Third-party data, as the name implies, is data that a marketer acquires from a multitude of outside sources. Normally used to help create consumer segments for targeting ads and marketing messages, third-party data often refers to information gathered from internet interactions. Data-management firms aggregate information from sites across the web that show interests in particular topics based on behavior, and that third-party data is used to categorize people into groups such as travelers or sports enthusiasts. But third-party data isn't just digital. It can represent real-world interactions such as purchase transactions or mobile phone locations.

Cillian Kieran, CEO and Founder of Digital Agency, CKSK

Third-party data is acquired from data sales houses or other large site and system operators. Third-party data is not typically from a single site, rather a consolidation of user data across a set of sites across the web and licensed to third parties for use in data and ad targeting. The benefit of acquiring this data is often its depth and breadth which would be hard to derive from a single data source, such as one's own website. In addition, data providers often carry out complex segmentation in advance of distribution, ruling out the costly overhead for big data analysis and distillation to arrive at a targetable segment. For example, information can be purchased about consumers already interested in books, travel or health insurance.

Read about first-party data here.