Zero-party data: a beginner’s guide

Data. It has an enormous influence on everyone’s life in the digital age. And in 2023, amid mounting concerns over privacy, the marketing world is undergoing a seismic shift as major players phase out third-party cookies.

With this impending demise of third-party cookies, marketers are compelled to explore new avenues for data collection. 

Businesses are now grappling with the question: How can we continue to gather valuable insights about our audience without compromising their privacy?

Enter zero-party data, a concept gaining momentum as the industry shifts toward a more transparent, user-centric approach and offering a promising solution to the challenges posed by a cookieless future.

What is zero-party data?

Zero-party data is information willingly shared by individuals with businesses or brands. Unlike first, second, and third-party data, zero-party data is explicitly provided by the user, offering a more direct and consensual approach to data collection. 

Zero vs. first (and second and third) party data: The differences

How does zero-party data differ from other data types? Let’s find out.

1. Zero-party data

What it is: Data provided by or sourced directly from users.

Characteristics: Data is shared willingly through interactive methods like surveys and quizzes, marking a shift toward more consensual data collection.

Marketers’ use: Send hyper-personalized communications to users based on information they willingly share with you. You can also apply opinions and preferences users share to improve products and services or to create better targeted-marketing efforts.

2. First-party data

What it is: Data gained by observing users’ interactions with products and services.

Characteristics: More reliable and transparent, relying on explicit user consent and utilizing tools like website analytics and CRM systems.

Marketers’ use: Personalize content and advertisements based on observed user behavior and preferences. 

3. Second-party data

What it is: Data shared directly between two businesses or organizations, typically through partnerships.

Characteristics: Involves a mutually beneficial exchange of data between trusted partners.

Marketers' use: Gain additional insights into a broader, typically similar, audience.

4. Third-party data

What it is: Data collected externally from users by entities such as data brokers and advertisers.

Characteristics: Passive collection without explicit user consent; it raises privacy concerns due to its indirect nature.

Marketers’ use: Use it for broad audience targeting based on inferred preferences and for tailoring advertisements.

Understanding the data collection evolution: The timeline

1. Pre-digital era (pre-2000s):

Characteristics: Limited digital presence; data collection primarily offline.

Methods: Paper surveys, direct interviews, and traditional market research.

2. Emergence of digital platforms (early 2000s):

Characteristics: Initial digitalization brings new opportunities for data collection.

Methods: Basic online forms, website analytics, and early CRM systems.

3. Third-party data dominance (mid-2000s to early 2010s):

Characteristics: Reliance on externally sourced data from various online platforms.

Methods: Data brokers, advertising networks, and passive collection practices.

4. First-party data renaissance (mid-2010s):

Characteristics: Growing awareness of privacy concerns prompts a shift toward more informed data collection.

Methods: Enhanced website analytics, CRM systems, and user account information.

5. Zero-party data era (late 2010s - present):

Characteristics: Rising privacy awareness, regulatory changes, and a shift toward explicit user consent.

Methods: Interactive content, such as quizzes, surveys, and personalized forms.

6. Current trends (2020s):

Characteristics: Ongoing emphasis on user control, transparency, and mutual value exchange.

Methods: Advanced interactive tools, machine learning, and personalized user experiences.

7. Anticipated future (late 2020s and beyond):

Expected trends: Continued AI and machine learning for predictive analysis of consumer behavior and hyper-personalization for customer experiences.

Foreseen challenges: Continued adaptation to evolving global data protection regulations.

What led to the downfall of third and first-party data?

Now we’ve explained the differences in collecting and sourcing the different types of customer data,  and why zero-party data is so important. But what actually caused the shift away from first and third-party data? Let’s find out.

1. Growing privacy concerns and regulatory shifts

The surge in privacy concerns, exacerbated by high-profile data breaches and increasing consumer awareness, led to a seismic shift in regulatory landscapes. Stricter regulations like GDPR and CCPA put substantial pressure on businesses to prioritize user consent and transparency in data collection.

2. The end of third-party cookies and changing user expectations

Third-party data, often collected without direct user consent, faced mounting scrutiny. At the same time, users became more concerned about how their data was used and demanded greater control. Zero-party data allows marketers to deliver targeted, personalized content while respecting users' desire for privacy (and obeying the right laws).

3. Demand for authentic engagement and personalization

First-party data, while valuable, often fell short of providing the depth of insights needed for truly personalized experiences. Why? Because first-party data comes from user interactions with a brand's websites, apps, or physical stores, thereby making it indirect, as well as less valuable than zero-party data.

Zero-party data, collected through direct and engaging interactions, became a goldmine for understanding individual preferences, needs, and expectations.

Benefits of zero-party data

We’ve tooted the zero-party horn already, but let’s quickly take you through a few advantages of this ‌data collection type.

• Higher accuracy, enabling better personalization

Unlike third-party data (usually obtained indirectly), zero-party data is provided directly by the user. This explicit consent guarantees that marketers receive accurate and willingly shared information, enabling them to understand their audience better. Plus, this precision allows marketers to make data-driven decisions with confidence.

• Enhanced personalization without compromising privacy

Businesses can foster a deeper connection with their audience by tailoring content, recommendations, and promotions based on user-provided data. Importantly, as the data is willingly shared, privacy concerns are alleviated, cultivating a sense of trust between businesses and consumers.

• Builds trust and transparency with consumers

Collecting data transparently builds trust, a critical element in forging long-term relationships between businesses and consumers. When users feel in control of their data and understand how it benefits them, they're more likely to engage openly with brands, increasing loyalty.

BONUS READ: As the cookie crumbles, three strategies for advertisers to thrive.

Challenges of zero-party data

While the benefits are clear, the challenges of zero-party data persist.

Elements and exercises like: 

• willingness to shift to internal data collection, 

• challenge of context and scale (without context, specific pieces of zero-party data can be difficult to understand, and without scale, the data isn't as reliable as larger swaths of 2nd or 3rd party data), 

• and dependency on user engagement, always persist. Moreover, here are some more challenges of zero-party data.

Adjustment period for marketers

Transitioning from traditional data collection methods to a zero-party data approach requires a shift in mindset and strategy. Marketers may face challenges adapting to a model where user consent and active participation are paramount. 

Ensuring consumers understand what they're sharing

A critical challenge lies in making sure that users comprehend the information they're opting to share. Users may be accustomed to passive data collection and wary of providing explicit details. Clear communication about the purpose of data collection, how the information will be used, and the benefits users can expect is vital. Any deviation from these expectations can erode trust and lead to user dissatisfaction.

Maintaining data security

Maintaining robust security measures is imperative with the increased focus on data privacy. Businesses must invest in secure data storage, transmission, and processing systems to protect the information shared by users. Implementing encryption, access controls, and regular security audits are crucial components for safeguarding zero-party data. 

While collecting data directly from users is great from a marketing standpoint, it also brings its own share of international security-based challenges. Companies and brands must guarantee compliance with individual national and international laws such as GDPR and CCPA.

How do you collect data directly from users?

As we covered above, zero-party data is the data customers explicitly choose to share with you. The data you receive depends on what you ask and how you ask for it. With the right strategy and techniques, you’ll be able to generate quality, straight-sourced data about your users. 

Here are some techniques to help you collect that all-important data:

• Surveys

Surveys serve as a versatile tool for gathering insights directly from users. By designing well-crafted surveys, businesses can pose targeted questions, uncover preferences, and understand customer sentiment. The key is to create concise, engaging surveys and provide value to the participants. 

• Quizzes

Quizzes offer an interactive and entertaining way to collect zero-party data. By creating quizzes related to products, preferences, or lifestyles, businesses can encourage users to share information more engagingly. Users are often willing to participate in quizzes that align with their interests.

• Forms

Forms can be powerful tools for zero-party data collection. These can range from subscriptions to preference forms, where users voluntarily provide information about their interests, demographics, or communication preferences.

• Interactive tools

Creating interactive tools, such as calculators, configurators, or product selectors, not only enhances user engagement but also facilitates the collection of zero-party data. Users willingly input information while interacting with these tools, allowing businesses to gather valuable insights without explicitly asking for data.

• Social media platforms

Leveraging social media platforms is another avenue for collecting zero-party data. Interactive polls, surveys, and engaging content on platforms like Facebook, Instagram, or Twitter can encourage users to share their preferences and opinions. Social media interactions provide a more casual and accessible environment for users to contribute data voluntarily, fostering a sense of community engagement.

• Transactional data

Transactional data, such as purchase history and preferences, can be a goldmine for zero-party data collection. Businesses can predict future preferences by analyzing users' past interactions and tailor marketing efforts accordingly.

The future of data collection

With companies moving away from relying on third-party cookies, marketers need to rethink the way they collect data from customers, users, and interested parties. In this case, how can marketers adapt to this changing landscape, to make sure their operations and campaigns are ready for their new way of working?

1. Changing global data protection regulations

A future trend in the impact of global data protection regulations is the increasing convergence of regulatory standards. With more countries recognizing the importance of safeguarding user privacy and data, there's a growing momentum toward establishing cohesive international frameworks.

2. Post-cookie strategies

With the imminent end of third-party cookies, marketers are navigating a cookieless future by exploring alternative data collection methods—prominently zero-party data. As an alternative to cookie-based tracking, contextual targeting is gaining traction. 

3. Interactive content dominance

The landscape is witnessing a surge in the use of interactive tools, such as quizzes, surveys, and personalized forms. These engaging methods not only collect zero-party data directly from users but also contribute to a more interactive and personalized user experience.

4. Emphasis on customer experience

By leveraging various forms of data, including zero-party data, businesses are moving toward hyper-personalized customer experiences. This involves tailoring products, services, and communications to individual preferences and behaviors.

5. AI and ML emergence

Exploring the integration of advanced technologies like AI and machine learning is a strategic move to enhance user journeys. By leveraging these technologies, businesses can optimize marketing strategies and deliver more personalized and efficient experiences.

The evolving landscape of data protection regulations is reshaping the future of data collection, compelling businesses to prioritize ethical, transparent, and consensual approaches. These measures not only enhance user privacy and control but also foster trust and pave the way for a more sustainable and user-centric era in data-driven marketing.

Why is your shift to zero-party data important?

The shift toward zero-party data marks a pivotal moment in modern business. As brands and marketers adapt to the cookieless future, understanding the nuances of zero-party data, its collection methods, benefits, challenges, and real-world applications becomes paramount. By staying ahead of the curve and embracing this change, businesses can survive and thrive in an era where user consent and data privacy take center stage.