August 18, 2023

Zero-party Data Marketing vs. First-party Data Marketing: Differences and Uses

By

Third-party cookies have been dying an extremely slow death since 2019, when Apple, Firefox, and Google announced they were phasing them out. Facing a world in which third-party data on consumers is no longer easily available, brands have been embracing two alternatives. They are: first-party data and zero-party data.

Here, we highlight the difference between first-party data and zero-party data in marketing and the contexts in which brands are already using one or both. We also explore the role of Generative AI in helping brands create a cookieless future defined by the best customer experiences possible.

What is the difference between first-party data and zero-party data in marketing?

First-party data is the meta-category to describe the information brands collect about consumers as they interact with their owned channels. These include information from their website, apps, and social media profiles, etc. They may also include comments on social media and anonymous survey responses.

First-party data is not always specific. Sometimes it is about demographics, age, and channel preferences more than concrete, identified actions. Many brands leverage a customer data platform (CDP) to consolidate all the data they collect and associate customers with specific data assets.

Until recently, the term “first-party data” was used to describe any type of data that a brand collected directly from customers—whether the customer shared it knowingly, such as by filling out a form, or not, such as when websites gather data via first-party cookies owned by the brand.

Forrester coined the term zero-party data in 2020. Zero-party data define the personal information that customers specifically, actively, and willingly share with brands in exchange for some kind of value. As distinct from the data brands collect incidentally as customers interact (e.g. first-party data), zero-party data is defined by a specific and targeted exchange of value. For example, the email customers input into a newsletter sign-up form. Or the preferences customers share in exchange for a more personalized and curated experience—both are forms of zero-party data.

Why have these forms of customer data become more important?

As heightened privacy concerns continue to drive the death of cookies, first- and zero-party data are becoming the de facto sources of information brands have about the customer. First-party data collection helps to replace third-party data with more accurate and more timely insights. 

Zero-party data takes that a step further with its emphasis on transparency, consent, and an exchange of value. That shifts the conversation away from the tracking technologies that capture information without the customer knowing it (third-party and to some extent first-party cookies) and toward customers engaging directly and choosing to share. That sets the stage for a completely different, and more reciprocal, interaction.

To be clear, first-party data and zero-party data strategies are not either-or. Organizations use both, each filling in the gaps of the other. Furthermore, both first-party data and zero-party data are more accurate and current than third-party data, because they update in real time as the customer engages with a brand. As a result, both are potent resources in the broader effort to foster customer loyalty and drive conversions.

Examples of zero-party data marketing

The exchange of value with zero-party data marketing is key to its success. A common approach is to offer a discount on the next purchase in exchange for an email or an opt-in to text messages. Increasingly, we are seeing brands deliver value-added experiences that educate the customer while also providing the brand with needed input to personalize.

An example of the latter is a questionnaire or quiz that allows the customer to share information about their preferences or goals. These appear across the product spectrum, from retail to financial services. For example:

  • Skin care brand Geologie asks new customers a series of questions and then creates a custom skin care program that’s ideal for their skin type
  • Clothing subscription company Stitch Fix guides customers through a series of questions and comparisons to help identify their personal style and increase the chances that items in their subscription box fit their preferences
  • Retirement investing giant Vanguard asks customers to share their investing goals and risk appetite

These methods allow brands to transcend demographics and delve into consumer motivations, aspirations, and preferences. In this way, brands build a more holistic and intimate view of their customer.

Examples of first-party data marketing

Despite the increased popularity of zero-party data-driven value exchanges, they are not without their disadvantages. One is that brands can only leverage zero-party data if they recognize that customer across all their channels. That can be difficult to do if a customer browses a web page or opens an app without signing in. In that case, the brand won’t necessarily recognize them. That is more common than not in sectors like retail and travel, which don’t require sign in to browse or search.

Brands should provide incentives that motivate a customer to sign in. But in situations where they don’t, brands can still deliver more targeted and personalized experiences using forms of first-party data they have available in real time. One of them is the “session” data brands collect as a customer browses a website and clicks on links to specific products or information. Using session data, brands can serve specific banner ads or a specific version of the website based on what they know about the preferences of customers “like” the customer. Brands can also update that content in real time as they see what the customer engages with or passes by.

Leveraging Generative AI with consumer data

First- and zero-party data are key tools for modern marketers to better understand the customer. Yet data alone is not enough. It must be activated through more compelling and personalized real-time customer experiences. The barrier to delivering those experiences at scale has long been the limits of human capacity. That is no longer the case, as the rise in Generative AI gives modern marketers an additional tool for activating first- and zero-party data with powerful, personalized language and delivering them at scale.

Persado Dynamic Motivation, for example, leverages Generative AI and the specialized Persado Motivation AI knowledge base to dynamically deliver exactly the message that will motivate a given customer to complete a purchase in the cart, click an email, or take a desired action on a webpage. Dynamic Motivation can leverage simple session data to serve optimized and personalized words and phrases in real time based on browsing behavior, purchase history, interests, preferences, and more. More advanced brands can leverage their full trove of both first and zero-party data to enhance and optimize the experience.

In the modern marketing ecosystem, first-party data and zero-party data are essential inputs for personalization and collaboration. The synergy between these data types equips brands with the tools to enable journeys of true engagement and mutual benefit.

Related Articles