“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Corey Weiner, CEO of Jun Group.
As the ad tech industry shifted in the last five years toward more privacy-conscious advertising, first-party data became the golden child. The pitch was short and sweet: Why buy ugly, third-party data from a sketchy data aggregator when you can compile fresh, actionable data yourself?
First-party data buzz permeated the discourse in the last few years as General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) cracked down on privacy violations in recent years, and the tech giants started walling up their gardens with the death of the third-party cookie and Apple’s Identifier for Advertisers (IDFA).
But in 2021, a new term has begun popping up all over the ad tech world: zero-party data, a form of data that describes an even more direct relationship between brand and consumer.
What is zero-party data?
Coined by Forrester research back in July 2020, zero-party data encompasses any data that a customer provides to a brand or company willingly and intentionally.
This can include a customer’s personal attributes such as age or gender, a customer’s purchase intent such as whether they’re in the market for a new car or any other information the customer is comfortable directly sharing with the brand. Most survey data, where a customer decides to tell a brand about their preferences, is a form of zero-party data.
You might have encountered this type of data on YouTube, where a survey pops up before your video, asking you to select your age. The survey is completely opt-in and clearly labeled as such; if you don’t answer, YouTube doesn’t receive your answer, simple as that. Other examples include Yelp, who recently began asking users upfront about their dining preferences, and Tide, who’s found success crafting gamified experiences that have users input their favorite types of detergents.
If zero-party data includes all consumer data that’s directly given to brands, what does that make first-party data?
First-party data vs. zero-party data
First-party data and zero-party data are similar. They’re both (ideally) consent-based, as in the person whose data is being collected knows it’s being collected. The key difference comes down to volunteering data vs. collecting data.
First-party data encompasses a person’s online behavior, such as what they click on, how soon they click, where they hover, how far they scroll, and how long they spend on a site. First-party data was great in the 2010s – it showed brands how people en masse behaved with their products and ads.
With zero-party data, the person is actively volunteering specific information, like their preferences, rather than just consenting to their data being collected after the fact. First-party data is like if you gave the OK for your doctor to see your Apple watch to monitor your activity. Zero-party data is when a patient actually describes their symptoms. They’re both consent-based, but zero-party data comes directly from the consumer to the brand, creating a stronger and more trusted relationship.
Why use zero-party data?
The other reason zero-party data is in high demand right now is because of growing privacy concerns. Brands and companies that deal directly with consumers don’t have to worry about privacy violations. As ad tech privacy regulations like GDPR and CCPA continue to protect consumer data, zero-party data becomes the cream of the crop. Not only does the data dodge privacy violations, but zero-party data paints a more accurate picture of the consumer because it comes directly from them.
The only hurdle brands face with zero-party data is getting consumers to actively enter into a dialogue with the brand. It’s very tempting to skip a survey, especially if I get nothing in return for providing my preferences.
That’s why the most successful brands weave their surveys into the value-exchange model, which offers consumers a reward in return for sharing data, like an extra life in an app, free Wi-Fi at an airport or 30 minutes of ad-free listening on Spotify.
You’ve probably heard of value-exchange ads, which reward the consumer for viewing an ad. The same model applies to zero-party data collection: Tell a brand your preferences (e.g., whether you buy organic ingredients) and get something back in return. This ensures the brand is effectively rewarding the consumer for filling out a survey or providing their information.
The most successful brands will make it easy and even rewarding for consumers to willingly give their data in a consent-based way. In return, consumers who participate in supplying zero-party data will get personalized ad experiences without fears of brands tracking their behavior behind the scenes. Zero-party data will pave the way for brands to target consumers in an authentic, transparent way.