July 16, 2024
What zero-party data is, and why you should care.
Image created by DALL-E, an AI system by OpenAI
Zero-party data is a relatively new term but represents a powerful concept. It includes insights such as product preferences, purchase intentions, interests, and other data points that the customer expressly provides. Unlike other types of data, which may be inferred through behaviour or transactions, zero-party data is voluntarily provided, making it incredibly precise and valuable for targeting and personalization. Examples include survey responses, preferences shared via a website or app, volunteered feedback, profile information entered in account settings, etc.
First-party data, on the other hand, is collected by a company through its direct interactions with customers, both offline and online. First-party data has long been a reliable source for understanding customers because it is gathered from the brand's own channels and interactions, and unlike self-reported intentions, it shows actual behaviour patterns. Examples include website analytics, purchase history, CRM data, offer redemptions, email engagement, social media interactions, etc.
Zero-partyand first-party data are the gold standard in customer data because they arecollected directly from the source: the customers themselves.
Zero-party and first-party data are the gold standard in customer data because they are collected directly from the source: the customers themselves. This direct collection method ensures that the data is accurate, relevant, and obtained with the customer's consent, making it highly valuable for creating personalized experiences. We at RI have seen first-hand the power of zero-party and first-party data not only in the context of CRM communications, but also in paid digital media targeting optimization, such as retargeting and look-alike audience development. We have witnessed significant cost savings driven by media efficiency thanks to zero-party and first-party data.
As concerns over data privacy and security continue to grow, and as regulations impose stricter requirements on data usage, third-party data access is becoming more limited and complicated. (The demise of third-party cookies is one major example.) Against this backdrop, zero-party and first-party data have emerged as invaluable assets for marketers seeking to build trust, ensure compliance, and drive more personalized and effective marketing efforts.
Why you should care:
- Accurate Insights: Building strategy off of inaccurate insights can have detrimental consequences, such as wasted marketing investment and reduced performance. Getting data directly from the source is more accurate than relying solely on third-party tools to tell you how your customers think and feel.
- Personalization: Catering to your customer’s preferences and interests using unverified or unreliable data collected from inferences or third-party sources can create a publicity nightmare, damage your reputation and escalate customer churn. On the flip side, using the data your customers actively shared with you to create personalized experiences will make your customers feel seen and appreciated, which will help cement their loyalty.
- Compliance: Even when working with reputable third parties, ensuring privacy regulation compliance can be very tricky, leading to increased risk exposure. Collecting your own zero-party and first-party data enables you to put proper checks and balances in place to ensure compliance with all applicable regional regulations, such as PIPEDA in Canda, GDPR in the E.U. and CCPA in California.
RI has been focused on zero-party and first-party data since before these labels entered the marketing vernacular. For decades, our clients have been relying on our expertise in collecting, analyzing and executing with customer data. With all the recent developments in the marketing landscape, we are helping many organizations rediscover the significant value and importance of zero-party and first-party data to provide deeper and more accurate customer insights, deliver increased paid digital media performance, and align with the growing emphasis on data privacy and customer consent.
Let’s get real. In our next post we will unveil real-life case examples of brands that are leveraging zero-party and first-party data to their advantage.