The importance of third-party data in big data analytics
Big data is becoming an integral part of business operations, with organisations using generated data for better insights and smarter decision-making. However, what many people do not know is that data falls into two categories: first-party and third-party data. The difference between the two data sets lies in their data source. Data from third parties is unrelated to an organisation and its stakeholders but still plays a huge role in business operations. In this blog, I’ll be diving into the hidden importance of data from third-party sources.
Why should organisations use third-party data?
It’s tempting for many stakeholders to stick with proprietary data in favour of external data. However, there are several reasons why stakeholders should use third-party data to their benefit.
Close the gaps
Third-party data closes any gaps in organisational data. Organisations produce a lot of data from their operations, however, there are still gaps organisations cannot close on their own. If the gaps in data are not closed, it affects the quality and reliability of their analysis. By using external data, organisations can close data gaps, which leads to more accurate and reliable findings. The results of analytics are heavily dependent on the quality of data, hence organisations need to close these gaps if they want to get the best findings possible.
Account for external events
Organisations, be it public or private, profit or non-profit are affected by external events. Demographic changes, geographical trends, macroeconomic changes and much more affect business operations. However, many organisations do not generate first-party data on external events. But by leveraging third-party data in their analytics process, organisations can accurately calculate how external events will affect operations. Hence, predictive analytics becomes more comprehensive and accurate.
Easier time working with partners
Most organisations don’t work on their own. They have a network of partners in the form of suppliers, investors, regulators, stakeholders – to name a few. Many of these partners are based in different parts around the world. Using third-party data can expand insights not found in first-party information, making it easier to work with their partners around the world. With external data, organisations get a better understanding of shifting larger trends of consumer behaviour, geopolitical events and competitor initiatives.
What is the value of third-party data to organisations?
Third-party data enhances the value of insights and findings in data analytics. For example in a marketing context, organisations can expand their functionality by personalising marketing offers because external data provides hundreds of data points that are not found anywhere else. Third party data also expands the functionality of the company in several ways.
For example, marketers can get access to location data by working with a third-party that they otherwise would not have access to. Thus, allowing them to devise clever marketing campaigns based on the information.
Organisations are in a better position to anticipate shifts in demand and supply – they can even launch products and services with better success than ever before, while HR departments can make smarter decisions on talent management. Organisations can even discover new revenue streams they would not have been able to discover with just their own data.
Not every organisation is in a position to collect high-quality data. Such organisations can benefit tremendously from third-party data. For example, start-ups might have a hard time managing the workforce because their data is not the most detailed or the most accurate. However, by acquiring third-party data they can make smarter decisions about managing their workforce. As a result of this, with external data, organisations can sidestep the pains that come with maturity, allowing them to grow steadily without suffering any major setbacks.
Third-party data holds tremendous value to organisations of all sizes. By using external data, companies can close the gaps in their data, account for external events, and have an easier time working with partners around the world. Furthermore, with external data, many startups can avoid the pains of maturity by accessing rich external data. However, despite its obvious benefits, it’s important to note that external data is not perfect.
There are drawbacks to using external data, especially given that the quality of data is a huge factor. Organisations will have to assess the quality of the data before putting it to good use. Another major obstacle when it comes to accessing high-quality data is that some companies simply cannot afford third-party data.
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