Nitin Gupta, founder of QRCodeChimp. He’s a technology leader with over two decades of technology development and management experience.
Picture this: A consumer scrolling through a website is bombarded with ads. The obvious question they would ask is, “How on earth did they get my personal information?” The scenario changes a few years later when the same consumer is invited to take a short quiz about their preferences. In return, they receive personalized recommendations based on their needs. This transition from guessing what the consumer wants to having them proactively express their choices is the essence of zero-party data.
The background of zero-party data
For decades, marketers have relied heavily on third-party cookies to understand consumers’ behaviors and target them with ads—which were often invasive rather than insightful. However, as stricter privacy laws forced tech giants to phase out such cookies, transparency and consent became the cornerstone of engagement, replacing age-old practices. Currently, consumers are in absolute control of their data and are in a position to shape the experiences they want to receive.
In early 2020, I began sensing the impact of this shift on businesses like mine, which depend significantly on precise digital advertising. During one of the weekly catch-ups with my marketing team, we discussed Google’s decision to phase out third-party cookies. I initially looked at it as a far-off deadline. However, with the magnitude of changes, I was forced to rethink my strategies. Procuring valuable zero-party data by building trust and aligning with regulatory demands became the most critical aspect of our marketing initiatives.
Let’s explore how zero-party data redefines the marketing playbook, helping brands to thrive in a privacy-conscious world.
Understanding various types of customer data and how zero-party data differs
First-party data: Businesses collect this data directly from their own platforms, like websites and apps. This includes customers’ email and/or physical addresses, phone numbers and purchase and support history.
Second-party data: This data is collected with consent from customers and is shared among organizations as part of collaborations or partnerships. For example, an e-commerce company shares customers’ addresses with its delivery partner.
Third-party data: Advertising platforms collect this data—with or without users’ consent—by tracking third-party cookies enabled on their devices and selling them at online data marketplaces. Businesses collect this data to get insights about their potential audiences with whom they don’t have a direct relationship yet. Over the years, this type of data collection has resulted in serious privacy breaches, prompting regulatory authorities to implement stricter policies.
Zero-party data: This data is voluntarily shared by customers with a company, which includes personal preferences, purchase intentions or how they want to be recognized. For example, a brand can encourage customers to participate in quizzes and surveys to understand their personas and make personalized product recommendations. Driven by consent, this is one of the safest and most effective data collection modes brands use to create marketing campaigns.
Why does zero-party data matter?
Not long ago, third-party data was the savior for marketers like us. However, with consumers demanding transparency in how their data is collected and used—as well as the subsequent tightening of GDPR, CCPA and other privacy laws—it is quickly becoming obsolete.
Apple was one of the pioneers in tightening its anti-tracking stance. Popular browsers like Mozilla Firefox and Brave Browser have blocked third-party cookies by default. Google, too, announced the same for its Chrome browser in 2019. However, as of July 2024, the tech giant has opted out of completely eliminating third-party cookies and instead provided users with enhanced privacy controls and options for managing their cookie preferences.
In such scenarios, zero-party data offers a solution that not only ensures compliance but fosters trust. For instance, a survey by Forrester Research highlighted that brands leveraging zero-party data experience higher customer engagement and retention rates. This is because zero-party data respects customer autonomy, leading to more meaningful and effective marketing campaigns.
How do you create winning strategies with zero-party data?
Offer incentives: Customers are more likely to share their preferences in exchange for benefits. Offer them personalized product recommendations, loyalty points or access to exclusive content for their shared data.
Integrate with digital tools: Embed tools like interactive quizzes, preference centers or surveys into your website or apps to collect zero-party data. For example, a fashion brand can quiz customers on their personal styles to create a tailored shopping experience.
Personalize recommendations: Zero-party data helps with precise targeting, making it less intrusive and more relevant. For instance, suggest sustainable offerings to a customer interested in eco-friendly products.
Be transparent: Tell your customers about your policies regarding customer data and how you will use it, and offer them complete control over their shared information.
Use technology: AI-driven platforms can analyze zero-party data to provide real-time insights. Use tools like customer data platforms (CDPs) to help quickly consolidate and utilize this data and recalibrate strategies.
My experience with zero-party data
As a business owner, adopting zero-party data in my marketing strategy has made me focus more on building customer relationships. Now, it’s more about understanding than targeting. We’ve improved our brand loyalty by channeling our energy into customer consent. Customers feel valued when they see their privacy is respected and their opinions matter. This is a win-win, as they get to decide what kind of experience they want from us.
Looking ahead
Respect, transparency and personalization will rule the future of marketing. Brands focusing on zero-party data-driven engagement will not only have a competitive advantage in building stronger, long-lasting customer relationships but will also better comply with consumers’ growing demand for data privacy.
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