Zero-Party Data
Don't be Late to the Party
(and why it'll be bad if you are)
Reading: 5 mins
Photo by Abigail Lynn on Unsplash
Intro
It may sound like a great name for an electro-death-metal-disco band, but Zero-Party Data is currently one of the most important concepts in digital marketing. This is a party you don't want to miss and if you don't know about it already, then you need to learn fast as some big changes are coming soon that are going to fundamentally change the way that the information flow between companies and customers works. In this blog we'll explore what zero-party data is, and why it is so important for the future of marketing.
What is Zero Party Data?
Data has always been a crucial part of marketing, even before computers and the internet existed. It drives decision making on a massive level. These days it is hard to imagine a world without it.
But there are different kinds of data that has been collected in different ways:
First-Party Data – this is data that your own company collected directly from customers. It includes data from actions, interests or behaviour accumulated across your website as well as subscription data, social data and data you have in your CRM.
Second-Party Data - This is the first-party data of another company which has been packaged and sold.
Third-Party Data - This is aggregated data collected from different multiple sources, which is packaged and sold by a company that didn't collect the data itself. is collected by aggregators and ad platforms through third-party cookies and contentious tracking techniques.
These kinds of data have decreasing quality and value. The further it moves away from the 'source', (I.e. the customer) the more imprecise and diluted it becomes. As well as this, it can often be out of date and so irrelevant. It's second and third party data which are the problematic ones as the customer has very little control over it or who uses it.
Zero-party data is data that a customer intentionally and willingly shares with a company. It can include purchasing intentions, communication preferences, personal context, as well as the customer explicitly saying what things they are interested in.
It's the 'purest' form of data. It eliminates guesswork and therefore is the most valuable. As long as the provided data is honest, it provides a clear picture of how a person wants to be perceived by a brand.
Some uncrumbled cookies Photo by Josh Sorenson from Pexels
How the Cookie Crumbled
Time for brief history lesson in how we got to where we are today.
At the beginning of the 21st century, it seemed like cookies were the answer to all marketers' prayers – the collection of mass consumer data at their fingertips without having to do much work to get it.
But then something began to happen. People started to get wary and tired of having their movements of the internet constantly watched and tracked. Big Brother was watching them. Without a clear understanding of how this data was being harvested and used, it felt intrusive and a little creepy to customers. Any positive benefits that the customer might be getting from the experience were cancelled out by a feeling of lack of control.
Consumer confidence was being badly shaken throughout the 2010's by a series of serious data breaches. As cybercrime began to increase, people realized how vulnerable they could be if their data got into the wrong hands. The internet's honeymoon seemed to be over.
The Cambridge Analytica Scandal, which took place between 2015-2018, really brought the issue of the covert use of personal data into the public eye. Trust had been broken. Faced with a PR nightmare, governments and companies moved swiftly to act.
The rise in consumers installing privacy protection software and ad-blockers was mushrooming. The marketing model that had existed previously was beginning to fall apart.
The large browser companies like Google brought in plans to stop third-party cookie tracking within a couple of years. These plans seem a little vague and the date has been pushed back, but it is still expected to go into effect in some form, spelling the end of third-party cookies.
Apple offered customers the easy ability to opt out of being tracked by advertisers in its IOS15 update. Initial numbers indicate only 4% of Apple users are opting-in to advertisers' app tracking, and that number is expected to fall even further.
In 2018, the General Data Protection Regulation (GDPR) was introduced in the EU to give consumers more control over their personal data. GDPR requires businesses to protect the personal data and privacy of EU citizens for transactions that occur within EU member states. Non-compliance results in fines and penalties for companies.
Photo by Max Bender on Unsplash
What it all Means
These changes are huge and far-reaching and have given marketers plenty of headaches in terms of disruption and trying to strategize for the future. But as one door closes, another door opens. It means that in the future B2C companies will need to create more transparent and meaningful relationships to get the data needed power their campaigns – and this data itself will be more relevant and precise. Zero party data has therefore become very, very important.
Fortunately, these changes have coincided with the increased demand for more personalized experiences from consumers. There's never been a better time for shifting towards zero party data collection and creating more personalized and engaging relationships with customers.
Information like purchase intentions and preferences are invaluable for building personalization and help to create an accurate picture of who the customer is.
The trend is for customers wanting personalized experiences and content, but they also want to be in control of what data is being shared and how it is shared. Anything else is going to feel like it has been stolen and so have that bad Big Brother aura of creepiness. There needs to be trust and transparency and it’s a two-way street. If a company leverages the data correctly, everyone benefits.
How to collect zero party data?
It's important to realize that zero party data is not obtained for free. Consumers only willingly give it up in return for a better customer experience - they want to be engaged, entertained, and receive something in return. It's part of a value exchange economy and it's going to become a crucial part of marketing strategy. If your customers trust you, and think it will provide a better service, they will tell you what kind of products they want, what they are looking for in a service, and what prompts them to make purchases. This means that the data collected is relevant, accurate and up-to-date as it is coming directly from the consumer.
There are various ways to collect zero party data but avoid methods that are laborious or time consuming. Making it fun and attention-grabbing is always a winning tactic.
Good ways of collecting zero party data include: access to exclusive content, interactive micro-experiences, NPS surveys, personalized recommendations, social media polls, birthday dates in return for a present or asking for information during an opt-in process are all.
Quizzes or questionaries are perhaps the best methods. Prizes such as discounts or loyalty points can be given out but it's not always necessary – as long as the customer knows their action will improve their personal experience with the brand, then they will engage.
What's more, by giving you data, they have already engaged in a relationship and shown they want to be associated with your brand. This is the kind of customer you want, and the relationship can develop from there to create stronger brand loyalty. Once trust and loyalty is established, if a customer knows that the data they provide will create an even better experience, they will give even more data. That is the goal that companies need to aim for.
Zero-party data and Video Personalization
Zero-party data allows brands to build direct, meaningful relationships with consumers. This then allows them to improve personalization on their marketing campaigns with offers, product recommendations and upsell services.
Video personalization slots in well to this equation and can utilize zero-party data (and first party data) to create customized videos for a wide variety of applications. Using relevant data, it can be used to deliver relevant video messages with information that is specifically tailored and unique. Viewers engage with them far more strongly than other communication channels so it's a good way of building relationships with customers.
To wrap up, let's have a look at a case study, powered by Motionlab, that used zero-party data to create personal video messages for customers
HBO Stories 2020
With this award-winning HBO Europe campaign, viewers were asked to fill out a simple questionnaire on a microsite, which reflected their daily lives in 2020 and covered subjects like social activity, exercise, work and travel. By choosing from 3-5 pre-defined answers, the viewer was then assigned scenes from some of HBO's favourite content to make up the final video.
Each video was a unique, darkly humourous take on how everyone's plans for the year had been disrupted by Covid. It was fun and engaging and customers responded incredibly well with the videos going viral.
For this opt-in campaign HBO were able to collect zero-party data from their customers which they willingly supplied. In return, customers received a fun Christmas present in the form of a personalized video message which strengthened brand loyalty. Nothing was being sold or promoted. It was a mutually beneficial exchange and felt honest – customers appreciated it for that.
Conclusion
We are in the middle of an era of disruption and flux. With data privacy concerns at an all-time high, a new way of collecting and using data is necessary. At the same time, as consumers desire increasingly personalized on-line experiences, they are willing to give data to companies as long as they know what the data is being used for and feel like they are getting something for it in return. To stay competitive, companies are going to need to factor in this new attitude to their marketing strategies and create more personalized, meaningful and transparent relationships with their customer base.
It'll be interesting to see what happens next but using data in a more open and reciprocal way should be a good thing for everyone.
Danny Holman, Motionlab