Although there are a lot of different types of data out there, one isn’t necessarily better than the other and the types you choose to prioritize will depend on the needs of your business. But, you’ll undoubtedly need a lot of these different data types - which leads us onto the next part of this lesson…just how are you going to get hold of them?

Data can be acquired in three different ways, and the first one we’re going to talk about is the data that a company collects itself through its different channels. This is called first-party data and because it’s acquired directly from consumers - and the company has full control over this process, including obtaining user permissions and verifying its accuracy - this way of sourcing data is generally considered the most reliable of the three.

Companies go about gaining first-party data in a variety of ways. A recent study found that email newsletter subscriptions was one of the top ways US advertisers acquire first-party data, followed by tracking consumer behavior on websites and on mobile apps. They also reported collecting data from social media. Other first-party sources include data generated when someone makes a purchase in-store, or when they call a customer service line, as well as a business's dealings with its suppliers and employees.

First-party data is generally seen as the ‘gold standard’ of data and, as a result, a lot of CPG brands are increasingly engaging directly with consumers in order to grow their first-party data, offering entertaining content like polls and quizzes, along with personalized offers, in return for a few personal details.

Next, is second-party data. This is simply another company's first-party data and companies acquire it from trusted partners that are known to comply with legal and ethical data collection practices - like another company that a brand does business with or a private data marketplace.

Second-party data is frequently used to augment first-party data. So, a company looking to broaden its marketing reach might seek out second-party data to target audiences that are similar to its current consumer base, or a CPG brand might share data with its retailers for improved trend analysis and sales forecasting.

Finally, we have third-party data. Now, this is data that’s acquired from brokers who sell large datasets and it can be particularly helpful in providing insights into different consumer segments, especially when a company doesn’t have enough first-party data.

Third-party data might include local or national government information about geographic locations, panel data collected by tracking the browsing habits of participants, social media data that provides insight into patterns and trends in consumer behavior, or you might even get it from aggregators who analyze online transaction data that’s been anonymized.

However, while it can be a useful tool, companies do need to be careful when it comes to third-party data as it’s not the most reliable source. It’s not always possible to clarify where this data comes from, guarantee its accuracy or quality, or check that it was collected in accordance with privacy legislation - so companies should keep this in mind when they’re considering whether or not to use it.

This issue of data quality crops up time and time again - and not just concerning third-party data. Poor quality data of any kind can lead to misleading insights and costly decisions. You could, for example, incorrectly identify a sales trend that might lead to you manufacturing too many products for the actual level of demand, or you might create an advertising campaign that could misfire because of inaccurate targeting.

To help avoid this, there are five key components of data quality to keep in mind when sourcing and collecting data…

First - accuracy. Is the information you’re collecting entirely accurate? Second - completeness. Is the information you have comprehensive? Are there any gaps, or is there anything you don’t know? Third - reliability. Can the information be trusted, or is it contradicted somewhere? Fourth - relevance. Does it actually add value to your business? Finally - timeliness. Is the information up to date or could it potentially now be so old that it’s likely to be inaccurate?

It’s essential to ensure that the data you’re collecting and using is of good quality, since it’s much more expensive to correct existing errors, than it is to simply verify whether or not data is accurate when it first goes into a system.

Data Acquisition & Data Quality

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