CPG brands have a closer relationship with their customers than ever before. In place of third-party retailers, they can sell directly to their audience. In place of static paper ads, they can create interactive digital content. And in place of mass targeting, they can create personalized experiences for each customer.
But that relationship depends on customer data. Today, we’re looking at the four types of consumer data: their pros, their cons, and how CPG brands can use them.
Why do CPG brands need data?
Personalization has become the secret weapon of CPG marketing. Personalized messaging, content, and product recommendations are transforming how beauty and wellness brands interact with customers and drive sales.
However, you need to know who someone is before you can personalize an offering for them. CPG brands find attribution and identity resolution notoriously difficult, especially when it comes to bridging the gap between online and offline interactions.
Brands are under pressure from two angles. Consumers want convenient, personalized experiences. But they also want to be in control of their data. That’s why it’s vital to understand the different types of consumer data. The most valuable, actionable data is usually the information that customers choose to share with you. The further you get from consumer control, the less useful the data becomes.
What is third-party data?
Third-party data may be the most commonly available consumer data today. It includes public records and data from user activity on third-party sites. For example, Facebook’s tracking pixel collects third-party data about how consumers interact with other websites. Third-party cookies track web activity in a similar way. However, there are three big problems with third-party data.
First, internet browsers are gradually phasing out third-party cookies, and privacy legislation in many places has tightened up. Second, the quality of third-party data is questionable. It’s right there in the name: you’re getting third-hand information about what your customers most probably do.
The final problem is the most important one. Consumers think that third-party data is creepy. Think about the last time that you visited a website privately, or mentioned a product that you were thinking of buying in conversation—only to see ads flash up on another device. That’s targeting based on third-party data, and most people respond poorly to it.
A growing number of marketers avoid third-party data because they believe it carries too many risks. However, it’s still available for brands that can’t invest time into getting to know their customers directly.
What is second-party data?
Second-party data is one step closer to your audience. It consists of data collected from someone else’s customers, who might or might not overlap with your customer base. Second-party data is usually digital: for example, shared email lists. However, some start-ups have begun collecting second-party data from brick-and-mortar stores. They record and analyze customer behavior through cameras. Once again, this type of data is relatively easy to get hold of. But it’s not perfect.
Second-party data may be more reliable than third-party data, but it’s still been filtered through another company. They might not collect the data that’s most useful to you. They might not have followed the same data standards that you promise your customers. Before you use second-party data, you need to ask the right questions, says Wendell Lansford, CEO and Co-Founder at Wyng. “It really starts with, What data as a brand do you need? On the flipside of that coin, what data is actionable to improve the customer experience? If it’s not actionable, don’t bother trying to capture the data.” And, once again, some customers will react badly to marketing based on second-party data. Although they happily shared information with the original collector, they aren’t expecting to be targeted by you.
What is first-party data?
First-party data is observed directly from your customers. It’s information that you learn about them as they interact with you: things like what they buy, which communication channels they use, or what article pages they visit on your site. “We’ve been investing a lot of time and effort into our first-party strategy,” says Jennifer Peters, Director of D2C, Martech, and Digital Compliance at OLLY. OLLY sells vitamins and health supplements both online and through third-party retailers, so they work hard to build direct relationships with their customers. However, they’re careful to put customers in control of their data through a preference center. That’s because while customers expect you to use first-party data for their convenience, they want to feel like they’re in the driving seat.
“In my personal experience, [many brands] rush into [first-party data usage] a little wrong,” says Jonathan Joseph, Head of Solutions at data privacy platform Ketch. “When you think about online experiences, and then you think about offline experiences… it feels like it’s not really well thought out.”
For example, think about the last time you were shopping in-store. Some retailers have started trying to connect online and offline interactions by asking customers to share their email address to get a receipt. But this is a clumsy method that people find intrusive, especially since they can easily get a paper receipt instead.
It’s more effective to offer customers value in exchange for their data—such as how OLLY gives personalized recommendations and guidance to customers. Value-driven personalization, teamed with privacy controls, means that customers are happy to share information with you.
What is zero-party data?
Zero-party data goes a step beyond first-party data. The two types work together: they’re both information that comes directly from your audience. But while first-party data is based on observing your customers, you collect zero-party data by asking explicit questions. For example, when you ask a customer how they prefer to be contacted, that’s zero-party data. When you ask them about their product needs, and offer a personalized recommendation in response, that’s zero-party data.
It might sound more effortful than other data types. But zero-party data is worth it. Zero-party data solutions can reduce customer acquisition costs. They also reduce risk for brands, by giving you early insights into changing customer preferences. Best of all, first-party data and zero-party data walk the line between enabling personalization and respecting privacy.
Make consumer data work for everyone
“How can we resolve the conflict [between privacy and personalization]?” asks Wendell. “By adopting a customer-first approach. That requires elevating and centering privacy.” When brands invest in first-party and zero-party data, they can reward customers with more convenience, personalization, and customer support.
Wyng is the platform for interactive, digital experiences that collect data for brands and share rewards with customers. Upgrade your data-driven marketing strategy now.
This is the third post in our series on privacy and personalization for CPG brands. Check out previous articles in this series, How CPG Brands Manage Privacy and Personalization in 2025 and Preference-Based Personalization for CPG Brands.