First-party data definition
First-party data is information collected directly from the source. This data typically comes from users’ personal interactions, for example, website visits, purchases, direct customer feedback, and membership or subscription services.
Organizations gather first-party data through various channels: their websites, mobile apps, CRM systems, or physical stores. They use tools like web analytics, customer databases, and point-of-sale systems to help collect and analyze the data, which is often raw and requires some work to derive meaningful insights.
First-party data example
Amazon and Netflix are prime examples of companies gathering and using first-party data. Amazon uses purchase history and browsing behaviors to recommend users products they are likely to want and buy. Netflix, like all streaming services, analyzes viewing habits to suggest shows and movies users are most likely to enjoy.
Advantages and disadvantages of using first-party data
First-party data, while extremely accurate and ensuring genuine insights, is limited because the interactions cover only a specific brand or platform. Therefore, the final findings will exclude broader market trends or insights from other sources and give a distorted image of the user base.
And while this direct approach allows businesses to personalize their offerings based on real user behaviors, the process of collecting, processing, and analyzing this data can be resource-intensive, requiring significant expertise and tools.