April 16, 2021 | Maz Tannir

The End of Cookies: Leveraging Zero-Party Data

“All human beings have three lives: public, private, and secret.” Gabriel Garcia Marquez

While I doubt that Garcia Marquez was thinking of the internet in particular when he said this to his biographer, I can’t help but wonder if perhaps we actually have a fourth ‘life’ – a digital one, catalogued by cookies and other tracking methods, creating a data profile that was once considered the cost of being online. 

The internet isn’t free, even if free sites make it seem like it is. Everything you consume online is an exchange: content contains ads. Cookies collect data, allowing companies to gain a better understanding of consumer behaviour online. That data makes it possible to offer more relevant ads to consumers. 

Consumers, however, are growing increasingly concerned about their data. Who is collecting it? What can they do with it? How much of their behaviour online is being tracked? Is that information being sold, and if so, who is buying it?

As a result, major changes are coming to ways in which data is collected and applied. This change starts with the end of the era of cookies. So what’s next?

Types of Data

Before we delve into ways companies can address the coming changes, let’s explore the different types of data.

  • Third-party data is data purchased from an external source that has been collected by cookies and pixels and stored by firms who resell to advertisers without any exclusivity.
  • Second-party data is data collected primarily by another company and then exchanged with your company for the benefit of both parties. 
  • First-party data is collected by your company directly from your customers using cookies, pixels, surveys, and online transactions. First-party data is exclusive to your company.
  • Zero-party data is data that is intentionally and proactively shared by customers with your company.
First-Party DataZero-Party Data
Data that you directly collect from your audience or customers. Data a customer intentionally and proactively shares with your brand. 
Examples include customer name, address, email address, phone numbers, purchase history, behaviours, and more. Examples include purchase intentions, preference centres, personal context, social stories, etc.
Rich with behavioural data and implied interests. Rich with specific customer interests and preferences. 
More relevant and accurate than external sources. Highly relevant and accurate.
Collected using simple registration forms or analytics tools to log activity and behaviour.Collected using qualitative data collection tools such as surveys, questionnaires, competitions, social media stories, in-app preferences, etc.
Owned by a brand which determines its collection, storage, management, and security. Owned by the customers who grant a brand the right to use their information.
Customer is not directly involbved and is mostly unaware of gathered data.Involves an exchange of value and the customer expects something in return for their information.
Requires inferring, observing, or assuming the meaning of collected data.Doesn’t require that you infer, observe, or assume its meaning since brands get the data directly from the consumers.
Enables personalized customer experiences.Enables highly personalized spot-on customer personas and ad campaigns.
Minimal privacy concerns.Builds trust with customers by respecting their privacy and intentions. 
Source: bluerush.com/blog/zero-party-data-vs-first-party-data

The Problem With First-Party Data

Often referred to as the new oil, the new gold, or any other number of metaphors meant to imply the incredible value of customer data, it’s important to remember that the problem with data isn’t personalization. The problem is that cookies violate consumer privacy, and the approach to personalization often doesn’t actually deliver useful information to the customer, or the company. 

More and more consumers are using adblockers, deleting their social media accounts, or using VPN services to shield their data, fearing that companies know “too much”. 

The Rise of Zero-Party Data

Many brands are using tactics like polls, quizzes, sweepstakes, and questionnaires to collect opt-in data that provides key insights into their customers. This type of data collection is win-win. It offers customers greater control and transparency into exactly what data is being collected, while giving companies access to much more useful information, enabling them to target personalized offers much more effectively. 

Zero-party data puts customers in control of what information they share and who they share it with, enabling both greater transparency, and more effective personalization.  Click To Tweet

Consumers are interested in personalized offers – 91% of consumers said they were more likely to shop with brands that recognize, remember, and provide relevant offers and recommendations. Zero-party data makes it possible to offer much better personalization that cookies ever could (without the privacy issues).

Customers have accepted that they will see ads and product offers matched to their lifestyle. Have you ever noticed that when you get an ad that doesn’t fit you at all, you wonder what you did to get that ad served to you? There’s an expectation of personalization to some degree. But alongside that expectation, customers don’t want their data to be collected in an insecure manner and then sold to the highest bidder or advertiser.

Zero-party data puts customers in control of what information they share and who they share it with, enabling both greater transparency, and more effective personalization. 

Innovating Data Practices for Zero-Party Collection

Now we can actually talk about what’s next. Your data collection strategies must be assessed to consider the ways in which information is collected and applied. Have you set yourself up for success when developing your digital media strategy? 

Zero-party data collection demands giving your customers clear, transparent information about how their data will be used and allowing them to control if that data is collected at all. Here’s how you can do that:

  • Clearly and prominently display messages about data collection and application when a page loads for the first time. 
  • Allow customers to proactively opt-in to share their information, including allowing them to customize what data they wish to share, and which they wish to keep private. 
  • Make data privacy education part of your user experience and explain your data policies in language that can be understood by anyone, no matter their level of digital literacy. 
  • Give real examples for how data will be used. For example, explain how data might be used to customize emails or offers. 

You might be thinking that all of this will simply lead to having less information about your customers, and that’s true – but it’s also false. 

Eighty-three per cent of customers indicate they are willing to share their data to enable a more personalized experience as long as companies are transparent about how they are collecting and using the data Click To Tweet

With the end of cookies, you will have less access to first, second, and third-party data. However, that data has long been quite raw. It shows you a generalized picture of the audience and their generalized behaviours. And while that generalized behavioural information has without a doubt been valuable, zero-party data has the potential to be vastly more powerful. 

Eighty-three per cent of customers indicate they are willing to share their data to enable a more personalized experience as long as companies are transparent about how they are collecting and using the data. Companies that embrace transparency, data education, and hand over the control of data to their customers will succeed in this new landscape. 

How does your company plan to adjust its digital marketing strategy? Connect with Maz on LinkedIn to discuss how to best take advantage of zero-party data opportunities.

Maz Tannir

Maz uses 26+ years of experience to effectively develop, negotiate and tailor media strategies to align with marketing goals. He is actively involved in industry organizations including the IAB (Chair, Diversity and Inclusion Taskforce and Programmatic Trading Committee), and AdClub Toronto (Digital Day Committee). You can connect with Maz on LinkedIn.