Data types handled by CDPs – Introduction to Customer Data Platform
Data types handled by CDPs – Introduction to Customer Data Platform

Data types handled by CDPs – Introduction to Customer Data Platform

We can classify data in different ways. The classification of data also depends on the use case at hand.

To understand CDPs better, we need to understand the different types of data they can collect. The classification can be done in two ways: h ow the data is collected and the nature of the data collected.

Classification of Data based on how it is Collected

Customer data can be divided into three types based on the origin of the data:

  • First-Party Data: First-party data refers to the data brands collect when users interact with their websites, apps, retail stores, and so on. The data is collected with consent, and user identification is possible. Most of the collected data is supplied by the user, like email IDs and phone numbers. Others are collected when users interact with the brands, like purchase history, membership details, loyalty program info, and so on. First-party data is highly reliable and accurate, and the most useful data for brands.
  • Second-Party Data: Second-Party data is the data that brands collect from trusted partners. The agreement with partners can be based on a data-sharing agreement, or brands may purchase the data from a third-party partner. As the partner is a trusted one, second-party data is also accurate and reliable, but less so than first-party data. It is important to be cognizant of privacy regulations like GDPR and CCPA before you buy data from partners. Second-party data is merged with first-party data to create more accurate data models.
  • Third-party Data: Third-party data is the data that brands acquire from data aggregators. Data aggregators are companies that collect data from different sources and compile them into datasets to sell to other companies. The data aggregators do not themselves interact with the customers. They maintain and build datasets. As the data is obtained from different sources, they are less reliable and accurate than first-party and second-party data. Also, one has no clue whether data regulations were followed while obtaining the data. So brands have to be careful while using third-party data. But if properly used, third-party data can be stitched together with other first-party to improve targeting. Examples of third-party data include data collected from Google advertising.

In the following table, we have summarized the differences between the three data types:

First-party DataSecond-party DataThird-party Data
Direct relationship with the customerIndirect customer relationshipIndirect customer relationship
Collected with consentCollected with consentUnknown if it’s collected with consent (depends on the data provider)
Individual dataIndividual dataAggregate Data
High accuracy and reliabilityHigh accuracy and reliabilityLow accuracy and reliability
Not sharedShared only with trusted partnersShared with many companies
Examples: Customer EmailExamples: Website ActivityExamples: Income
– Customer email– Website activity– Income

Table 2.1: Classification of Data based on how it is collected

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