Zero party data: What on earth is it and why do marketers need it?

Just what marketers need - another buzzword. CMO takes a look at exactly what Zero party data is

If you’ve been around the marketing traps for the last year, you may have heard of ‘Zero Party Data’.

However, you may be unclear as to what it actually is. It is a fancy way of saying first-party data? Is it is different kind of data altogether? Are we not already inundated with too much data? How many more data categories do we really need as marketers?

The trick to understanding what Zero Party Data is lies within two words: Privacy and value.

According to a recent Forrester report, zero-party data (ZPD) is data a customer intentionally and proactively shares with a brand, and might include preference centre data, purchase intentions, personal context, and how the individual wants the brand to recognise them. This differs from first-party data (FPD), Forrester says, because while brands own FPD, they do not own ZPD. Instead, consumers grant a brand the right to use their ZPD for the purpose of a particular intent or value exchange.

Therefore, unlike other forms of data, ZPD should never be sold without consent, and should be considered ‘fluid’.

“While first-party data is rich with behavioural data and implied interest, zero-party provides explicit interest and preferences — and you must use it to improve the value you provide to consumers,” Forrester explains. “Firms collect first-party data through interactions with customers. This differs from zero-party data, which consumers give you in exchange for benefits from your firm. While brands might historically have considered this self-reported data to be “first party,” consumer expectations have forced the need for a new term and a new way of treating this kind of personal information.”

Consulting director at Kantar Analytics, Jarrod Payne, said ZPD is data consumers are willing to share directly with brands. 

"FPD is data a brand collects, ZPD is just asking people, asking consumers what they want from a brand, and using it specifically for that person, rather than inferring it for a broader population," he explained. "It’s a reflection of the fact that people want more control over their data now. They are giving you that data for a purpose, like for better personalisation, or for a reward."

Co-founder and head of strategy at The Lumery, Ben Fettes, told CMO privacy and intent are key to ZPD, as is fluidity. “It’s a crafty way of putting data privacy and explicit opt-in into the spotlight,” he said.

“The entire time of being at The Lumery, the only thing we talk about is first-party data. But over time it has evolved and with the amount of attention on what happens with consumer data, we need explicit opt-in data, which is what ZPD is.

“It’s a fancy way of saying first-party data provided by a consumer or prospect you can act on, with a strong stipulation around it." 

Specifically, this allows customer to have more control over their data, and a clear value exchange has to exist, Fettes continued.

"When a consumer provides an email address, they don’t do it for fun. They sign up as there is a value exchange. The website or brand has an offer they want at that particular point in time, and they are happy to exchange contact details for that," he said. "The issue is, a customer can opt-in if they are interested in jeans, for example, but it doesn’t mean they will always be interested in being contacted about jeans. The idea of ZDP is, it has to be fluidity to it, and the customer has to keep telling you that’s what they are interested in.

“In the future I don’t believe we’ll be calling it ZPD, we’ll be calling in FPD, just the concept around it will change."

Building preferences

Another example of ZPD is preference centre data. This is because it’s customers telling a brand what they want and need - in other words, reflecting data exchange with intent. However, 10 years ago preference centre was considered first-party data, Fettes said.

According to Forrester, preference centres are a great way to capture zero-party data as they help build trust by giving customers control and choice over how companies contact them and with whom they share their personal information. Performics CEO, Jason Tonelli, refers to ZPD as that data which is self-reported by the consumer.

“It is data which is procured by brands, almost like survey data of consumers, it is not inferred data, it is self-reported. While first party data is demographic and psychographics, this is more this is where the consumer is at in a journey,” he explained.

“It is self reported, and this is the potential red flag on it. Look at the polls before the election, which were wrong. We need to consider the consumer is telling us what they think we want to hear. The validity of this data, as it’s self reported, is the interesting thing. It’s going to be skewed by what the consumer think the brand wants to hear. Therefore, is it a true reflection of intent?

“There are multiple factors to what people are self-reporting, so we’ve got to be careful that it is really reflective of that human and that human’s intent to subscribe or buy.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia. 

 

 

 

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