dog tangled up in yarn
PHOTO: Ryan

Our collective digital ecosystem, and the ongoing privacy and brand safety tangle, is a lot like the M&M’s Chocolate Bar commercial. You know, the one where, stranded inside a chocolate bar,  a few M&M's seek therapy to express that they feel stuck. In response, the therapist explains the obvious: “you are stuck!”

That statement sums up the current marketing landscape. The only way to get unstuck is to acknowledge that we got here because of insufficient data collection practices and disrespecting user data ownership rights. The associated brand safety issues that stem from the broken data collection dynamics are just the latest symptoms of what ails us. But the great news is, we can heal ourselves if we move from third-party data to zero and first-party data.

Understanding the Difference in Data Sources

Marketers often want data, and digital operations teams wish only for clean and non-duplicative data. But there is a real difference in the types of data, something we have neglected over the past decade or so. The first step to getting unstuck is to understand the different types of data that you have.

  • Zero-party data or data close to the consumer is the data users willingly share directly with your organization in exchange for some benefit. For example, a dentist can conveniently remind a patient of an upcoming appointment by texting the patient’s mobile phone because it is more convenient than receiving a phone call.
  • First-party data is the set of information often layered on top of zero-party data, such as user data behavior information collected from websites or mobile applications. For example, a mobile application beacon may collect user location data, allowing an organization to understand consumers' geographical usage area and associated time zones, thus making targeting easier for restaurant offers and similar.
  • Second-party data is first-party data that an organization buys or obtains from another party. For example, when a webinar is sponsored, the webinar organizer delivers to the sponsor participating user data, usually for a fee.
  • Third-party data is the one that has been making headlines the last several years and is the most significant contributing factor to us getting into this tangled mess. Third-party data is the information collected and sold by organizations that have no relationship with the consumer. For example, Facebook ads are served to a consumer because an organization provides demographics of the target user (e.g., female, 25-30, single, renter, metro Chicago area), and Facebook connects to serve up an advertisement in the context of the social media platform.

Historically it has been easy to expand audiences and gain more profound insights into their interests and behaviors because of the sheer volume and reach of third-party data, fueled mostly by big tech and advertisers. And this is where we collectively have gotten stuck: it is relatively easy and powerful to use third-party data, especially when combined with first-party data. Like other unhealthy relationships, though, this combination is detrimental because it doesn’t rely on consumer consent for personal data collection, sharing, and use for a personalized digital experience.

Richard Jones, CMO of Cheetah Digital, puts it this way:

“Solving the privacy vs. personalization paradox is the most critical long-term consideration that brand marketers have today. The ramifications of not addressing this issue will be felt for many years. And the answer is not as complex as one might think. “

Our way out of the existing entanglement is to start to use zero or first-party data. Doing so not only makes it easier to market and sell to individuals who have self-selected or pre-qualified themselves for a product or service. While it is more challenging collection work as it takes time and expertise, your job is relatively easy once you get to zero and first-party data.

Related Article: Will There Still Be Marketing After GDPR?

Rewards of Zero

Cheetah Digital commissioned a piece of global research with eConsultancy in March 2020, which demonstrated that 55% of consumers would happily share data directly to a brand in return for value. Moreover, users are happy to get personalized messages, ads and services when they explicitly give their permission. So the key is to turn the unknown consumer into known by collecting opt-ins and then profiling consumers by collecting zero party data, which powers responsive advertising and engagement.

A business switches to a strategy of driving personalization off zero- and first-party data to transform results. According to Jones, the Pure Archery Group is one brand that has taken this approach and seen tremendous results. Three years ago, the company switched to a zero-party data strategy, which resulted in the brand climbing from number five in the US market to number one.

The marketing approach called for creating a million archery fan database, mostly made up of individuals engaged with competitors. Knowing about which competitor products users were buying and collecting first-party information on what users like about the competitor brands and products now allows Pure Archery to target users when they are ready for new products through targeted campaigns that incorporate members' attitudes, desires and motivations. The specific data allows the Pure Archery marketing team to power advertising and direct marketing, thus driving sales. The highly targeted approach to user engagement through reliable data has resulted in a 500% increase in advertising effectiveness powering ads from zero party data.

The moral of the Pure Archery Group story is that any brand can and should move on from personalized ads based on third-party cookie data to zero- and first-party data. The days of marketers not needing to know who their customers are and just relying on Facebook and their data partners is over. Building direct relationships with customers carries the added benefit of moving an organization away from GDPR and CCPA worries and into a space where marketers can be innovative and free to create and engage.

Getting unstuck from the current process can allow all of us to increase loyalty, decrease social advertising costs, improve brand safety, and increase returns on marketing investment.

eveolution of consumer attitudes
PHOTO: Figure 1: Source: eConsultancy Research, March 2020.

Conclusion

As you embark on finalizing your consumer engagement strategy and budget for 2021, focus on getting your consumers off platforms like Facebook and Instagram and into your direct channels. Doing so will allow you to collect zero party data and combine that with your first-party data. You'll also get ahead of the curve, as Forrester predicts zero-party data investments will increase in the year ahead as privacy concerns will continue to drive consumer behavior.

Getting back to permission-based marketing principles will allow you to get unstuck, regain consumer trust through principled marketing, and create a trove of reliable data to sustain user loyalty for years to come.