Zero-party data: The end of the age of the cookie?
Cookieless marketing is gaining ground: On October 1, 2019, the European Court of Justice (EuGH) issued a ruling that requires website operators who use marketing cookies to obtain active consent from users. Then, at the beginning of 2020, Google announced the imminent end of third-party cookies in its popular Chrome browser. User-level ID characteristics that collect consumer data and give them alias IDs are to be used as an alternative. However, without cookie tracking, marketers can no longer track each user’s path, recognize visitors, or use the collected data for marketing purposes. This is where zero-party data comes into play. Zero-party data facilitates data protection-compliant personalization while also ensuring privacy for the user.
Key points
- Zero-party data offers a promising opportunity for companies to adapt personalization in online marketing to data protection policies.
- Transparency in cookie tracking with zero-party data strengthens customer loyalty and trust in the company.
- Using zero-party data allows companies to enhance data quality since the information is up-to-date and reliable and comes directly from the customer.
Good-bye, cookie tracking: Personalization with zero-party data
First, eliminating third-party data from Google Chrome does not mean that the age of the cookie is coming to an abrupt end. Still, ad-tracking tools on the internet must comply with the GDPR data protection policies. In addition, internet users are becoming increasingly sensitive when it comes to data protection, which is why data tracked involuntarily via cookies has developed a bad reputation – not an easy task.
What is Google’s solution? The company wants to combine users in so-called flocks, i.e., groups with similar needs. Then, marketers can use their campaigns to engage the individual groups specifically instead of reaching out to individual users. The risk is that users might more easily get the idea to filter and block the less relevant ads since the advertising is no longer 100% personalized. In the United States alone, about 57 percent of users filter ads (Marketing Dive, 2019).
On the other hand, marketing managers can continue to collect data from users with zero-party data and use the collected data as a foundation to create a targeted customer experience with personalized content.
Good to know:
Consumer data is categorized as first-party data, second-party data, third-party data und zero-party data. Second-party and third-party data are data from other companies such as collaboration partners and third parties. Zero-party and first-party data, on the other hand, come directly from the customer. While first-party data originates from indirect customer interactions and is collected in the background, e.g., during the purchasing process (number of purchases, favorite payment method), customers make zero-party data available proactively during direct interactions, e.g., as part of a sweepstake.
Cookieless Marketing: The benefits of zero-party data
What exactly is zero-party data? It is information customers make available to a company voluntarily. Companies obtain this information through direct contact with their customers, for example, through sweepstakes, discount offers, surveys, mailings or chatbots. The advantage: The data is current and meets customer needs, which has a beneficial effect on the personalization of offers. At the same time, your customers do not feel spied on since they share the data consciously and voluntarily.
An insurance sector example:
For World Health Day on April 7, you launch a sweepstake for your customers, with the first prize being a first-aid kit. To participate in the sweepstake (via newsletters, website and social media), you ask your customers to specify which of the following insurance types they are interested in: supplemental dental insurance, private health insurance or international medical insurance. Using the data you obtain, you can contact your customers personally and make them an offer for their preferred insurance type.
Customers only provide certain information and are actively involved in the company’s marketing activities. In return, companies receive entirely new and unique data that enhance the quality of data-based decisions and processes.
Thus, zero-party data facilitates personalization without violating customers’ privacy and being non-compliant with GDPR (General Data Protection Regulation). This scenario creates trust and improves customer relationships. In addition, it lowers the risk that customers block a company’s advertising. After all, nearly 53 percent of marketers consider ad and pop-up blockers to be the greatest threat to online marketing (Bynder, 2019).
Conclusion: Data protection-compliant personalization with zero-party data
Marketers need a variety of customer data to improve the customer experience continuously. While cookie tracking can conflict with data protection policies and deter users, companies can use zero-party data to collect comprehensive and current data through direct interactions with their customers. With data protection-compliant and transparent personalization, marketers then have the opportunity to generate new insights about their customers and deliver customized offers.
May we suggest:
At BSI, we create customer delight and help you win your customers’ hearts. Our highly motivated team has extensive expertise in customer relationship management and data management. We will see you through the implementation of a compelling customer experience in the #retail, #banking and #insurance industries. Interested? We are here for you.
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