People in the evening on the streets of the city showing shift to zero party data for personalization

The Future of Personalization: How the Marketing Industry Can Be “Privacy-First”

The privacy revolution has arrived in the marketing industry. Changing attitudes, new and evolving regulations and the demise of third-party cookies and Apple’s IDFA have permanently altered traditional marketing practices built on third-party and first-party data. More than ever, there’s a pressing need for brands to invest in ethical and compliant alternatives.

Accelerated by the pandemic, brands have shifted their focus to e-commerce — a trend that shows no sign of slowing down, making the need for better data about digital audiences even more urgent. Marketers are facing a real challenge. For many, zero party data (“ZPD”) is the favored solution.

Forrester Research defines ZPD as, “data that a customer intentionally and proactively shares with a brand. It can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize her.” In aggregate, ZPD encompasses all of the consent-based, personal context data that customers share with a brand (and keep up-to-date) in order to improve their experience with the brand — personal needs, preferences, interests, goals, favorites, communications settings, etc.

Customers share ZPD with the full expectation that it will be used for their benefit. And because ZPD is explicit, marketers don’t have to guess the meaning of the data to put it to good use.

Just a single data point goes a long way by revealing a key facet in how customers want to relate to a brand, and why. When a user tells Yelp that they’re a vegetarian, for example, Yelp can provide them with vegetarian-friendly recommendations rather than steakhouses.

ZPD provides the individual-level insight required for brands to interact with customers in the deeply personalized manner they’ve come to expect without compromising their data privacy rights.

Today’s consumers have heightened concerns about their personal data, and brands are navigating a dynamic and uncertain regulatory landscape — with GDPR in 2018, CCPA in 2020, CPRA in 2023, and whatever comes next.

We’ve all found ourselves on the receiving end of some brand communications that come across as creepy. That’s what happens when your personal data is captured and used behind the scenes, in ways that you don’t knowingly agree to or expect.

There’s an adage that if something is free, you are the “product.” The reality is actually worse: even if you pay for a service, you may still be a “product” if your personal data is tracked and monetized without your knowledge or consent. Consumers are hyper-aware of this in 2021, which is why ZPD presents such promising opportunities. It truly puts the customer in charge of what data they share, and helps to cut down on the reliance on the larger surveillance ecosystem. By giving customers transparency, choice, and control over their data, brands build trusted relationships while also making privacy a competitive differentiator.

By its nature, ZPD stands in stark contrast not only to third-party, but first-party data too. A side-by-side comparison makes it clear:

Zero-Party DataFirst-Party Data
Personal context data (e.g. preferences)Behavioral (e.g. clickstream) & transactional data
Knowingly & intentionally shared with brandObserved & accumulated by brand
Forward-looking, predictiveHistorical record of events, like breadcrumbs
Meaning is explicit, no guessworkMeaning is inferred, requires guesswork
Customers expect it to be used for their benefitUsage is unexpected, and sometimes creepy
Customers update it to fine-tune their experienceCustomers have little visibility, choice, control

ZPD gives brands a future-proof foundation for personalization, and equips brands to build deep, lasting, and profitable customer relationships based on trust, while ensuring compliance with evolving privacy regulations. It should come as no surprise that 49% of marketers say ZPD is their most favored solution to the looming data deprecation risk.

Taking a privacy-first approach to marketing and personalization involves three core practices:

  1. Unify ZPD from all your sources into ZPD ‘profiles’ that reflect each customer’s personal  preferences. Creating digital experiences to collect ZPD is easy, and many brands already have existing sources they can tap into — like product finders, quizzes, surveys, digital campaigns and promotions, chat bots, loyalty programs, and email preference centers. Every source should integrate with and progressively enrich the profiles.
  2. Give customers transparency and control over their profiles. Make it easy for them to keep their ZPD profiles up-to-date, including adding or revoking data any time they want.
  3. Use ZPD to personalize the content, products, and offers you show to each customer or segment at key moments of engagement on your website, app, emails, and other addressable channels like custom audiences on Facebook and Instagram.

ZPD  is brand-specific, so you should define your data model around the most important customer attributes for your business. Some attributes may be immutable or long-lived (e.g. a personal characteristic, or a list of favorites), while others may be shorter-lived (e.g. plans to take a family vacation or renovate a kitchen). Your ZPD profiles should support multiple data types and essential meta-data for each attribute — e.g. an “update after” date, so you can automatically refresh the attribute on a certain cadence.

Changing attitudes, new and evolving regulations and the demise of third-party #cookies have shifted traditional #marketing practices towards zero party data as the favored solution. #privacy #respectdata Click to Tweet

The idea that marketers and brands must choose between privacy and personalization is not the reality of the situation. There is a clear path forward. By taking an above board, consent-based approach to data, brands not only foster more trust (much of which has been lost amid scandals of recent years), but can provide a wholly better experience for every customer.

 

Co-Founder at Wyng