How zero-party data is changing trust and relevance in advertising

There’s frustration and uncertainty with some in the advertising industry stemming from the gradually constricting sources of identity data used for targeting, including the looming deprecation of third-party cookies and an evolving regulatory environment. The conversation about identity and cookies is complex, but ultimately these changes will help develop stronger relationships with people. We’re finally at the point of building real trust, transparency, and relevance, which are foundational to long-term relationships and returns between businesses and their customers.

Data, how it’s collected and what we do with it has been the topic of conversation since the advent of digital marketing. Initially, many were swept away by the possibilities of digital marketing and its ability to connect directly with people while measuring everything. Then came the era of big data and the opportunities therein, but we learned that bigger wasn’t always better. Now, in many ways, we’re coming full circle and finding better ways to connect with our audiences; it no longer needs to be a one-way dialogue. Instead of using data only to reach more people, we’re using it to help them. These principles, and to some degree policies, govern how we collect, merge, analyze, and activate it in service of our customers. One of the most meaningful ways marketers can gain trust and create meaningful engagement with customers is with zero-party data.

What is zero-party data?

As marketers, you’re probably already familiar with first, second, and third-party data. First-party (1P) comes from direct customer interactions, second-party (2P) is obtained from a partner, and third-party (3P) is collected, bought, and sold by data aggregators. Zero-party (0P) data, on the other hand, comes from people willingly and proactively providing information about themselves — their interests and intentions — to brands.

With 1P and 2P data there are either observed or consented types; each have essential differences to consider when developing a data strategy:

• Observed data is assumptive. It typically comes from consumer behavior based on past actions. For example, a marketer might assume you’re interested in one type of product over another based on what you click on their website, but these actions aren’t always indicative of intent. Though it’s the most common data type used today, it can be unreliable and quickly outdated.
• Consented data is known. It comes from what people tell us. Commonly, it is gleaned from a form fill during interactions with customers in emails, webinars, and other tactics, and it often includes things like where people live, where they work, and additional contact information.

Zero-party data is a type of consented data beyond standard information, such as someone’s email address or phone number, that you may gather to deliver a service or experience. It could include product interests, personal context, and preferences, and it is exchanged for value and helps brands better understand an individual. People voluntarily share it in exchange for some explicit value, such as tailored communications or a more personalized experience for the customer. It is grounded in transparency and control and is how brands improve relevancy and the value exchange they offer.

What zero-party data can do

Zero-party data is powerful. If you ask the right questions, it opens communication, seeks to understand people better, and builds more meaningful relationships. Many marketers already are capturing some 0P data in their customer relationship management (CRM) systems, but they may not be using it to its potential. That may be because they’re not asking the right questions in the right places.

Typically, we’ve asked questions solely to obtain contact information and use it for primarily transactional purposes. But that rarely gets to the heart of why a person is on a site in the first place; it doesn’t immediately help them either.

A good 0P data strategy begins with questions to help understand what customers want, and it enables the creation of a meaningful value exchange. It helps expand customer knowledge, optimize marketing, and deliver value. A Forrester studyon 0P data shared examples from several brands they’ve seen do this well.

• Make-up brand NARS used its website to ask customers directly which type of communications and online events interested them. They followed up accordingly with virtual make-up try-on, expert classes, and other communications.
• HOKA shoes partnered with Dick’s Sporting Goods and created interactive display ads that asked consumers which of four choices was the best shoe for them. With the intel, they served appropriate mid-funnel content and eventually directed these consumers to a website to buy the shoes.
• Kellogg’s asked customers when and where they snacked, their preferred snack types, and with whom they shared in their household. They used the info to segment audiences and make snacking recommendations via tailored marketing messages.

This type of tailored communication is the digital version of walking into a business and being immediately greeted by staff who ask how they can help you. It’s the main difference of how 0P data delivers a better value exchange over other consented models. The consumer now has skin in the game that forms a connection and directs the conversation.

Why you want zero-party data

Zero-party data is the foundation for a relationship built on trust and a value exchange. For consumers, it holds the promise of a personalized and more relevant experience with brands. In return, brands and businesses receive better insight and a longer-term relationship.

Businesses using 0P data directly connect with people willing to share their information to receive specific types of personalized messages. They have a more highly engaged audience, and that can be priceless. Keep in mind, 0P data is more laborious to collect than more traditional forms, but the key to success is quality over quantity.

When your data request is communicated transparently, 0P data helps build more trusted customer relationships that lead to higher lifetime value and 0P data, unlike some other methods, is free. Plus, it’s more likely to be compliant and accurate, so incorporating it into your overall data strategy can better protect you as industry regulation evolves.

How to get zero-party data

First and foremost, you’ll want to keep in mind that it's not a race to zero-party data, and your 0P data plan should be part of a larger data strategy. Other observed data, 2P data, partnerships, and more should continue to play a role in your plans. Understand the value exchange you're committed to providing, your customers’ values, and what’s required to deliver against that commitment, and deliver on your promises. Put mechanisms in place that offer people transparency and control of their information — grant them agency to edit, add, or even revoke aspects of what they provide.

The way to obtain 0P data is to ask for it, and more marketers are doing just that. Forresterpredicts that Automated Intelligence, by the end of 2021, will enable more than 60% of business-to-business (B2B) brands to collect it.

You'll find some opportunities immediately and others that will take more time to nurture. It could be off-putting for a person’s first experience with your brand to come with too many potentially personal questions, so gauge your approach accordingly.

Many brands begin with a plan to build micro experiences on websites and in advertising to initiate short, simple exchanges. These ask for guiding information about the customer in exchange for value such as loyalty points, giveaways, or just the promise of more relevant communications.

Savvy marketers create opportunities to collect 0P data in interactive advertising, social media, messaging apps, websites, email, and more. This is where understanding your customer and providing a good experience is vital. 0P data collection must be:

• Easy for people
• Reasonable in scope
• Actionable for marketers
• Providing clear value to the customer

Ensuring you’ve set up your customer experience to collect data at the right touchpoints is critical. Automation, such as chatbots, is a popular method to learn from and guide conversations to orchestrate more meaningful interactions. This automation could surface patterns that drive marketers to the next best communication flow and build their relationships.

An Accenture Interactive studyfound that 91% of consumers say they are more likely to shop with brands that provide offers and recommendations relevant to them. Further, 83% are willing to share their information to create a more personalized experience, but it’s essential that marketers only ask for data that helps them provide a better experience and explain to people what the value exchange will be. Too many questions without a purpose will frustrate people.

Advertising with zero-party data

Zero-party data allows you to create advertising and marketing that fosters more meaningful engagement and better personalization that helps forge more robust connections. Epsilonfound that 80% of people are more likely to purchase from brands that personalize communications and results show that when ads are better targeted, they’re also better performing.

Combining 0P and inferred data together can help you more strongly predict a behavior or a pattern of behaviors for more precise targeting and segmenting at scale, but you may still be curious as to how exactly you can obtain your own 0P data while providing your customers with a positive value exchange. Here are just a few ways:

• Set up Universal Event Tracking (UET) to collect data to measure and tune your ad campaigns.
• Leverage tools like Custom Audiences to deliver personalized messages and offers with UET data.
• Use remarketing to reengage customers and prospects.
• Create look-alike, or Similar Audiences, lists and segments based on signals obtained through the above to provide more personalized ad experiences at greater scale.

Using zero-party data responsibly

One important note of caution: Zero-party data is built on trust and fostered through an explicit relationship a person makes with a brand (and vice versa). Collecting it and then sharing it with various parties can break that trust, so upholding consumer data privacy — which 87% of consumers say they believe is a right, not a privilege — is not only the right thing to do, it’s a brand’s responsibility.

With this information and these strategies, advertisers can begin to earn trust through a more personalized and helpful line of communication that is authentic. It can bring clarity to audiences and marketers alike — and that’s good for everyone.

Resources

Data privacy will always be an important topic. Learn more about the importance of privacy and what you can do to build trust, love, and loyalty with your customers. Download the Marketing with Purpose Playbook.

Keep up to speed with Microsoft Advertising insights, tips and tricks, thought leadership, customer success stories, and additional resources. Sign up for the weekly Microsoft Advertising Insider newsletter.

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