Zero Party Data

The writing is on the wall. Increasingly people will take control and will worry about their personal information. They do want more control over how their data is shared.

Now here’s the thing. Marketing data is critical to how we run our businesses and how we personalize for consumers and how we reach the consumers that we have already built relationships with.

—Fatemeh Khatibloo

The writing on the wall that Forrester Vice President and Principal Analyst Fatemeh Khatibloo refers to is written in the language of changing attitudes towards privacy. This change is most notable in younger generations who are demonstrating, their own unique penchant for privacy however different from the attitudes that preceded them. But more importantly – and marketers need to take note – they possess the digital savvy to enforce it.

Khatibloo, a self-described privacy nerd, joined WireWheel’s Chief Marketing Officer Camille Landau to present Forrester’s findings and discuss their implications for the marketing ecosystem. The webinar Increase Customer Loyalty Through Privacy can be accessed here.

“I personally got really tired of people telling me that millennials don’t care about their privacy,” says Fatemeh. “And so, we [Forrester] set out to understand privacy attitudes and behaviors at a much deeper level and to look at the behaviors and attitudes that influence privacy.”

The Evolving Privacy Personas, Segments, and Cohorts

Forrester’s investigation uncovered four key attributes that influence privacy, but as Fatemeh cautions, “It’s not the case that people care or don’t care. It’s not the case that people trust or don’t trust a given brand or a given kind of website: there’s a lot of nuance to privacy.”
Those key attributes influencing privacy are:

1. Willingness to share personal information: Will people share their data for things like discounts or loyalty points for better experiences?
2. Privacy awareness: Do people actually look at privacy policies and app permissions. Do they understand that there is a “data economy?”
3. Comfort with that data economy: Are people okay with companies sharing and selling their personal information? Especially if there’s some benefit to them. And,
4. Protective behaviors: Are individuals actually using available privacy tools, (e.g., browser incognito modes and ad blockers). Do they take measures to limit data collection when they’re online?

Perhaps unsurprisingly, these four factors can create very different behaviors depending on experience. Forrester identified five different segments:

1. Conditional Consumerists love to shop, love loyalty programs and are willing to share their personal information for perks. However, they are tech and privacy savvy and will use privacy-preserving tools like ad blockers to improve experience.
2. Reckless Rebels largely comprising under 18’s and students are the least protective and very willing to share personal information. Naturally, many migrate out of this cohort as they mature, but 50% have the attitude that “the big platforms know everything about us anyway: what’s the point of trying to put the genie back in the bottle” as they get older.
3. Data-Savvy Digitals are tech and data savvy Gen Xers who grudgingly share their personal information and only when they perceive significant value (e.g., an airline milage program). Data-Savvy Digitals also use privacy-preserving tools.
4. Nervous Unawares, the largest segment, lack tech savvy. They don’t understand the data economy, the risks, or the cost-benefit analysis demonstrated by Data-Savvy Digitals.
5. Skeptical Protectionists are absolutely unwilling to share their personal information. This segment is the only one where zero percent trust anybody to keep personal information safe online.

The Writing on the Privacy Wall

Forrester notes a significant change from 2018 to 2020 in the distribution of these segments – most notably a 4- to 5-point shift from “Nervous Unawares” to “Data-Savvy Digitals” – and points to the Facebook Cambridge Analytica scandal as the catalyst.

What made the Cambridge Analytic Scandal unique was that it wasn’t a data breach, but rather “Facebook’s systems working as designed: data was amassed, data was extracted, and data was exploited” (Wong, 2019). This woke (the non-privacy nerd) people up to the “data economy,” and they didn’t much like what they saw. While Zuckerberg touted a “pivot to privacy” it is users who began pivoting, not Facebook.

Less subtle “writing on the wall” for the marketing ecosystem has of course come from Big Tech themselves: Google’s planned deprecation of the third-party cookie (2022) and Apple’s requirement (with the release of iOS 14) that every app ask for consent (opt-in, not out), which in turn increased awareness of just how much data Google’s Chrome collects. And of course, there is the recent passage of privacy laws in California (CCPA and CPRA), Nevada, and Virginia (CDPA).

Prospective consumers are actively seeking to not only hide from marketers, but perhaps worse, feed false and misleading data into the marketing ecosystem, eroding the value of even first-party data. Data that in the best of circumstances can lack context, and mislead spend.

As Fatemeh relates “young people have multiple Instagram accounts because they are curating who can see what content they share.” They are increasingly using finsta accounts. “The “finsta” is a second Instagram account many users will maintain, and its content is quite different from their real (“rinsta”) account” (Molina, 2017).

Perhaps even more tellingly, users “will share an Instagram account to mess up the algorithms… When we think about life stages,” says Khatibloo “we should be thinking about what that cohort of young people who have such a sophisticated understanding of algorithms and data will be doing to us as marketers in ten years that we can’t predict…”

When we have our marketing hats on, we look at the recent past. But I don’t think that we can possibly look at Generation Z and think that they’re going to act or behave in nearly the same way as Gen Y or even Millennials. They are so different…my 16-year-old nephew uses a VPN on his devices and all of the young people in my life use Signal as their primary messaging platform.

They understand that the ability to disappear messages is much more representative of how we act as human beings in the real world and that’s what they’re doing now.

—Fatemeh Khatibloo

When your business model provokes this kind of response – even absent cookie depreciation and new privacy laws – that model may be worth a rethink.

Privacy by the Numbers

• 71% of consumers are aware that the Apps and the websites that they use collector personal information and activities. This number is up 10 points “right after the Cambridge Analytica news broke in 2018.”
• 65% think that it’s wrong for brands to track them across devices to send them more relevant ads,
• 25% of consumers don’t trust any companies to keep their personal information secure online.
• 77% of US adults use at least one security or privacy-preserving tool online. This includes:
  • 43% who regularly clear their browsing history and clear their cookies.
  • 21% who block information sharing through their device, and
  • Nearly one in five who use private browsing or incognito mode on their browsers

“This is a really dangerous trajectory for businesses because there are so many tools out there today for consumers to disintermediate data collection and, in fact, that is happening,” rightly warns Fatemeh. “Again, this hurts everyone in the ecosystem.

“But we really shouldn’t be surprised,” says Khatibloo.

Zero-Party Data is Good for Business

Fatemeh is adamant that the one tool that will entice most consumers to willingly engage with brands, and share information is zero-party data.

Unlike first-party data, zero-party data is data that consumers intentionally and willingly share. Zero-party data typically includes preferences, intentions, needs, and importantly, the personal context that first-party data lacks.

“Zero-party data strategy does five really important things that are privacy-first, very human-centered, and also benefit the enterprise,” says Fatemeh:

1. Because zero-party data tends to be captured through really rich experiences most consumers with the possible exception of the “skeptical protectionist” will willingly engage with these interactions.
2. Zero-party data enables a highly consistent and relevant experience across channels. When you’ve gotten permission to use this data you can connect it across all your marketing platforms: email, mail, mobile, and in-store.
3. Zero-party data lets marketers validate their inferences in a privacy friendly way. The brand can confirm context.
4. Zero-party data reduces the dependence on costly often inaccurate, and potentially risky, third-party data.
5. Finally, zero-party data forms the foundation needed for an experiential consent program that meets both consumer needs and regulatory requirements.

“Ultimately though, regardless of the type of data that you are collecting and using, you have to ask three questions, avers Khatibloo, “if you really want to be able to continue to earn trust and meet the privacy expectations of your customers.”

1. Is it relevant to your business?
2. Is it actionable in your business and marketing strategies?
3. Can I use It ethically? Did I obtain the data in a way that my customer would actually expect?

 

A More Germane Metric

“The current world is shifting. What I think is interesting about that for marketers is often our way of tracking our success has been tied to the number of impressions and number of data points essentially starting with email address. And of course it’s all meant to roll up to revenue contributed,” notes Camille. “What are the metrics that you think are more germane these days?”

I think what we have done for the last ten years as marketers is treat all digital as acquisitions. So we haven’t been focusing on things like customer lifetime value. We’ve been looking at these short-term metrics like conversion, impressions and clicks, and I think we’re missing really important metrics around our customer health and lifetime value. We’re missing things like brand awareness by treating digital like an acquisition machine.

And what I see increasingly is marketers realizing that they should be treating marketing or advertising, even as much as any other channel, as a retention mechanism.

—Fatemeh Khatibloo

Fundamentals still apply. Perhaps they are even more relevant now as brands grapple with the upheavals to the adtech and marketing network and trade impressions and clicks for the values of transparency, trust, and loyalty.

“So, I think those things like contact strategies, customer lifetime value, and health of the database, and growth of the database, and trust,” matter, continues Fatemeh. “Willingness to share information is a barometer of trust. These are the metrics that I feel like we really have to go back to.”

There has been a limiting component to the hyper-personalization approach typical of Facebook strategies: “so granular that we’re not actually creating brand awareness with potential future customers. “That’s a real mess and that’s what digital has gotten us” opines Khatibloo. Some companies were ahead of this curve:

“One of the world’s biggest companies has decided that targeted ads on Facebook really aren’t so targeted. Procter & Gamble is moving away from targeted ads on the social media giant, saying that hyper targeting on Facebook did not prove as effective as the company thought it would be…. the road taken down targeted ads…did not reach the audience the company hoped for…”(Media-Marketing.com, 2016)

In the final analysis, “I definitely think that marketers have a tremendous opportunity,” says Fatemeh. “And I think that savvy marketers are thinking about ways to deepen customer relationships, without being creepy, without violating trust. And really making those cornerstones of their marketing programs and marketing strategies in the future.

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During the webinar, Fatemeh’s presentation includes examples from companies getting zero-data right, and the missteps currently being made relying on first- and third-party data and profiling. There is much more about the personas, segments, and cohorts.

Forrester’s research is compelling. It is a cri de cœur to the marketing community about the evident failures of current practices and the great opportunities ahead.