Call us: (800) 490-1476 | Email us:

Schedule Your Free 45 Minute Consultation
Free 45 Minute Consultation

The Pros and Cons of Third-Party Data Management


Isadora Teich wrote this article


In today’s world, data is an integral part of both business and our everyday lives.

However, it is a complex topic.

Despite being so commonplace, a lot of people are unsure of exactly what it means, how it’s gathered, and all of its implications. Today, we are going to take a look at third-party data, third-party data management, and its pros and cons.

Understanding Third-Party Data

So, what exactly is third-party data?

It is essentially any data collected via different sources by a company with no direct connection to users whose data is being collected. Third-party data sources can include things like websites, surveys, social media networks, and subscriptions.

Your name, email address, phone number, social media handles, purchase history, and website browsing activities are all examples of third-party data.

Third-party data is collected and used by data management platforms (DMPs) or data providers to strengthen and create targeted profile segments. These segments can be bought by companies or brands for their marketing campaigns.

However, collecting and managing all of this data is a complex process, that can even have legal implications if it is mismanaged. Some companies have decided to ditch using third-party data altogether. Let’s take a look at why.

GDPR Hysteria

The General Data Protection Regulation (GDPR) is an EU law that went into play in 2018. It focused on protecting the data and privacy of EU web users, as well as the transfer of their data outside the EU. In 2018, a similar regulation, the California Consumer Privacy Act (CCPA) passed in the US.

While the CCPA was only implemented in California, it had widespread effects on US companies and companies that want to market to Americans.

Such a high percentage of the US population lives in California that many marketers were forced to change how they approached the entire US. After all, having one set of processes for California and another for the rest of the country simply did not make sense.

Many companies became unsure of what data is legal and illegal to collect and use nationally and internationally. Since they did not want any issues, they gave up on third-party data. However, you do not have to go that route.

Managing Third-Party Data Can Be A Legal Minefield, But Does Not Have To Be

These laws were not created to stop data-sharing and collection.

They were simply created to make sure that consumers consent to sharing their data and that companies use their tdata responsibly.

Any reputable company that you trade with or take data from should be able to provide a step-by-step account of the processes and methdology they have in place to source data legally. In fact, many data aggregators have a section on their website dedicated exactly to their compliance measures.

They put it front and center publicly without hesitation.

If a company cannot or will not provide these answers, you may run into problems if you choose to work with them. If you are not sure of which questions to ask, take a look at this helpful checklist from ICO.

If you cover your bases and ask the right questions, third-party data carries no risks at all. It can also be a powerful marketing tool.

What Can You Do With Third-Party Data?

Most people who hear the term ‘third-party data’ probably think about programmatic advertising.

It’s likely because this ad model is becoming more and more common every year. However, there is another way of using external data in business: audience data enrichment.

This gives you a chance to look deeper into your customers.

Here are two main ways that businesses use this type of data.


This type of data is usually bought as audience segments in order to discover and reach the right target groups in programmatic advertising.

You can choose from potentially endless target groups segmented by age, interests, location, and more. With some data providers you can even collaborate on tailored custom segments specifically to reach your advertising goals.

First-Party Data Enrichment

Vast and broad data from external sources can help to enrich your first-party data-bases.

It can help you fill in gaps, reach new customers, and more effectively connect with current customers.  Remember, third-party data includes anonymous information about a range of things. You can explore favorite brands, interests, purchase intention, and even demography.

The Importance Of Buying High Quality Third-Party Data

Whether this type of data works for or against you largely depends on your research.

Just buying any kind of data from any aggregator can lead to you possessing a whole bunch of information that doesn’t really do anything for you. You want to connect with real people, not bots. In the worst case scenario, it can even lead to expensive legal trouble.

Checking on the quality of data may seem like an impossible task, but there are independent market standards you can measure audience data against.

This will show you if it’s better or worse than the mid-market values. One useful test like this is the Nielsen Digital Ad Ratings. Check in with any provider and see if they have the results of any such test.

Final Thoughts

Many users would rather streamline complex processes.

There are a number of platforms you can use. These include Twilio, Stripe, Onesignal, Mailgun, and Google Analytics. Sourcing and implenting this kind of data does not have to to be a huge and difficult task.

Ultimately, the real pros and cons of third-party data come down to how you approach, source, and use it.

While new data protection laws have scared some businesses out of using it at all, that is a bit of an extreme reaction. By using good tools and working with reputable companies, you can avoid almost all of the pitfalls associated with third-party data.

Of course, like most things, many experts have different opinions on this type of data. Some think it is too broad to have a strong impact, while many others consider it a crucial marketing tool. How about you? What do you think?

Comment below.

About Since 2009, we have helped create 350+ next-generation apps for startups, Fortune 500s, growing businesses, and non-profits from around the globe. Think Partner, Not Agency.


Follow us on Twitter

Like us on Facebook

Double tap us at Instagram

Connect with us on LinkedIn

Find us on social at #MakeItAppn®

What Does It Take To Build A Next-Generation App?

Each month, you’ll receive insight from our team, like what’s new in tech, app development and all things running a startup.

Always free. Unsubscribe anytime.

Are you looking for a partner to help bring your vision to life?

Look no further. Schedule your free consultation to see how our passionate team can help turn your app idea into a real product.

Schedule your free consultation

Join in on the discussion! Leave a comment and get involved.

  • Recently Released Content

    Leadership & Inspiration

    5 Ways To Optimize Your Networking Habits


    Google Wants To Start Charging Long-term Small Business Users

    Social Media

    How Elon Musk Wants To Reach 1 Billion Twitter Users

    Web & Mobile

    Make Your App Stand Out