The Identity Landscape: the role of data providers and why third-party data doesn’t belong in the past

  • Posted by Radia Douiri
  • On May 20, 2022

The role of the data provider

Data providers are companies that collect user data and sell it to third parties to enrich their audience for targeting purposes. A data provider can own the property where the data is collected and sold, or act as a third party to the page. They provide marketers with audience data to enhance their existing datasets/customer base. They also provide publishers with added value on their inventory and insights into their own user base.

As the industry continues to develop and more traditional identifiers exit, what role will data providers play in the new era of digital advertising?

Don’t confuse third-party cookies with third-party data

There is a common misconception that since third-party cookies are on their way out, third-party data is off the table as well. This is not the case. Third-party data is, in fact, just as vital today as it has always been. We can still leverage third-party data in the cookieless future. We simply need to readjust our processes and ensure a privacy-first approach.

Due to this misconception, we are seeing an increasing amount of focus being placed on first-party data strategies as a top priority for the cookieless future. The reality is that relying on first-party data alone is not enough for many to survive.

It is important to note that in the past data providers did, indeed, predominantly rely upon third-party cookies to collect and send data. Today, that is where identity solution providers, such as ID5, come into play to help them make the shift into the cookieless future.

First-party data is not enough

Let’s take a closer look at the differences between first- and third-party data…

  • First-party data is the online and offline data that a publisher or brand collects directly from their audience on their properties. Including CRM data, subscription data, surveys, and so on. It can also be general user journey data and modeling from owned and operated properties.
  • Third-party data is any data collected by a company that doesn’t own the property on which the user data is collected. Meaning there is no direct relationship between the company collecting the data and the user.

First-party data collection enables media owners to better understand customers. However, not all publishers and brands have enough first-party data to build their addressability strategies around it. Only the tech giants, such as Google and Facebook and some of the very largest publishers can rely on first-party data alone. The walled gardens have even attempted to expand off properties in order to get additional data points.

Everybody else needs to further supplement their audience strategies by sharing their data via third parties. Read more about this in Part One of the series: Introduction and different approaches to identification.

Working with data providers in the next chapter

Third-party data is vital in the new era of digital advertising, but the way platforms operate will most certainly be different. As previously mentioned, we can still leverage third-party data in the cookieless future. We simply need to readjust our processes and ensure a privacy-first approach. When choosing data providers to work with there are a couple of things to consider:

  • Cookieless preparations – Data providers use third-party cookies to share the data they collect and sell. To survive in the cookieless future, they must prepare for a world without cookies. They must do this by finding another mechanism to exchange data and, therefore, sustain their business. This can be done by leveraging alternative identity solutions, such as universal identifiers. When evaluating data providers to partner with in the long term, it’s important to only consider those that can demonstrate a sustainable identity strategy. This will enable them to make their assets available in the post-cookie world.
  • Privacy focus – The industry is constantly chopping and changing under the weight of developing privacy laws and regulations. Some are turning away from third-party data claiming it is not a viable asset in an increasingly privacy-focussed world. This is incorrect. Third-party data can be collected and activated in a privacy-first and transparent way. This is done by ensuring that the individuals whose data is being collected and shared are aware of how and with what purpose their data is being used. In Europe, for example, data providers need users’ consent to collect and share their data. Today, more than ever, it is essential to partner with data providers that can clearly demonstrate that their data is captured and processed in a transparent and privacy-first way. Certifications, such as Neutronian’s NQI, can give you a reliable, third-party guarantee of the data providers’ privacy and data quality framework.

No matter the size of your first-party data set, by working with data providers and collecting third-party data, you can enhance your customer profiles with data provided at scale, better understand the consumer journey, and amplify user acquisition. Data providers have a vital role to play in the new era of digital advertising and beyond. 

Third-party data does not belong in the past. When collected and processed ethically and transparently, it is a crucial element for advertisers to better reach their target audience. As well as for publishers to strengthen their own first-party data with additional audience information, long after the removal of third-party cookies. 

Next up: The role of the advertiser and how they should take action on the cookieless future