Concerns about data privacy are causing a tectonic shift in online marketing. Coming on the heels of Cambridge Analytica and a host of other recent scandals, marketers start the new decade facing two landmark pieces of legislation committed to cracking down on the misuse of online data collection.
The EU recently passed the Global Data Protection Regulation (GDPR), which works to redefine how data is used and managed across the online space for all European Union site visitors. Not to be outdone, the California Consumer Privacy Act (CCPA) will go into effect this year, aiming to hold big corporations accountable for how they use consumer data. California is the fifth-largest economy in the world, so combined with the EU, these two bills cover a huge portion of the online marketplace.
Lawmakers passed both of these bills in response to the widespread misuse of personal data by online marketers. How can marketers approach data management in this new regulatory environment?
Zero-party data can be the solution. Zero-party data is a type of data collection where users willingly share their valuable information with you. Instead of using tracking pixels to passively collect information on user behavior without their express consent, zero-party data relies on active cooperation to build trust with the consumer, with data collected and shared transparently.
Right now, zero-party data might seem largely theoretical. But there are several ways companies are approaching this new type of data collection. For example, marketers can add a quiz on their site, run a contest, or offer a clear opt-in checkbox where they can choose to enter information.
With its focus on trust and transparency, zero-party data has the potential to completely revolutionize how we approach marketing.
Building a trusted community channel
Savvy marketers know that these days, nobody automatically gives up their data to brands no questions asked. This has become even more of a challenge in light of recent data scandals, with consumers more wary than in years past.
To counter this, there needs to be a clear exchange of value between the data consumers give and the value of the experience they receive. In fact, 79% of users said they would share their data if they could see a clear benefit to doing so. The bottom line? The consumer needs to know that what they are giving up will be put to good use and in a way that somehow benefits them. Zero-party data fills this need because it focuses on building a relationship with the customer.
Brands can take advantage of these trusted community channels to gain information in order to improve their product. For example, imagine you’re a ‘free to play’ video game company releasing a new update. Embracing the zero party data approach, you can easily embed a survey in your game or site asking users to give their best suggestions for improvements. Each user who participates would get a free power up for use in the game. Because you are able to demonstrate positive benefits for them, your audience is much more likely to provide their data.
It helps if brands first build a sense of community among their users before collecting data. Users are far more likely to want to participate if they feel part of a larger group with similar values. Brands that are proactive in creating active social communities on Facebook, Twitter, and the like have a built-in advantage when it comes to later asking users to voluntarily opt in to giving up their data.
There is a red line that companies shouldn’t cross when collecting information. It might seem counterintuitive, but sometimes, too much personalization can actually work against a company when it comes to gaining information.
Done poorly, over-personalization can feel a bit ‘creepy’ for customers who will be less likely to purchase. After the massive data breaches of the previous decade, people are much more cautious with big tech and data usage. When companies reveal they know too much about a customer through hyper-customized campaigns, people end up suspicious that the company has gained their private information without their knowledge.
This privacy/personalization paradox is something marketers struggle to deal with. Where should companies draw the line when it comes to finding the perfect tailor-made experience for consumers?
The problem here is consent: When users feel they’ve given consent, they’re much more likely to think positively of a given company. Zero-party data could be the perfect antidote here as it allows users to give as much data as they feel comfortable giving – ultimately resulting in a higher amount of information willingly given to a company.
Provide clear intentions for data usage
This might sound obvious, but marketers need to be crystal clear to their users about how their data will be used. Zero-party data is based on trust, and both parties need to receive something of value. Suppose you’re doing market research and want to find out what consumers want to be improved about your prize application. If you can show each respondent that their data will a) help improve the application, while b) giving them 10% off their next order, you’re much more likely to receive valuable information in the transaction.
A good practice to follow is to allow consumers to choose the exact data they want to give up instead of an all or nothing option. This level of control allows for the perfect balance of customization customers expect and the over-personalization they fear. Zero-party data moves towards a more responsible type of data collection where everyone is in the loop – the perfect antidote to marketing’s reputation problem.
Looking back, the 2010s were a “Wild West” of data collection, where consumers didn’t really mind giving information. That’s all changed – the 2020s will be dictated by governmental regulation as well as consumer demands when it comes to data collection.
Full transparency is key here and zero-party data is going to be a key driver. Giving the power of the opt-in to the customer will make sure that advertisers offer a high level of quality, transparency, and accuracy.
Less data, but better data
Born out of consumer concerns and increased regulation, zero-party data is actually a powerful new approach for marketers, with the potential to unlock deeper consumer profiling and targeting. Far from being just a fallback, zero-party data allows companies to improve their data collection through recommendations, services, and offers.
Building relationships with customers is great for the long term of any business. More transparency and providing more value and encourages opt-ins and data from willing customers. Zero-party data goes beyond one-off customer data collection – zero-party data can be the basis for an entire customer communications effort, where they participate and get value for a longer period of time.
This is good for both sides: Marketers are given access to accurate data and audiences are more consenting, making targeting much more precise. Giving the consumer control over which data they give up means that everyone wins. Also, there is a greater probability of customers giving accurate data to receive value or prizes, instead of just filling out forms as email@example.com to continue an experience.
Instead of taking all the data they can find, zero-party data encourages companies to ask nicely for it, resulting in better and more accurate information. While they may be collecting less data, this data is typically much more accurate. Voluntarily given info is a powerful new way to market with much less risk of fines.
The 2020s mark the start of a new and perilous era in online marketing. With the EU’s GDPR and California’s CCPA, marketers are facing hefty fines for any misstep. Add in an evermore suspicious consumer audience and it’s proving difficult to collect data. Savvy marketers are increasingly turning to zero-party data as a transparent alternative – where consumers explicitly opt-in and are rewarded when they provide their data. In this regulatory climate, zero-party data isn’t just a solution – it’s the only solution.
About the Author
Boris Pfeiffer is the CEO and co-founder of Riddle.com. Before launching Riddle in 2014, Boris was heavily involved in the online gaming industry with a focus on sales and marketing – first managing European operations of Kabam, then setting up his own game studio. Boris has deep roots in the global startup space, having created tech businesses in Asia, the U.S., and throughout Europe.
He’s a published author of “Facebook Fan Pages” (2011) and “Quizmaster” (2017), married and father of two, and in his rare leisure time, can often be found enthusiastically (if badly) swinging away at the local golf course.