Collecting and analyzing audience data helps businesses develop high-performing and effective marketing campaigns. However, it’s crucial to understand which kinds of data will be the most beneficial for your brand, depending on your specific business goals or customer journey.
As a first step, brands collect first-party data across their websites and other data channels to get a complete view of their existing customer base. Furthermore, leading marketers also make use of zero-party data to be able to capture what the customer is precisely interested in for more enhanced customer experiences. Combining these two datasets enables brands to create accurate, highly targeted, and personalized customer experiences for improved return on investment (ROI).
It is crucial to have an understanding of both first-party data and zero-party data. This article aims to discuss both zero-party data and first-party data in-depth, to help you understand the two audience datasets and, most importantly, which one you should be utilizing.
In 2017, the Economist said that “the world’s most valuable resource is no longer oil, but data.” Data is one of the biggest drivers of successful marketing today. It is to the digital age what oil was to the industrial age. If you’re not focused on data collection strategies to establish your brand, you’ve already fallen behind your competitors. Just like oil barons did years ago, you must learn how to dig for “oil” and extract it for huge profits.
Brands that understand this are reaping huge rewards. Think about the tech giants like Google, Amazon, Apple, Facebook, and Microsoft. They continue to report massive profits due to their access to vast amounts of audience data combined with their practical data mining and analysis approaches. Specifically, the majority of Facebook’s revenue is generated from digital advertising solutions, which is made possible by the data it collects from its users.
Data has exceptional value in gathering powerful insights that drive innovation, growth, and customer experience. Brands have no choice but to understand available data sets, useful data collection methods, and analysis tools in order to learn how to make customer experiences better.
This article is about understanding the difference between first-party data and zero-party data. However, before we do that, it’s imperative to outline the other types of data in order to lay a foundation. In the past, companies have relied on these three categories of consumer data used for marketing purposes:
Learn more about the different types of audience data here.
There is also a fourth kind of data that brands have been effectively utilizing more and more: zero-party data.
As a marketer, you probably have heard of ‘zero-party data.’ When it comes to the types of audience data that brands can leverage, zero-party data (ZPD) is the new sheriff in town. The term was coined by Forrester in their Predictions 2019: B2C Marketing Report.
Put simply, ZPD refers to information which a customer intentionally and proactively shares with a brand. According to Forrester, zero-party data can include purchase intent, personal context, preferences, and how the individual wants the brand to recognize them.
In their report, Forrester projects that by 2020 about 15% of marketers will turn to zero-party data to improve their marketing practices. Brands that leverage zero-party data will have a major opportunity to get and stay ahead of the curve while gaining valuable insights into your customer’s tastes and preferences.
As mentioned above, first-party data is the information that a business assembles directly from its customers or audience. Examples include customer names, addresses, email addresses, phone numbers, purchase history, behaviors, and more. It is collected by installing pixels or cookies for tracking user behavior on brand websites. Since its raw audience data, a company chooses how to collect, store, manage, and secure it and therefore maintains its exclusive ownership. Many brands make use of Customer Data Platforms (CDPs) to achieve centralization.
First-party data is relevant and accurate because it provides brands with data about your existing prospects and customers. As such, marketers use it primarily to create highly personalized customer experiences and gain a competitive industry advantage. A recent research report found that more than 80% of marketers plan to increase their use of internal first-party data.
So far, ZPD sounds like a fancy way of describing first-party data. This begs the question: is there a difference between zero-party data and first-party data? While zero-party data sounds a lot like first-party data, the two are different. Let’s break it down.
First, unlike first-party data that requires a business to use a pixel, cookies, or cross-device identification (XDID) to track customer behavior and gather some data, ZPD focuses on asking the customer for information directly.
Also, first-party data requires that a brand infer, observe, or assume some facts about customers from gathered data. ZPD, on the other hand, doesn’t expect that you conclude, find, or make assumptions about customers because you get that information directly from them. Meaning there’s no gray area – an organization gets first-hand knowledge. Typically zero-party data is collected using tools such as surveys, quizzes, questionnaires, polls, contests, etc.
Zero-party data is mainly about trust, privacy, and value for the consumer. When a customer trusts a brand, there’s no need to infer or guess. Marketers make many calculated guesses with first-party data. The challenge is that while a customer can show interest in a specific product at one point in time, they may not necessarily be interested in that same product in the future.
With first-party data, a brand owns and controls data collected from actual and prospective consumers. Conversely, with zero-party data, customers have more control over the data that they share, reporting it in their own words for a transparent exchange of value with an organization.
Zero-party data helps blend data privacy issues and personalized marketing perfectly. Marketers can now use it to build even stronger relationships with clients to improve sales and marketing processes.
The table below summarizes the main differences between zero-party data and first-party data:
|Data that you directly collect from your audience or customers.||Data a customer intentionally and proactively shares with your brand.|
|Examples include customer name, address, email address, phone numbers, purchase history, behaviors, and more.||Examples include purchase intentions, preference centres, personal context, social stories, etc.|
|Rich with behavioral data and implied interests.||Rich with specific customer interests and preferences.|
|More relevant and accurate than external sources||Highly relevant and accurate|
|Collected using simple registration forms or analytics tools to log activity and behaviour.||Collected using qualitative data collection tools such as surveys, questionnaires, competitions, social media stories, in-app preferences, etc.|
|Owned by a brand which determines it’s collection, storage, management, and security.||Owned by the customers who grant a brand the right to use their information.|
|Customer is not directly involved and is mostly unaware of gathered data.||Involves an exchange of value and the customer expects something in return for their information.|
|Requires inferring, observing, or assuming the meaning of the collected data.||Doesn’t require that you infer, observe, or assume its meaning since brands get the data directly from the consumers.|
|Enables personalized customer experiences.||Enables highly personalized spot-on customer personas and ad campaigns.|
|Minimal privacy concerns.||Builds trust with customers by respecting their privacy and intentions.|
For many brands, data helps better understand and meet customers’ demands and preferences. However, data is increasingly getting complex, and marketing teams need to sift through the complexity by rightly familiarizing themselves with different types of data. The collecting of both first-party and zero-party data is as necessary as oil to the industrial tycoons.
Brands that can effectively collect and manage these two datasets will be able to build stronger, longer-lasting relationships with their customers. By augmenting your first-party data with zero-party data, brands can identify the highest value customers, develop strong customer personas, forecast trends, enhance customer experiences, and build enduring customer relationships.
Specifically, the fact that zero-party data is self-reported helps marketers deal with privacy concerns since it involves directly asking consumers for their interests and intents. Without violating their customers’ trust, they can power more personalized marketing. Zero-party data is critical for digital marketers looking to further enhance their customers’ experiences interacting with their brand