Zero-Party Data Management is Needed to Protect Consumer Privacy

Entering 2022, privacy technology was identified as the top prediction for increased marketing investment to look for throughout the year. Consumers have voiced anger, confusion and suspicion over company breaches, unwanted sharing of personal information, and collection of data from other entities. A survey right before the new year, seen in Forbes, showed that almost 160 of 463 chief marketing officers put privacy first over artificial intelligence (AI), the metaverse, and other technology predictions impacting the industry.

As companies scramble to check the privacy compliance box, the main solution to ensuring consumer privacy and trust in a competitive market space is hearing directly from customers themselves. Zero-party data is data that a customer intentionally shares with a brand, such as their preferences, insights, profile data and consents. Customers expect companies to provide value in return for their willingness to share their personal information. This process builds trust with the customer and helps companies maintain compliance. For example, one of the most common forms of zero-party data is collecting a person’s email address, areas of interest, and consent when they sign up to receive product information. This basic information enables businesses to give customers what they want moving forward, which in turn incentivizes customers to continue to share data.

How is Zero-Party Data Different Than First-Party Data

Zero-party data is a subset of first-party data. In addition to the zero-party data that a customer explicitly shares with a brand, first party-data also includes data that a company directly collects about customers as they interact with their brand such as demographic information, purchase history, and subscription data. While businesses use this implicit first-party data to target customers, it can only offer inferred insights about areas of interest.

How is Zero-Party Data Different than Third-Party Data

When considering how companies predominantly interact with their customers, a large percentage of customer insights (e.g., what the customer is interested in or not interested in) have been obtained from external third-party data. Whether it’s through online activity, third-party cookies, affiliate networks, social media engagement, etc., companies tap into many outside data sources to get their product or service in front of the person.

For example, a majority of retailers use information about consumers that's collected when consumers visit various websites. Third-party data is collected when searching for or clicking on an item to possibly purchase and it's stored in the consumer’s web browsing history. Retailers can then share or purchase that browsing history with other businesses or affiliates. However, web browsers, such as Apple’s Safari and Mozilla’s Firefox have already eliminated third-party cookie tracking and others like Google Chrome will be phasing out third-party cookies in 2023. Therefore, from an online web browsing history perspective, the third-party data approach of large companies has been called into question and is even greater now in the shifted virtual reality most have adapted to due to the COVID-19 pandemic.

With many companies still leveraging third-party data, the largest weakness is making assumptions about what interests the customer. Just as retailers track activity on their websites, assumptions of what product the customer is looking at (e.g., if they're going to purchase that particular product or want to look for similar products) is segmented through advertisements and can be seen most of the time on social media feeds. Just think about how many times you've seen a product you found on Amazon.com that you didn’t necessarily want pop up on Facebook. The underlying message here is that zero-party data puts the customer in charge of what they want or don’t want the company to remember about them, while third-party data is based on assumptions and completely bypasses consent.

What's the End Goal of B-to-C Marketing?

With companies continuing to evolve their physical business models to a virtual model, it’s important to invest in and develop a well-thought-out zero-party data strategy. Customers want to have more power in their relationships with the companies from which they buy products, and companies need to engage them via more personalized experiences to continue providing high-quality service. To provide personalization for the customer, everything from products and content to advertisements need to be tailored for that specific individual and be proprietary to the brand. An important attribute of zero-party data is that it's proprietary and no competitor has access to it. Moreover, the future of marketing also relies on being heavily relationship based, in which the company must give complete transparency into how it intends to use the customer’s data and provide value in return for customers sharing their data.

Ultimately, by giving customers control of their preference, profile, insight and consent data, it will only lead to them continuing to buy the company’s product or service and strengthen the future relationship.

Jeff Jarvis is the senior vice president of strategy and consulting for PossibleNOW, the pioneer and leader in customer consent, preference, and regulatory compliance solutions.