If First-Party Data is King, Zero-Party Data is Queen
There’s a new kid on the data block, and everyone in marketing, advertising, and eCommerce is banging the drum about it — zero-party data. But how new is it really, and why the hype right now?
I love data to the point that people who have worked closely with me over the years have already called me a weirdo when I got too excited about it. But it’s not only me who is enthusiastic about zero-party data: 90 percent of marketers said their companies plan to capture zero-party data in the next 12 months in a recent Forrester survey. The beauty of data is that it is like described in the Matrix: data people do not see lines and columns of numbers, they see 18–24-year-old players of survival games looking for a new game to try out, Anime fans with a Netflix and Crunchyroll subscription ready to purchase a Switch — not the woman in the red dress maybe, but they see audience patterns. In the ideal scenario before zero-party data, this view has been fueled by first-party data blended with second and third-party data where needed.
What exactly is Zero-Party Data?
What then is the difference between these data sets and zero-party data? Simply put, it is data given to you right from the user, and people like our team and I have much less work to decipher it. The term was introduced by Forrester research in 2018, and this is their definition:
Data that a customer intentionally and proactively shares with a brand, which can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize her. — Forrester Research
In other words, it makes the predictive and behavioral analysis of audiences more manageable than ever because the audience tells you precisely what they want. On top, it should be mentioned that zero-party data is always deletable or changeable at the users’ discretion.
Still not completely clear? The simple example of a gamer’s Steam account explains it quite well: you provide a username, email, and password when you create the account. From the moment you log in, Steam starts recording your behavior, which store pages you visit, which games you search for, and much more. These interaction-based records are called first-party data because Steam owns it, and you are not giving the data proactively. It’s being collected automatically according to their T&Cs, GDPR, and other regulations. The principle applies to almost every first-party pixel or cookie in the digital space. So far, this kind of first-party data has been king in the world of marketing.
But if you wishlist a game or follow a curator, you are actively providing data: you tell Steam: “I want this game and that content.” That is data owned by Steam but proactively shared by you. Per definition, this is zero-party data. For example, the same is true with Netflix: you like a show on the website and tell Netflix your preferences. Why would users do it? Because they get value in return: better recommendations, notifications for price promotions, or even a coupon. And users stay in control of their data: if you decide to remove a wishlist previously added, the info is gone.
Why is it important for Advertisers?
The hype about zero-party data is based on two factors:
- First: proactively provided info is the highest quality level advertising data can have. It is honest and accurate, making it the most relevant to inform your targeting in advertising campaigns. If you consider the evolution of data in the digital world, third-party cookie data was already significant compared to the traditional channels like TV, Radio, or OoH, where you had to have a bit of a spray and pray approach (and yes, Nielsen or GfK). Then first-party data evolved more and more, giving advertisers ownership over data used for targeting.
- Second: as you will surely know, the cookie’s lifespan is somewhat limited from here. And the topic of Apple ATT privacy rules has been discussed forwards, backward, and sidewards in the marketing world. Zero-party data, however, is supposed to be privacy future-proof as long as it is stored and transferred correctly, adhering to the regulations like CCPA or GDPR. The more zero-party data you have at your hands, the less the third-party cookie’s death will hurt you.
Why do you want Zero Party data in your campaign?
Scott McNealy, the founder of Sun Microsystems, is breaking down why you want zero-party data in your campaigns in one complete sentence:
“Personalization and privacy can only coexist in the future with a zero-party data strategy.” — Scott McNealy
In the cookieless future of advertising — for example, our agencies preferred programmatic partner Quantcast and many others are doubling down on — you still want as much personalization as possible to keep your advertising relevant for your target audience. Cookieless advertising will work best when built on first-party data and zero-party data — they are the king and queen of data for future-proof ad tech. It’s better than a vitamin shot for the machine learning behind AI-driven ad tech.
Relevance of an advertisement is key: in a digital space crowded with ads in all shapes and colors, you will be overlooked if it is not relevant to the user. It doesn’t matter if you look at it with an awareness or a conversion goal in mind! Your target group would remember your ad and be aware of your brand if the ad was relevant in the moment and the place they saw it. And your audience will convert for the same reason. Right time, right place, right message, right visual! Zero-party data is a cornerstone to achieving just that.
Now, back to the original question: is zero-party data new, and why is the hype so big? Plus, will it be more than a hype, and is it to stay for longer?
- Zero-party data is not entirely new. As I explained above, the topic has been around for almost four years now. That’s quite some time in the ever-changing ad ecosystem.
- The hype is so big and significant because the Cookiepocalypse is becoming real, with Google announcing that it will be phasing out third-party cookies in late 2023 — this time for real. Before that, the apple ATT meltdown has jolted many marketers out of their comfort zone. They will not want to be half-prepared again.
- Zero Party Data will stay as more and more companies integrate into the services of their digital representations. The only thing I am not convinced about is that the label in itself will persist. There’s a good chance it will be seen as a specific set of first-party data.
Octane AI CEO, Matt Schlicht, has a good reason for my last assumption as the label is mainly used within the ad tech industry but not beyond:
“Do I think that there’s a chance that the term zero-party data goes away, and people just refer to it as first-party data? I think that is potentially very likely. It’s a lot easier to say!”
Read on:
https://www.forrester.com/blogs/straight-from-the-source-collecting-zero-party-data-from-customers/
https://twitter.com/Ryanbarwick/status/1481282656209887234
https://www.marketingbrew.com/stories/2022/02/02/is-zero-party-data-a-real-thing
https://www.marketingbrew.com/stories/2022/02/02/is-zero-party-data-a-real-thing
