives brands the opportunity to build something they control directly: an ongoing relationship with their own consumers.
For CPG brands that historically have had limited visibility into who purchases their products, that direct relationship can be extremely valuable.
Frequently Asked Questions
What is first-party data?
First-party data is information a brand collects directly through its own interactions and relationships with consumers.
What is third-party data?
Third-party data is information collected or aggregated by outside organizations and made available to companies that did not originally collect it.
Is first-party data better than third-party data?
Not necessarily. They serve different purposes. Third-party data can help brands understand or reach broader audiences, while first-party data can help brands understand and engage consumers with whom they have a direct relationship.
Is an email address first-party data?
Yes, when a consumer provides an email address directly to a brand through a promotion, loyalty program, website, or another brand-owned interaction.
How can CPG brands build first-party data?
Consumer promotions, loyalty programs, rebates, digital coupons, sampling programs, connected packaging, and other direct consumer experiences can all create opportunities to build first-party data.