In the Information Age that we’re all living and working in, data – or rather the right type of data – can prove to be an invaluable asset for your business. Simply put, you need data for business success, as data is currently one of the most important assets of modern-day businesses.
However, many businesses lack this key asset, as their first-party data is simply not enough to back up their operations. That’s why many businesses choose to invest in third-party data and rely on it to back up their business needs.
It’s important to know exactly which type of third-party data you should go for.
On top of that, you also need to know who you’re buying that data from and make sure that it’s of the right quality. Otherwise, there simply is no use in wasting your resources on something that won’t bring any value to your business.
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With that in mind, here are some of the must-know things when it comes to buying third-party data, as well as some of the best practices that will enable you to rest assured knowing that you’ve made the right move.
Know the difference between first-party, second-party and third-party data
In order to be able to make the best use of buying third-party data, you must first know the difference between three major data sources that include first-party, second-party and third-party data.
Simply put, first-party data is the data that you’ve managed to gather yourself. Therefore, you know the exact origin and reliability of the data. This type of data is usually considered to be of the highest quality for any business, as the business itself managed to gather it – so it should provide the best value.
Second-party data is the data you get directly from the source. To make it a bit clearer, if you sell your first-party data to an organization, it will become that organization’s second-party data. This type of data is usually considered the next best thing if the first-hand data is lacking.
Third-party data is all the data purchased from any data aggregator. This data is usually purchased in bulk, and, most commonly, the data collector is in no type of direct connection with the people (organizations, etc.) it’s collecting the data on.
That being said, you may initially think that this type of data will bring less value. However, the sheer scope and volume of it will offer great value if you learn how to use it right.
Determine if your first-party data is sufficient
Now, before you actually go looking for third-party data, you should first determine whether you need it or not.
One of the easiest ways to determine this is by measuring your data by scope. This means that you need to assess the overall engagement that’s a direct result of your first-party data and measure its performance.
You can easily achieve this by:
- Clearly defining the level of engagement you expect from your campaigns
- Determining the ratio of potential opportunities compared to simple page views
- Analyzing historical data to see if your actual engagement rate managed to meet your expectations
If the end results are less than expected, it will – in most cases – mean that your first-party data is simply not sufficient. Therefore, by analyzing your contextual and historical information, you’ll be able to easily and accurately determine whether or not you need to invest in third-party data.
If you come to the conclusion that your first-party data is simply not sufficient, here are some things to keep in mind when buying third-party data.
Choose a third-party data provider
When looking to buy third-party data, you must first make sure that you choose the right provider. Since there are so many data providers out there, determining the right one may be a bit challenging.
And since you’re only after accurate, high-quality data, you may be unsure of how to look for just that. Here are some ways you can make sure that you’ve chosen the best third-party data provider to procure information from.
- Source
In order to be able to understand and make the best use of the data you’re looking to obtain, you must first focus on the way in which it’s being gathered by the provider. Here, you should check the sources used by data aggregators and learn more about their methodology.
Keep in mind that, most commonly, the data provider is likely not collecting the data on their own. Instead, they’re most commonly obtaining data from individual clients and a plethora of other sources.
Only when various data is gathered, the data provider will analyze it, categorize it and compile it so that it provides the most relevant content and insights
It’s extremely important to try and learn more about where the data originated from so that you can determine its possible and probable accuracy and quality.
- Scale
The next thing you need to pay attention to is the sheer amount of data you’ll gain access to once granted the provider access. The scale of data you’ll have at your disposal will determine how much use you can make of it and how you’ll approach your company’s future data use.
For the most part, you should ideally have a target number in mind that will enable you to easily determine whether or not the provider meets your ideal standards.
- Reputation
Whenever you’re looking to buy anything from anyone, you should always first check their reputation. In the world we live in, researching a business – or in this case, a third-party data provider – has never been easier.
So, you need to make sure that the provider you choose is reputable and has proven results to boast with. On top of that, you must also inquire about the procurement solutions offered by the provider and see if they work for you.
- Price
Of course, the next thing you’ll need to pay attention to is the cost of access charged by the provider. The prices are usually determined by CPMs (cost per thousand views), and each data segment is usually priced differently.
Therefore, make sure you know exactly what you’re after and exactly how much gaining access to that data will cost you in the end, so you can determine whether or not this type of investment has the potential to bring in a decent ROI.
- Quality
Last but certainly not least, is the quality of the data you’ll be granted access to.
The quality of data is not only measured by checking its accuracy and relevancy, but it also relates to how beneficial the data will prove to be for your organization.
- Know what you need
Therefore, if you’re in the process of obtaining third-party data for your business, you need to make sure you entirely understand what you’re after. That way, you will know which type of data you need to focus on and which providers, prices and quality will work for your business.
Unless the third-party data you gain access to brings a positive ROI, chances are you’ve probably made the wrong choice.