Is zero-party data the answer to creepy messaging?

It hinges on data privacy and value, and marketers that maximize the latter find that customers care less and less about the former.
31 December 2019 | 11 Shares

Personalization can go a long way but too much may backfire. Source: Shutterstock

Personalized content, in theory, should cater to the needs and taste of individual customers and make them feel special. In reality, the overflowing of such ads comes off as invasive to one’s data privacy and to an extent— creepy.

However, studies have established that consumers to appreciate a certain degree of personalization in services and marketers at this digital age are challenged to find the perfect dose of personalization.

First, we need to look at what aspects of personalization exceeds the level of acceptance.

A recent whitepaper by Accenture answered that question when it surveyed customers about the five advertising techniques that they found most “creepy”:

  • Receiving an ad for something the customer talked about near a voice assistant but never searched for (73 percent)
  • An ad that followed the customer across devices (69 percent)
  • A chatbot that had access to the customer’s past online shopping (66 percent)
  • An ad on social media site based on a recent shopping visit on another site (66 percent), and
  • A chatbot that had access to the customer’s past customer service interactions (64 percent)

The risk of over-personalization is that customers feel suspicious and tend to avoid buying from that brand.

This is reflected in Accenture’s most recent study that found that 30 percent of consumers felt one of the brands they bought from had become too personal — and 69 percent of those consumers reported re-thinking their relationship with the brand.

At the end of the day, dividing the personalization that customers desire and the over-personalization that customers think is “creepy” is a fine-line that is easy to cross if marketers aren’t careful.

To find the right balance, the report teases a few concepts such as zero-party data, first-party data, and second- and third-party data. However, customer demand for privacy and transparency growing every day, marketers might do better following a strong zero-party data approach to marketing personalizations.

What is zero-party data?

Zero-party data is data that marketers or brands entice customers to share with them in exchange for a promise to deliver better, more tailored service or greater value, in some way.

Jargon aside, zero-party data hinges on data privacy and value, and marketers that maximize the latter find that customers care less and less about the former.

To put things in perspective, think about cosmetics companies that have retail outlets and their own e-commerce platforms. When dealing with such brands, customers tend to voluntarily provide information about themselves, their skin tone and type, tastes, preferences, birthday and more — in exchange for more tailored advice and offers.

All of that data is zero-party data because it is being shared voluntarily by the customer; it’s also being provided for a specific use — to enable the brand to provide the right advice when the customer is making a purchase.

The difference between zero-party and first-party data lies in the fact that the latter involves collecting data without the customer’s explicit knowledge and volition, and the data is intended to be used more broadly, to provide a better experience to customers overall.

In the example discussed previously, when the cosmetics brand makes a note of the items a specific customer purchases and the amount they typically spend and translate those into marketing objectives, they’re collecting and using first-party data.

Zero-party data transforms personalization and (digital) marketing

Accenture’s report emphasizes to marketers that they must use data more respectfully and see people rather than patterns when they create strategies and campaigns. That’s actually the title of the report: See people, not patterns.

Although the report suggests using zero-party data in combination with first-, second-, and third-party data, the reality is that in the current regulatory environment, leaning more towards zero-party data might be a good idea for marketers.

Currently, among consumers who said they see brands communicating in ways that are too personal, 71 percent said they felt that the brand had information that they or their family didn’t share directly.

The concern among consumers about data privacy is rising. Generally speaking, marketers know that nobody likes being sold to or marketed to because they feel manipulated — which is why a move towards more responsible use of data is a great thing in the marketing community.

“Just because you can doesn’t mean you should,” says the Accenture report, and marketers that want to thrive in the digital age need to understand this.

In an age where almost all marketing is digital, zero-party data holds tremendous potential for businesses, allowing them to deliver more value to customers and find the natural balance between the personalization that customers seek and the over-personalization that customers fear.

Marketers now need to up their game. Their challenge is to find ways to augment the value they provide to customers in order to entice them to share data voluntarily.

This article originally appeared on our sister site Tech Wire Asia