Zero-party data and brands—how marketers are navigating privacy crackdowns

Brands think they have found the answer to the big data problem hounding digital marketing, as regulations and privacy policies confound other means of collecting consumer information, and the answer is: zero-party data. The term “zero-party data” has permeated the marketing lexicon for a couple years, so it’s not new, but it is becoming more prevalent, and urgent, given the heightened regulatory interest in data practices of brands and tech companies. Instead of relying on third parties to discretely gather datasets, identify people and track their habits online and in real life, zero-party data is when a brand straight-up asks a customer for data. It is collected through prompts like online quizzes and greeting people on a website, app or in an ad. Consumers get asked questions such as “how old are you,” “what’s your favorite color,” “do you prefer country or rock music,” or “what’s worse, zits or dry skin.” If a consumer participates, all these signals then get used to personalize marketing, and the brand considers that express consent to use the data for further marketing—it is in the fine print. Consumers are being enticed to share personal information by offering rewards, loyalty points, special offers and more to keep feeding the data machine. “Brands are basically pulling in all that information to help personalize the next time you come back to a property [online] … a brand can start tailoring that content,” said Jesse Redniss, CEO and co-founder of Qonsent, which is a platform that helps marketers manage the collection of data. The data also gets fed into a brand’s data management platform, where it’s married with other data, and is used to target ads. The data can also help track when a person finally made a purchase or interacted with the brand somewhere else, like in a store or at an event. Brands such as PepsiCo, Procter & Gamble, the NFL, Nike, L’Oreal, Hendrick’s Gin, Hulu and Verizon Wireless, among others, have used these tactics to capture personalized data directly from the source. Read more: Brands' data practices draw fresh scrutiny Why are brands looking for zero-party data? “What it does is future-proofs the companies on their data collection practices,” said Brian Mandelbaum, CEO of Klover, which is a financial services app that has a zero-party data relationship with customers. Klover users get financial rewards and benefits in exchange for sharing banking, purchasing and other data useful to brands. Klover is basically a panel of 3 million consumers giving direct consent to be digitally tracked and participate in surveys. Companies are building up zero-party data sets because of the chilling effect that regulations and privacy policies are placing on other types of data collection. Most recently, the U.S. Federal Trade Commission indicated it was investigating “commercial surveillance,” and wants input from the public on what types of data collection should face the highest level of scrutiny. States including California, Virginia and Colorado have passed consumer data protection laws, and U.S. lawmakers are working on the American Data Protection and Privacy Act to cover the whole country. The new rules are making it more difficult for brands and tech companies to pry into people’s information and share that data, which is typically used to target highly personalized ads online. Meanwhile, Apple shows that private platforms, which control access to consumer data, are cutting off those sources. Apple killed cookies on the Safari web browser, so third parties can’t use online tracking to build profiles about consumers. And Apple implemented anti-tracking rules in its app ecosystem. Google is trying to develop similar policies on Chrome and Android. “Zero-party data, in particular, follows most agency or regulatory guidelines,” Mandelbaum said, “because of the way that it actually airs toward the consumer explicitly sharing that data.” Related: TikTok advertiser on Apple's data rules What brands collect zero-party data? Basically, they all do. If a person gives a brand an email address for a 10% discount, that’s zero-party data. For some types of brands, it’s easier to get, because they have a direct relationship with the consumer. Retailers interact with shoppers on their sites and in stores; hotel chains book visitors and check them into their rooms; and banks handle every transaction a customer makes. But consumer product goods are often a step removed from shoppers. PepsiCo is a prime example: soft-drinks and snacks, under Frito-Lay brands, are mostly sold in stores or through online retailers like Amazon and Walmart. Last month, Sarah Pichardo, head of tech venturing and innovation at PepsiCo, spoke with Jebbit in an online panel, where she outlined how the company thinks about data. Jebbit is a consumer data software service that brands use to create online surveys, analyze the data and then put it to use. “Being a brand like PepsiCo, we don’t always have a direct relationship with the consumer, at the point of sale,” Pichardo said. “In some instances like Snacks.com, we do have a site that is direct-to-consumer, but generally we work through retailers or e-tailers … we don’t necessarily always have that conversation with the consumers.” “Leveraging Jebbit and other tools,” Pichardo said, “we can actually have a conversation.” Snacks.com is a PepsiCo site where consumers find obscure varieties of chips. For instance, earlier this month, Pepsi used Snacks.com to sell promotional ketchup and mustard flavors of Doritos. Snacks.com sometimes engages visitors with a survey about their snacking habits, a “snack finder,” powered by Jebbit, asking a series of questions that could be helpful in customizing the website to fit those people’s tastes or later marketing to those people. Jebbit has worked with Procter & Gamble, which runs quizzes for Gillette, Old Spice, Voost and many other brands in its portfolio. Related: 3 ways marketers can harness zero-party data What can brands do with this data? “We’re also leveraging data in terms of consumer insights … in order for us to actually understand what are the right types of products to launch next,” Pichardo said. The data from shoppers helps PepsiCo dive into new flavors and product categories. A lot of food and beverage brands create custom flavors, like the ketchup and mustard Doritos, after analyzing consumer preferences. But it’s more than market research. Emails, addresses and internet information can feed into data management platforms run by Salesforce, Adobe, Oracle, Google and other tech companies. The zero-party data can be mixed with other forms of first-, second- and third-party data to build even deeper profiles about consumers. The data is used to help fine tune targeted ads online through Facebook, TikTok, Pinterest, Twitter and Snapchat. And it can be used to send newsletters and emails customized to the shopper’s interests. Tom Coburn, the CEO of Jebbit, said that the company worked with a “big CPG brand that just tested this across five brands.” “They ran this test right after Apple introduced IDFA changes and there was a massive drop in the performance of media,” Coburn said. Apple has placed strict data collection rules on apps on its devices, withholding the IDFA—Identifier for Advertisers—unless the app gets permission from users to use the ID. In the past, the Apple ID was an easy way for brands to match a consumer with its own data to target ads and see when the consumer later engaged with the brand or purchased a product. The IDFA helped brands analyze their media spend, and to understand what apps were the most powerful advertising channels. Coburn could not name the brand publicly, but it experimented with quizzes in ads on Facebook, and a half-million consumers responded, Coburn said. The brand used that zero-party data to inform how it targeted ads to “lookalike” audiences, consumers who shared the same interests as those expressed by the people who took the quizzes. Those ads were five times more effective, Coburn said, meaning people clicked on them at higher rates than the brand typically sees. PepsiCo’s Pichardo said that with data from its “snack finder” quizzes on Snacks.com, “we were able to double our conversion rate.” And “along the way we were able to capture some really great data.” Pichardo said the data strategy brings down costs like CPMs—or the price per 1,000 views of the ads. Karrie Sanderson is the chief brand officer for Typeform, which is another software service that brands use to collect zero-party data online through quizzes and surveys. “The bulk of our customer base is small- and medium-size businesses who are looking to break through,” Sanderson said. “Zero-party data is as if somebody walked into your store, that person has walked in metaphorically, and is willing to tell you about themselves,” Sanderson said. “It’s the highest quality data you can get, it’s also the hardest to get, which is why brands should pay attention.”

Zero-party data and brands—how marketers are continually navigating privacy crackdowns

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