What if we asked users for their data? It seems simple, but this concept has gained steam in the last year, and the ad tech world is calling it zero-party data.
What is zero-party data?
Zero-party data is any data that a user shares intentionally. Unlike first-party or third-party data, which brands or publishers collect surreptitiously (albeit with consent) — users directly provide zero-party data.
Forrester Research coined the term back in 2018, and they have a fancier definition:
"Zero-party data is that which 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 [them]."
Marketers collect first-party and third-party data through browsing habits, purchase behaviors, and signals (like user agent / IP address) while users directly provide zero-party data.
First-party, third-party, and zero-party data can tell you the same thing, but the collection method is the dividing factor. For example, I can determine your location by collecting your IP address from request headers (first and third-party) and running it through a geolocation vendor, or I can ask you where you live (zero-party).
Why would a user share their data?
Users may share data if there is a clear and distinct value exchange for providing the information.
An example is a company asking to provide your date of birth in exchange for a free gift on your birthday. Starbucks asked me this question many years ago in exchange for a free drink each year. It's the ultimate quid pro quo, they now know my exact age, and I get to regret chugging a quad venti Java Chip Frappuccino every year.
Brands can also personalize a digital experience through the use of zero-party data. Stitch Fix creates personalized shopping experiences for users with zero-party data they receive from the user.
Through features like their Style Shuffle survey and collecting information about your waist and shirt size, Stitch Fix crafts a completely personalized shopping experience. You tell them what you like, and they surface brands and styles based on the data you provide.
How do you collect zero-party data?
Brands collect zero-party data through surveys. The Stitch Fix style shuffle above is a simple and effective survey that yields real-life value in the form of better recommendations for me.
Surveys can occur during the onboarding experience or through different touchpoints of a customer lifecycle. Brands can also set up preference centers on their websites or apps to allow users to customize their experience at any time.
Advertising using zero-party data
However, you better make sure the user knows you will use the data for advertising. The same rules on consent apply, and if you use or sell zero-party data without permission, you will most certainly erode a user's trust and violate privacy laws.
Can zero-party data be first-party or third-party data?
Yes, zero-party data can be first or third-party data.
If you collect zero-party data on your website or app and activate that data on programmatic ad buys, it is your first-party data. It is first-party since it is data that you collected.
If you license zero-party data directly collected from users and aggregated by a data provider like Oracle, it is third-party data. Other third parties to you collected the data.
The naming convention used for zero-party data may have been misguided. The word "party" invites a semantic debate around the ownership of the data. But zero-party does not describe the relationship between the owner and the data, but the data collection method.
The collection method (direct from the user) is the defining characteristic of zero-party. With first and third-party, the relationship between the data and whoever is using it is the defining characteristic.
The value of zero-party data
Knowing is half the battle, and the more you know about your users, the better you can serve them. You can choose to infer information, or you can gain data directly from the source. Which method do you think users will appreciate more?
The difference in perception of a brand could change drastically depending on context. Personalizing a website or ads using information collected in the background can come across as creepy, but personalizing using directly provided information may be received as thoughtful.