Brands today understand the value of personalization, but with the deprecation of third-party data, providing personalized experiences for customers is becoming all the more challenging.
Google’s move to phase out tracking cookies in Chrome, along with Apple’s tracking prevention in Safari and growing privacy regulations in many jurisdictions, means businesses must lean into their own sources of customer intelligence — through first-party data and increasingly zero-party data.
For many brands, this new data collection process is already underway. Kellanova, formerly Kellogg’s, is adapting to the decline of cookies by capturing zero-party data, according to Nicole Vinson, VP of global digital, media and omni-shopper experience at Kellanova.
Kellanova isn’t alone. In fact, 9 in 10 businesses said they would be capturing zero-party information in 2023, according to a 2022 Forrester survey of 200 digital marketing decision-makers, commissioned by SheerID.
While data deprecation has led to a reevaluation of data strategies, many businesses still underestimate the benefits of zero-party data, the survey found, putting them at risk of not fully utilizing this rich source of customer insights.
Understanding the value of different customer data sources
Zero-party data is information a customer voluntarily shares with a brand, such as through quizzes, competitions and polls, usually with the promise of an offer or reward. First-party data includes transactional and engagement data collected through websites, apps, social media and other digital assets, demographic information and customer feedback.
Both zero-party and first-party are valuable data sources, representing different stages of a brand’s relationship with its customers, according to Rob Myers, senior product manager at marketing technology company NextRoll. Since zero-party data is provided directly by the customer, it more accurately represents the customer, while first-party data captures only what the brand can observe.
First-party data can be used in a similar fashion to zero-party data but lacks the same fidelity and accuracy. “Something like site browsing behavior can be used to anticipate future needs and site offers, but [it] might be hard to hone in on actual preferences when devices are shared between individuals,” Myers said.
With rich customer intelligence held by retail partner databases and other sources, zero- and first-party data is critical for consumer packaged goods brands. A case in point is Kellanova, where customer data plays a central role in understanding consumer behavior and personalizing marketing efforts.
“It really is the heartbeat of our consumers,” Vinson said.
"It's how we enable stronger insights and better innovation for connected, personalized, frictionless, relevant experiences,” Vinson said.
She agrees that adapting to the decline of cookies and compliance with privacy regulations makes it imperative to have a strong data foundation while ensuring consumer trust through robust data privacy and governance practices.
“For us, zero-party data is really consented data in which a consumer explicitly or proactively shares with one of our brands with the intention of informing their interactions and engagements,” she said.
The importance of a zero-party data strategy
Across the board, brands are facing a large-scale data deprecation through the demise of cookies, privacy laws and consumers’ own privacy-protecting behaviors, the survey found. This makes an effective data strategy crucial.
In the survey, 99% of respondents said they are actively responding to data deprecation, which impacts the entire customer journey and makes achieving marketing goals more challenging. Nearly three-quarters of respondents said the broad acquisition of customer data was more challenging and about 7 in 10 found cross-selling and up-selling as well as customer acquisition more difficult, the survey found.
For brands, the situation makes collecting customer data all the more important. However, many consumers are unmotivated to share the information required to build out a strong customer profile to support personalization.
“The biggest challenge I’ve seen is the low rate of visitors providing zero-party data to brands,” Myers said.
“The best brands only capture zero-party data from around 5% of site visitors. This means that there is a great opportunity to capture more zero-party data for the remaining 95% of site visitors,” he told CX Dive.
To overcome this, Myers said brands need a zero-party data strategy that revolves around forging a strong, active relationship with loyal customers who are more likely to offer their data. “The relationship should be authentic and build real value for both parties,” he said.
This means moving beyond simply offering a first purchase discount or access to a loyalty program.
“I’d challenge brands to expand from these commonplace examples and think about what kind of value they can build for their customers by asking for brand-specific data,” Myers said.
Myers advises companies to foster their relationship with customers and use the information wisely to provide them with a better experience and the brand with better results.
“Try to think of ways to move past the transactional relationship of providing a discount or loyalty points for data,” he said. “Brands that can build a real relationship providing true value are going to see the best results using zero-party data.”
At Kellonova, the brand has responded to the heightened emphasis on data privacy, consent and preference management by putting in place the people, processes, tools and technology necessary for a refreshed comprehensive data strategy.
The goal, Vinson said, is to have “a better understanding of our consumers than we have had before.” This includes reviewing the range of sources of data and data clean rooms — a technology service to view aggregated customer data — ensuring the required level of granularity and accuracy of data.
It also includes regulatory compliance. The brand has formed a data privacy council that involves multiple departments, including IT, legal and marketing, to forge a multidisciplinary approach to data management and privacy.
“We want to ensure trust and integrity in what we're doing with that information,” Vinson said.
Editor’s note: This article’s header image was updated to reflect products in Kellanova’s portfolio.