ADCG’s Explainer: Zero Party Data

There are several types of digital data sharing practices that can be deployed by an organization in collecting consumer data, including first-, second-, third-, no-, and zero-party data. Each of these sharing practices differ in collection and purpose.

First-party data is information that a consumer consents to sharing with a specified entity regarding their relationship and interactions with the business. In this type of data capture, the business is the party who decides what information will be collected.

Second-party data is information collected by a business from well-defined sources—such as the consumer—for the benefit of the consumer. Examples of this include collection of consumer-provided personal information by an insurance business for the purposes of giving that consumer an accurate insurance quote.

Third-party data is the opposite of second-party data, meaning it is where businesses collect information about a consumer and transfer that information to a third-party organization, without consumer consent, for the benefit of the collecting business, such as increased efficiency stemming from the outsourcing of data analysis.   

Zero-party data is information relating to an individual consumer’s immediate experience with a business that the consumer chooses to share to the benefit of the business, such as filling out a feedback form, completing a poll, membership application, or survey. According to TechTarget, this form of data collection “presents no privacy concerns” because it is voluntarily provided by the consumer, unlike first-party data which is collected by a business without consumer consent or provision.

No-party data is the information about an anonymous consumer that is not shared with a business, such as the consumer preference data stored on your personal device. According to NewsWeek, this is “the only type of data that does not flow anywhere and complies with all privacy laws since information is not sent to servers of any kind.”

A business could elect to deploy any combination of these data collection types. However, TechTarget encourages the use of zero-party data in conjunction with the more commonly used practice—first-party data collection—as it “doesn’t require analysis and offers insights directly from customers.”

According to TechTarget, zero-party data has been considered by industry experts to be “an evolution of explicit data” since the information comes directly and explicitly from the consumer. As such, these experts say organizations can utilize this data “as a way to drive personalized marketing campaigns.” In exchange for consumer insight, businesses can provide consumers with products and services recommendations, discounts, and rewards that are specifically tailored to their preferences.

According to Venture Beat, a focus on zero-party data collection may also be beneficial to organizations in light of the shifting consumer expectations for brand interaction and consumer response to the myriad of privacy legislation being introduced at the state and federal levels.

With 79 percent of Americans “concerned about the way companies are using their data, and distrust continuing to grow,” marketing departments should develop and utilize zero-data targeted strategies so that consumer needs and preferences can be tended to while maintaining their privacy expectations.

Many organizations have already pledged to implementing industry practices that comply with these expectations. This article by DARK Reading notes that several companies—like Apple in 2017—and Google and Mozilla in 2019 have pledged to take action toward blocking the use and tracking of third-party cookies, which are files created by the websites a consumer visits to keep record of their online presence and site preferences. These major organizations are starting to ask consumers what information they would like to share instead. This shift is projected by DARK Reading to have a positive effect on those organizations as “[c]ompanies that excel at delivering [a personalized] experience typically see 40 percent more profits on those services[.]”

In order to begin this process for your organization,  Benjamin Dorr, Chief Operating Officer (“COO”) for Cordial stated in an exclusive interview with EnterpriseTalk that the first step is to define the values of your organization and engage with consumers in an authentic manner pursuant to these values in all regards—including data collection.  

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For ADCG’s Breach Report and more news updates discussing: Speaker Pelosi Makes Statement on Federal Data Privacy; Ireland’s DPC Fines Instagram; FTC Sues Data Broker; and Michigan Governor Calls on Big Tech to Protect Privacy, click here.

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