What is Zero-Party Data?
What is Zero-Party Data?
Zero-Party Data? First-Party? Third-Party? What's the difference?
Here at TIKI we talk in droves about zero-party data. Heck, it’s the main copy on our website and the driving force behind nearly all of our content. To us, it’s a given. But to everyone else, we realize zero-party data might not be as common knowledge as it is to us. Fortunately, since we write about it all the time, we should be qualified to write a “What is zero-party data” blog, right? Well, hang on to your hats, because it’s about dang time that we find out.
Zero-party data
Simply put, zero-party data is any information that is willingly shared with a business or organization. No coercion, no sneaky tactics, just straight up voluntary data. And this data can be anything…from basic data like name, email, gender, location to interests, preferences and behaviors, to purchasing habits and intent, financial information, segmentation, attribution and more. Anything data someone willingly shares with a business is zero-party data; the key thing to remember is it has to come directly from the customer to be considered zero-party.
I couldn’t track down exactly when this term originated, but it has only started gaining popularity in the business world recently. The reason? APPLE MOTHERF***ERS!!! Just kidding, but sort of. Popularity has increased in tandem with the desire to source data directly from users, and the desire to source data directly from users has increased in tandem with the Privacy Revolution™.
And what is this revolution I have incorrectly trademarked? Well, it consists of many initiatives, laws, rules, regulations, and sentiment that have spawned from customers realizing that businesses have been f’ing around with their data for years and ignorance and apathy for data mishandling hit critical mass, boiling over into a lot of pissed off people lobbying governments and tech companies to stop screwing people over. And also a lot of businesses saw a growth opportunity at the expense of competitors. Looking at you, Apple.
From this growing sentiment came GDPR, CCPA, Apple’s iOS 14.5 update including App Tracking Transparency, and Google’s phase-out of third-party cookies. The world is changing, and the way we collect and utilize data is changing, too. Zero-party data is usually more accurate because it is straight from the source, but it is also the closest thing we have to a totally future-proof method of data collection and use. When privacy policies and laws are changing at a furious pace, a direct-line flow of data from customer to business ensures everyone is playing by the rules.
Zero-Party Data vs. First-, Third-Party Data
Zero-party and first-party data are often confused with one another or used interchangeably. But they aren’t the same. So let’s break it down!
First-party data is data that is collected directly from people interacting with the brand. Normally, it is what can be collected by a given business given the tools in their arsenal. Another way of thinking about first-party data is as observational data. If you invite Billy to a party, you can take note of lots of things. Billy is tall. He brought chips and dip. He sat in the corner of the living room. He was very quiet when the party was conversating about Sunday’s football game, but quite outspoken when talking about the legitimacy of the moon landing. The party host (the business) has direct understanding of the behaviors of their guest(s) from their observations, and can cater the party (and future) party to the preferences of the guests.
From a business angle, this includes things like web analytics data (what they did on-site), transactional data (what they bought, put in their cart), registration info, native social media posts etc. They are observations of regular actions taken by a customer given to a business passively, whereas zero-party data is given proactively, and usually with the expectation of receiving something of benefit in return, such as rewards or personalized experiences. Usually, businesses own first-party data as it is collected on their own platform, app, website or place of business
Third-party data is information that is collected indirectly from a consumer. Normally it derives from multiple sources and then is weaved together (to the best of a business’s ability) to create a profile on a consumer. It’s data that comes from somewhere else and is usually purchased or collected via a partnership agreement. The sources include data brokers, social media platforms, publishers, and other companies that are collecting their own first-party data. To extend the party metaphor, imagine that there’s a bunch of folks with notebooks and binoculars observing your bash from afar. They aren’t actively participating in the party, but they’re eavesdropping and jotting down observations. Then they go ahead, package that up and sell it to other party hosts looking to glean insights about what makes a party a hit. If our peeping toms have been to many parties, that information becomes even more valuable. That’s third party.
And lastly, zero-party data! At this party, your guests are your friends. They trust you, and they love your parties. But they want the parties to be better! They want a more personalized experience. So they tell you things about themselves proactively, from what they enjoy, to their favorite flavors of cake and ice cream, to what music sets the mood best. They tell you this with the expectation that you alter this party or future parties to their liking. That’s zero-party data. This is the most valuable of all the data.
In summary, these corny party metaphors help illustrate the nature of the different types of data: first-party data relies on direct interactions and observations, zero-party data involves active and explicit sharing of preferences by individuals, and third-party data comes from external observers or intermediaries who gather and package data from various sources. Get Brian Wilson on the line because this is fun, fun, fun!