First-Party Data

When you order something from an online shop, the shop afterward knows a lot about you. It knows your address, your shoe size, the time of your purchase, and the products you looked at beforehand. Exactly this kind of information is called first-party data: data that a company collects through direct contact with its own users. “First party” refers to the provider itself. The opposite would be purchased data, which comes from outside companies and is collected across many websites. The distinction sounds technical, but by now it decides billions in revenue in the advertising industry.

The value of a company’s own customer data

For decades, online advertising worked through small files that tracked users across the internet. This tracking is now heavily restricted, both by laws and by the browser makers themselves. The European General Data Protection Regulation requires clear consent. Apple and Google have additionally blocked third-party tracking in their browsers and mobile operating systems. This means an important source of information has disappeared for advertisers.

What remains is the data a company owns itself. A supermarket with a loyalty card, a bank with account transactions, or a streaming service with viewing habits suddenly has an advantage over competitors without direct customer contact. That is why first-party data increasingly shows up in quarterly reports and stock market analyses. It is treated like an asset, similar to a factory or a brand.

The same idea applies to AI systems. A recommendation system learns from the real behavior of its users and thereby becomes better than a competitor relying on general market data. Nobody can simply copy this data, because it arises from the company’s own customer relationship.

How the data gets in-house

First-party data is generated at every point where a user interacts with the company. This includes customer accounts, newsletter sign-ups, orders, support requests, and clicks in an app. Payments made in-store also count, if they can be linked to a loyalty card. The only thing that matters is that the contact runs directly, without an outside intermediary.

For individual traces to become a useful picture, the data must be combined. Companies use large data collections for this, often called customer data platforms. Such a platform links the order from the shop with the click in the app and the call to support, usually via the email address or a customer number. Only then can a model recognize that the same person is about to cancel.

That said, it is not legally unrestricted. Even a company’s own data may only be used in Europe for the purpose for which it was collected. Anyone wanting to use order data for advertising usually needs separate consent for that. A common misconception is therefore the assumption that first-party data is automatically compliant with data protection law.

First-party data in the news and in products

The principle is most clearly visible at Amazon. The company knows from its own sales what people buy, and sells advertising space on that basis. This business now brings in a double-digit billion-dollar amount annually. Retail chains like Rewe or dm proceed similarly, building their own advertising networks around their loyalty cards. In industry news, this goes under the keyword retail media.

In everyday life, you encounter first-party data every time a recommendation fits suspiciously well. The suggestion of a series that matches your last three movies comes from the service’s own usage history. The cookie banner on a site’s first visit also belongs here: it separates exactly what the site itself is allowed to store from what advertising partners want to read along with it.

For investors, the interesting question is who actually owns such data. Banks, telecom providers, retailers, and streaming services have direct customer contact and thus a good position. Companies that only reach their customers through outside platforms are more dependent. When a report mentions a “first-party data strategy,” it is almost always about this independence.