First-, second- and third-party data and cookies - what is the difference between them?

In today's digital world our online interactions generate plenty of data. Have you ever thought about how websites remember your preferences or how you see targeted advertising on various platforms? The answer lies in cookies and data. Let us clear up what cookies are and what the difference between them is.

What are cookies?

Cookies are small data files a few kilobytes in size. They contain data about the user who visited a website. 

What does that look like in practice? When you close the browser and later open it again, you do not have to enter your username and password on that website again. Cookies store information about items in the shopping basket. So when you leave the site and return later, you find the same items in the basket. 

Besides that they store information about pages visited and other data about browsing behaviour. Some websites use them to show visitors personalised content on the basis of their reading and viewing history. Netflix works similarly with recommended series and films. As you can see, cookies are useful not only for website owners but for visitors themselves. They serve to create an excellent user experience. 

Who are these parties?

First party: the website you are currently visiting stores information about your visit. It does so using cookies. Since these files are created and stored by the website you are currently visiting, we call them first-party cookies.

Second party: this concept is not generally recognised as a separate type of cookie. 

In some discussions it refers to a data sharing agreement where a website (the first party) shares its cookie data with a trusted partner (the second party).

Third party: third-party cookies are small files of information not created and stored by the website you are currently visiting. Usually they come from advertising, remarketing, analytics and tracking providers.

First-party cookies

First-party cookies store information about sessions, pages viewed or items in the basket. They may also store information about your login or favourite topics. That makes your browsing experience smoother and more personalised.

Technically speaking, first-party cookies are stored in the same domain you are currently visiting.

Second-party cookies

This is not a separate type of cookie. There are only first-party and third-party cookies. These cookies are stored either in the domain you are currently visiting or in another domain. 

Essentially it is 2 parties that have agreed to share data. That means you have a first-party cookie stored on the website you visited. The whole file is then transferred to another party on the basis of a mutual agreement or partnership.

Third-party cookies

These files, unlike first-party cookies, come from domains other than the website you are on. Usually they come from advertising, remarketing, analytics and tracking providers.  

Their primary purpose is to track your browsing activity across various websites, which allows targeted advertising and analysis of user behaviour.

The end of third-party cookies

Major browsers such as Google Chrome are gradually ending support for them. This change is a challenge for advertisers and companies that rely heavily on targeted advertising based on third-party data. The end of third-party cookies will affect audience sizes and the ability to measure conversions.

How to prepare for the end? There is no need to take fright at once. Google and others are looking for a tracking alternative to offer once third-party cookie collection is switched off entirely.

• Follow the changes and news.
• Integrate a quality CMP platform for collecting consent.
• Implement server-side tracking.

What is data?

Data is any information that can be gathered, stored and processed. It can be anything from numbers and letters to images and videos.

Data itself has no particular category (first, second or third party). These categories come in only when we refer to the way data is obtained and used. Like cookies, data too can be categorised as first-, second- and third-party data.

What is the difference between data and cookies?

Data is a broad term for any information. There are many ways of obtaining data, including surveys and web browsing. Cookies concern gathering data about the user who visited a website. Usually it is information about sessions, pages viewed or items in the basket. 

First-party data

First-party data is information companies can gather from their own sources. In other words, all customer information from online and offline sources such as a website, an app, a CRM, social media or surveys.

First-party data may include the following information:

• interests
• website visits and interactions
• demographics
• purchase history
• time spent on the website

First-party data can be gathered free of charge, but the company that owns the data must have all the necessary customer consents. 

In the GDPR era that matters enormously. With first-party data you can give your users personalised experiences and show them relevant advertising.

Second-party data

Second-party data is often defined as someone else's first-party data. That means if your prospective business partner gathers data and wants to share it with you, it becomes second-party data for you. It can then be used for audience targeting or enriching your own database. The information you want to obtain from another company can come from various sources including websites, apps or offline sources such as surveys.

By collecting second-party data, marketers gain access to information about consumers who might be interested in their products. It is a fairly small group, but with a specific interest or behaviour (car lovers or fans of a particular sport - football, basketball, for instance).

It matters just as much that your partner complies with personal data protection rules such as GDPR. That way you can be sure the information was gathered with consumers' consent.

Third-party data

Third-party data is data you obtain from a data aggregator. Data aggregators do not gather data directly but obtain it from other companies and assemble it into one combined data set. As a result the data can come from various sources, some large, some small, and there is not always a clear definition of the audience. 

Most third-party data is bought through a platform such as a DMP (Data Management Platform) for advertising purposes. There are also many other third-party data marketplaces.

Why would you want to buy third-party data?

• It will help you reach a broad audience for your advertising programmes.
• Combined with first-party data it can help you improve ad targeting.
• Usually these are very large data sets.

The greatest problem with this data is that you do not know where it comes from. So you cannot be sure of its reliability, accuracy or whether it was gathered in line with personal data protection rules (GDPR). That is why you have to do your research when choosing a third-party data provider and find out where and how the data was gathered.

Zero-party data

There is also a new type of data that is much talked about - zero-party data. Unfortunately zero-party data can be confusing, because in many respects it overlaps with first-party data.

Forrester Research defined zero-party data as "data that a customer intentionally and proactively shares with a brand, which can include preference data, purchase intentions, personal context and how the customer wishes to be recognised by the brand".

Let us picture that in practice. Zero-party data is data a customer explicitly gives, such as communication preferences or the type of information they want to receive. Another example is interests. If a customer tells you what interests them, a particular sport, pet products or travel for instance, you gain valuable information. Zero-party data is a component of first-party data and must follow all the rules for managing it. At the same time it brings the same advantages as other data, including the ability to create personalised, relevant experiences.

We believe our article has helped you understand the differences between first-, second- and third-party cookies and data better. If further questions on this subject occurred to you while reading, do not hesitate to get in touch. We will be glad to answer them.