The marketing lexicon just got a whole lot more complicated with a new term: zero-party data.
The ad industry has been on notice ever since U.K. regulator the Information Commissioner’s Office warned that the current use of personal data to buy and sell ads on the open exchange violates the General Data Protection Regulation. That, plus the two scorching fines issued this week to British Airways and Marriott International, makes it more important than ever for marketers to more proactively explore GDPR-compliant ways to communicate with, and advertise to, their customers.
This is where zero-party data comes in, as a way for the industry to ask nicely for people’s data rather than just take it.
Confused? Here’s a primer.
What is zero-party data?
It’s the data a person intentionally shares with an advertiser. For example, when a person knowingly gives their consent for an advertiser to use their data in exchange for offers that are individually relevant to them. Zero-party data was coined by research firm Forrester last November and has begun to get more traction. It subscribes to the notion that as much as people like to protect their privacy, they also like the brands they buy from to understand them.
How is it different from first-party data?
First-party data is a broad term used to describe all the data an advertiser automatically collects from people that use their channels. Zero-party data is a subset of that. It’s data that people have knowingly shared about their preferences and emotions with the brands they’re interested in.
That explicit consent is key for ad businesses looking to process sensitive data such as ethnic origin and sexual orientation now required under GDPR law. Processing this sort of data without explicit consent from people is unlawful, though some companies continue to abuse this GDPR clause, according to the ICO.
Why is zero-party data so important?
Zero-party data is essentially clean, contextual and acquired in a consent-compliant manner and, therefore, has big benefits for ad businesses that can unify it all into a single consumer profile. For some advertisers, particularly those that have little access to consumer data, bringing in zero-party data to inform and optimize their ad spend is very appealing, even though it’s an incremental step, said Cory Munchbach, svp of strategy at customer data platform BlueConic.
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That incremental step is what agency Cheetah Digital banked on when it bought Wayin earlier this week. Wayin courted a sale based on its ability to create branded games that people will play in exchange for their data. Since 2017, Wayin’s pitch has managed to collect more than 1.3 billion zero-party customer data records for advertisers including Vodafone, Reckitt Benckiser, Air New Zealand and Manchester City FC. Now that GDPR has put consent front and center in the data debate, more advertisers want to give people clear incentives to share data, which is why they turn to companies like Wayin.
Zero-party data sounds confusing.
Therein lies the rub. It’s hard for some industry execs to understand why a new term is needed to describe what is essentially consented first-party data. Companies like Wayin say surveys and user-declared data is zero-party, but for that data to be used for anything, it must be linked to an ID, at which point it becomes first-party data and deleted any time the user asks for it to be in future.
“People are calling consented first-party data ‘zero-party,’ but we should really be talking about old-school, non-consented first-party data or tracking and consented first-party data, said Doug Chisholm, CEO of Rippll, a customer data platform for location data.
What’s the upside for advertisers?
Volunteered data liked zero-first party is more accurate than the so-called inferred data that usually takes up the bulk of first-party data sets. And while those data sets will naturally be smaller, they’ll contain highly engaged users that want to hear from a brand — that’s gold dust to advertisers. For example, zero-party data could provide insight into how marketing tactics like more individually targeted ads impact a person’s opinion, not just their click-through rates.
As valuable as the idea of zero- and first-party data is, those same strengths also weaken its scale. Given this sort of declared user data is at a premium in advertising, ad businesses may struggle to collect enough zero-party data to underpin really powerful campaigns. A short supply of zero-party data, and the subsequent cost of collecting it, could force other advertisers to rethink how much data they need. Not every advertiser will be willing to pay higher CPMs for data they know has bona fide guaranteed consent. Then there’s the problem of only having insights into existing customers through zero-party data, which may not be as useful when it comes to breaking into new markets.