The Rise Of The Zero-Party Data Economy

In The Press: The Personalization-And-Privacy Paradox

Richard JonesLast Updated: Company, Featured, Press

The original article ‘The Personalization-And-Privacy Paradox’ appeared in AdAge on 25th March 2019. You can read it here.

The new era of privacy has created a catch-22 for marketers. Today’s consumer expects true personalization, bespoke content and tailor-made product recommendations. But this is tough when contrasted with government legislation for increased privacy, tighter data controls and the right to have information erased with the click of a button. This is the personalization-and-privacy paradox.

For marketers who still rely on third-party data sets, cookies and past purchases to power personalization strategies this is something of a headache. But for those marketers who are prepared to ask rather than infer, this is an opportunity to build more meaningful and lasting connections with consumers.

The shift in the data ecosystem

This shift in a data landscape came as a result of myriad interconnecting reasons: The Cambridge Analytica scandal, coupled with Facebook’s penchant for selling private user data to favored brands hit newspaper front pages rather than merely the tech pullouts. Google received a prodigious fine for falling foul of GDPR rules for ad-targeting and creepy personalization fueled by a multibillion-dollar third-party data market slowly eroded consumer trust. Add to this nascent data protection legislation and calls to end the third-party data economy.

The reliance on third-party data is not just bad practice; it’s often bad data because it’s commonly amassed from a host of unrelated and unreliable sources like credit scores, cookies and click trails. As a result it quickly becomes outdated and has no direct relationship with the individual consumer which ultimately hampers the quality and effectiveness of your campaigns. Consumer preferences, budgets, household sizes and the like all evolve and change over time. Credit scores fluctuate, and third-party consumer data rapidly becomes useless.

“If you buy data from a third party, that is a risky element that could get you in hot water not just with the client for being creepy, but potentially with regulators.”

– Mark Grannan, Senior Analyst, Forrester

The solution: zero-party data

It is possible for marketers to collect data that is willfully shared directly with them by the consumer. This is zero-party data.

Forrester describes this as a class of data that “a customer intentionally and proactively shares with a brand. It can include purchase intentions, personal context and how the individual wants the brand to recognize her.” In other words, not first-party data with a millennial rebrand. First-party data is collected during sales and includes things like purchases, mailing address, date of birth and the like: purchase history, rather than purchase intentions.

Marketers can collect zero-party data by connecting directly with consumers and gathering the data, insights, and permissions they need to power truly personalized marketing. Rather than inferring, they’re asking, and consumers are willingly and intentionally sharing.

Zero-party data allows brands to build direct relationships with consumers, and in turn, better personalize their marketing efforts, services, offers and product recommendations. As it comes directly from the consumer, there are no intermediaries, no guesswork. So you don’t just know what your customers have done in the past, you have the data to know what they will do in the future.

Digital disruptors like Spotify have been successfully delivering personalized content for decade. Subscribe and listen to Ed Sheeran and you’ll be sent relevant ads for pre-sale tour tickets and receive notifications for new albums as well as suggestions of similar artists.

“Zero-party data is extremely valuable and will improve the effectiveness of your firm’s personalization efforts.”

– Fatemeh Khatibloo, Principal Analyst, Forrester

Collecting and activating zero-party data at scale

To break the personalization-and-privacy paradox, consumers need to be entertained, engaged and receive something in return for their attention and preference data.

Brands can deliver this through interactive experiences that conduct research, accrue opt-ins and deliver an altogether better experience with a tangible value exchange.

Questionnaires, polls, quizzes or social stories incorporate incentive mechanics that allow marketers to quickly and easily collect zero-party data at speed and scale.

Capturing consumer motivations, intentions, interests, and preferences at scale allows for a personalized customer experience. Empowering you to stop using guesswork by arming you with the data you need to make the right connections with your customers. And by leveraging the right mechanics, and offering a value exchange, your customers will tell you what products they desire, what they look for in a service, and what motivates them to purchase.

Your customers’ interests, preferences, motivations and desires evolve. Moving to a zero-party data strategy means that your audience building and profiling doesn’t stop, but that it also allows for change. This keeps your data accurate, relevant and current because the data points are coming directly from your audience.

Forrester Q&A: What Marketers Need To Know About Zero-Party Data

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