Most paid traffic channels (e.g. social ads and retargeting) are based on 3rd party data in order to provide a better, more relevant “right-message-at-the-right-time” towards a user in order to identify a target audience and to drive conversions.
At the same time your 1st party data sources measure all activities and your business success on your own platforms and by your direct marketing efforts as per email, newsletter, apps, support desks, any customer communication (and possibly also by digital touchpoints in your stores).
3rd party data sources are rather easy to add to a digital platform (the famous “single line of code”). Their power is coming from feeding cloud-based profiles with signals from multiple sites which allows the profile owner (the 3rd party) to derive relevant information which again is used to optimize the different digital platforms, or the traffic being sent to it. However, 3rd party data is creating another data silo and the data is usually granular or not customizable for the data controller (the website owner). In a nutshell: You pay for success, but you can’t look into the black box.