What is Third-Party Data? Definition, Examples, & Providers

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Third-party data has stirred up quite a bit of controversy in the advertising and research spaces. 

Despite the ongoing debates, it is estimated that worldwide digital advertising will surpass 1 trillion dollars in 2024!

Although questions about the digital right to privacy have been raised, the increasing interconnectedness of our world through social media requires a novel approach to marketing. 

Third-party data is extremely useful to business owners, marketers, and researchers, as the growing desire for consumer personalization is apparent. 

In this article, we’ll investigate the details of third-party data, discuss the difference between first-party data and third-party data, and the best methods for picking a good data provider.

Key Takeaways

  • Third-party data is used by organizations to optimize their marketing efforts.
  • There are many third-party data sources to discover.
  • The utility of third-party data goes beyond standard marketing.
  • We can learn from data breaches using statistics – and the risks can be mitigated.
  • Choosing a good data provider depends on your business model and goals.

What is Third-Party Data?

third-party data definition

Third-party data refers to any business data (or information) that is collected for an organization by another entity. 

One notable purpose of third-party data is its use in targeting consumer demographics in order to create marketing materials, analytics, and more.

Third-party data has tremendous utility for businesses as marketing strategies become more complex and personalized. 

Additionally, third-party data has been used in scientific endeavors, such as archaeological research, to draw educated conclusions about old civilizations!

Third-Party Data Sources

If you are looking to get third-party data, here are the main types of sources that you can get your data from.

Data providers

Data providers are organizations that specialize in handling and distributing data to companies. 

Typically, data providers handle large amounts of data and are suitable for big corporations that require airtight security measures.


Apps are software tools that can be implemented into businesses as a method of extracting business insights.

These third-party data apps can provide high-quality analytics for marketing purposes.


Government agencies distribute third-party information that is easily accessed by the general public (including businesses) online.

This information includes the census, labor statistics, and environmental bodies.


Non-profits use third-party data and produce it. Non-profits typically contain philanthropic, lobbying, and community data that can be utilized for entering into new markets.


E-commerce third-party data offers payment and shipping information that can be immensely useful for a business. 

For example, companies can learn that their customers are most likely to buy big-ticket items on Thursdays through e-commerce data.

Academic sources

Academic sources, such as healthcare databases or educational institutions, are terrific information authorities that can (and should) be referenced in the extraction of third-party information. 

Many of these sources are freely available online and some can be accessed by using university journal privileges.

Examples of Third-Party Data

Third-party data can be used in a range of contexts, but one emerging target of data collection is behavioral information.

This includes website visits, purchase history, and interactions (measured in clicks).

Another example of third-party data is demographic data such as gender, age, race, and other population characteristics. 

This data can be collected from census records and is frequently used in marketing to gear advertisements toward a certain demographic.

Additionally, the most common method of third-party data collection is through cookies, which are small pieces of data that are stored when you visit a website. 

Cookies are used to track consumer behavior on a website, such as by noting which items a particular user viewed.

Third-Party Data Use Cases

Understand your customers: As a business owner or someone who works in marketing, it is of great importance to understand your true customer base and their pain points!

Pain points are areas of concern or frustration that a customer has with their life, which can hopefully be addressed by your product or service!

Augment existing data: If you apply behavioral data to your preexisting demographic data, you can level up your marketing efforts. 

Knowing that your young female customers are more likely to shop in the evening than your older male customers might prompt you to run ads on a different schedule based on this information. 

Depth and breadth: Gaining a thorough understanding of your customers, their interests, and their purchase habits will certainly help you thrive in any market. 

This can be accomplished using third-party data sources, which will make your company appear to have great instincts according to your customers. 

Target competitors’ customers: If you see that your competitors are failing to notice a certain marketing trend that you were privy to from third-party data analytics, you might have an advantage over them in gaining new customers. 

Advanced data modeling: Advanced data analytics and modeling can be done in several ways, but machine learning is the most cutting-edge method. 

Machine learning involves having a computer predict what your customers will do based on third-party information.

It is incredibly effective and can sift through large amounts of data!

First-Party Data vs. Third-Party Data

Third-party and first-party data both have distinct roles in business. Here is a table that describes the two and their roles:

First-Party DataThird-Party Data
DefinitionGathered directly from customers and used in business analytics.Gathered from extraneous sources that profile large amounts of people in different markets.
UseRetaining customers and ensuring their loyalty.Targeting new customers and expanding reach.

Based on this table, someone might opt to use first-party data if control, accuracy, and compliance are important to them.

However, third-party data may be preferred if cost-efficiency, scale, and creating thorough customer profiles are all high priorities.

Third-Party Data Breach Statistics

Here are the most contemporary statistics on data breaches:

  • Almost 80% of infrastructure entities did not use critical shielding architecture for data protection.
  • Unfortunate news for the cloud: close to half of data breaches were cloud-based.
  • 30% of all data breaches took place in medical facilities (for example, hospitals). 

Fortunately, there are ways to protect you and your customers, which can be found here.

How to Choose a Good Data Provider

  1. Clearly lay out your data requirements (both in size and type).
  2. Make a spreadsheet that includes potential third-party data providers that are known in your industry and compare.
  3. Connect with each data provider and consider their collection practices. Also, you can also ask for sample data!
  4. Ensure that they are adhering to data protection and privacy standards.
  5. Once you’ve selected a provider, continue to monitor data performance.

Wrapping Up

You’ve made it to the end – congratulations! Third-party data can be a confusing topic, but this article provided all of the important information that can jumpstart your third-party data integration. 

Whether you’re a CEO, marketing researcher, or a curious customer, learning about third-party data keeps us engaged with the future of technology and business.

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Donny is the founder of SMB Guide. He is a seasoned small business owner and entrepreneur, with over 17+ years of experience growing and building companies. He is a well traveled and multi-faceted individual with several successful six figure business exits.