Cookies are crumbling: Zero-party data – what it is, and what marketers need to know about it

Cookies are crumbling, which impacts how marketers collect customer data and how they leverage data for their marketing efforts. Customer concerns about privacy and control over how their data is being collected and used have led to emerging regulations such as GDPR and CCPA. These regulations increase restrictions on tracking third-party data/cookies (that allow marketers to track visitors across domains) imposed by multiple operating systems like Google, Apple, and Mozilla, ad-blocking software, and more. 

These combined data restrictions have brought about the death of third-party data/cookies, meaning that marketers and customers alike have entered a new era of data privacy. More than ever, marketers need to be deeply aware of data privacy concerns and how they impact the use of customer data.

What is zero-party data?

Fortunately for marketers, there's something better than collecting third-party data. Zero-party data, a term first coined by Forrester Research a few years back, comes directly and consensually from your customers in response to your asking them what they want from you. Such data is of higher quality because it takes the guesswork out of identifying your target customer’s preferences: instead, you ask and they tell you. Obviously, they only tell you if they trust you, which changes how you market to them.

So when brands show customers those subscription center check boxes, they can collect zero-party data such as communication preferences, product preferences, and customer interest areas/topics. They can then use that data to categorize customers into groups for email or other types of marketing engagement that addresses stated customer preferences.

Brief overview: 3 other types of customer data

• First-party data, though similar to zero-party data because both originate directly from customers, is collected within a brand’s domain (usually through enabling tracking) to support a transaction, or as a support or service requirement. It doesn’t come in direct response to requests about how customers want you to engage with them, as zero-party data does.

• Second-party data is typically someone else's first-party data: it’s data your organization has purchased from another organization or that’s been shared with you through a data partnership arrangement.

• Third-party data is collected outside your brand’s domain from a variety of sources, such as a customer’s (cross-domain) browsing history. This data is typically collected from third-party cookie tracking, a functionality that is now disappearing.

Massive benefits of zero-party data

With the coming elimination of third-party tracking, first-party data and zero-party data become the best data sources for understanding and engaging with your customers. Sojourn’s Kelly Newton identifies three main benefits of using zero party data:

1. More customer trust. When marketers explicitly ask customers about how and when they’d prefer to be communicated with, and when marketers respect those customer preferences, a foundation of trust gets built and maintained. That trust is gold for marketers.

“Customer consent and trust are so important today,” says Newton. “Marketers and everyone else are all learning how we can respect and appreciate each other in better ways. It's all about building relationships based upon trust and the shared exchange of value.”

2. Higher-quality customer data, and more of it. When customers trust you, they’re also more comfortable sharing zero party data. It becomes a virtuous cycle where more trust leads to more data – and more relevant data. ZPD is of much higher quality than other types of data “because it comes directly from the source and with full consent,” says Newton. “So you don’t need to guess or infer about a customer based on third-party data because they’ve explicitly told you exactly what they want.”

3. More personalized and effective campaigns. More and better zero-party data becomes the fuel for driving better campaigns that are more personalized and more engaging. With marketing automation, it’s never been easier to take customer preferences and automatically serve up content that addresses the expressed needs of customers.

So if you know from zero-party data that customer A is a parent and also a history teacher, that's two different categories and two different email campaigns you can create and automate to nurture them.” 

With zero-party data, you know you’re sending content that’s more relevant to customers and that they’re more likely to engage with. “You get to know individual customers better with zero-party data and first-party data,” says Newton, “and you can use your marketing automation platform (MAP) to scale, automate, and personalize customer engagement. You can set up campaign canvases based on who your customers have identified themselves as and what actions they take in relation to your content and nurturing campaigns.”

A final word

Let’s give Forrester Research, who invented the term, the final word on zero-party data: “Zero-party data is extremely valuable and will improve the effectiveness of personalization efforts. Ultimately, zero-party data can reduce marketing waste for a brand and improve the lives of its customers – a win-win situation for everyone involved.”

To learn even more about how to collect and leverage Zero-Party Data to improve your marketing efforts, reach out to us.