SMH, WTF Is ZPD (Zero-party Data)?!

Remember in the 90s when the Internet felt like the Wild West? People didn’t trust one another (or brands or media companies for that matter), there were no high-speed connections, and things could get lawless at the drop of a drunken cowboy’s hat.

Things are (a bit) more civilized now. Publishers, advertisers, and consumers all inhabit their own hyper-connected corners of the web, navigating them with relative ease. It’s as if we’ve all constructed our own digital neighborhoods, complete with nosy neighbors and our preferred shops, all under the watchful eye of local law enforcement. 

But when you move to a new place, you get to know the community at your own pace. You make connections and volunteer information to neighbors when you deem it valuable or necessary. You control who you are and how you’re seen. 

Online, consumers give their personal data to brands, publishers, retailers, financial services companies, and all manner of “nosy neighbors” without thinking twice. And, largely unbeknownst to them, many of these nosy neighbors are busy behind the scenes gossiping – harvesting, trading, manipulating, and stockpiling their audiences’ personal information like the incredibly precious asset it is.

In return – theoretically – consumers are promised better products, services, and experiences. And to some extent, that’s been the case. But this “value exchange” is lopsided: it hasn’t given consumers any control or power over who gets to know them and in what capacity. Despite all the progress that’s been made online, it feels like consumers have lost a great deal of personal agency when it comes to building the relationships they actually want in their digital neighborhood. 

But now, consumers and brands are starting to wake up to this power differential. The advertising and marketing industry has anticipated this inflection point for quite some time now – but despite the heads up, brands and publishers have struggled to formulate a substantive, unified gameplan to navigate this dynamic shift.

On top of it all, governments around the world continue to regulate how data and privacy are protected, following in the footsteps of the EU’s GDPR and California’s CCPA. One of the most important paradigm shifts behind this coming revolution is zero-party data or ZPD.

What Is Zero-Party Data?

Simply put, ZPD is information that consumers intentionally volunteer about themselves in exchange for a more personalized experience with the media companies and brands they trust. It’s the purest source of truth about their relevant characteristics, behaviors, and preferences because it’s sourced directly from them.

You could say ZPD represents a movement. One aimed at consumers clawing back their personal agency and reclaiming the power of their own data (which, by the way, is already theirs thanks to sea-change regulations like GDPR and CCPA).

So far, collecting ZPD has been limited to direct-to-brand relationships: like when a customer fills out a form telling a hotel their room preferences. In this model, every brand constructs its own separate profile of who that person is – either as a customer or prospect – and then puts the onus on the consumer (if the brand cares to make it possible at all) to add, remove, or edit the data in their profile. All while continually adding more information to that profile through 1st, 2nd, and 3rd party data sources.

The reality is this situation is fast becoming untenable. With the growing number of digital relationships in our lives, it’s become a Sisyphean task to delete inaccurate information, protect ourselves from fraud or sever any unwanted connections. And it’s incredibly labor-intensive (read: expensive) for brands to manage everything they know about us.

If we choose to interact with a brand, then the onus should be on them to actually, factually understand who we are in a way that benefits us. For brands, that means adopting the mindset or developing the flexibility to meet the consumer where they’re at, one to one.

That’s always been the holy grail of targeted advertising in the first place, right?

Real, accurate knowledge obtained from consenting consumers who actually want your business. By shifting to a ZPD structure and allowing consumers to initiate the conversation, brands are able to preemptively optimize their media budgets because the audience targeting homework has already been done. And the best part is you don’t even have to cheat off the smartest kid in your class to do it. 

Likewise for publishers, with ZPD, ad inventory is already pre-optimized because the consumer explicitly shares their reading interests ahead of time.

Likewise for publishers, with ZPD, ad inventory is already pre-optimized because the consumer explicitly shares their reading interests ahead of time.

You won’t have to gamble on content that may or may not stick with a reach-audience; audience experts at brands won’t have to expend as much time, energy, or resources to identify new segments – because, again, the segment comes to them. ZPD is a literal win-win-win… win – yes, that’s four wins – if you take into consideration the fact that ZPD also solves the cookieless conundrum vexing the industry today.

But first – first we have to take back control of our data.

We’ve seen what happens when we are not vigilant and our data falls into nefarious hands – as in the case of Cambridge Analytica. That was effectively ZPD gone wrong. Millions of users unwittingly participated in ZPD collection schemes, creating grossly comprehensive psychological profiles which threatened our very democracy. This demonstrates the risk at hand – what we as consumers should be fighting against – but also the opportunity if ZPD could be deployed at scale for the betterment of the web.

Zero-Party Data Is Zero-Prey Data

Believe it or not, it’s been 28 years since the first e-commerce transaction. Since then, we’ve seen the rise (and some falls) of multiple e-commerce giants. True, our relationships with brands and publishers have gotten more secure and personalized along the way, but we’re still miles away from being truly consumer-centric.

Part of the reason is that brands and publishers are locked into the ecosystems they inhabit. In a way, they’ve become prey to their own (un)virtuous cycle they helped to create. Targeted advertising capabilities rely on a costly, difficult-to-renovate, and intricate trenchwork of 1st/2nd/3rd party data, expensive tech, and partnerships.

This means the prospect of divesting from these systems – which, for many companies, has taken the better part of a decade to accumulate, implement, and staff – is a really hard pill to swallow. Even if an objectively better, streamlined solution – ZPD – is looking them straight in their cartoonish, dollar-sign eyeballs. 

But things aren’t much better under the status quo for consumers either.

The reality is, we are constantly preyed upon by brands online offering supremely irrelevant products and offers, and by publishers who insist on serving listicles “we think you’ll love” after one accidental click on an archived Labor Day article from 2017.

These inefficiencies are one of the many, many reasons why consumers continue to swing adblockers at carousel ads and prerolls like it’s Sunday tee-ball practice. In short, the brand/consumer/publisher triangle is tired, predatory and outdated – but worst of all, it makes it harder for actually relevant ads and content recommendations to cut past consumers’ ad-selective hearing.

ZPD helps re-balance this value exchange.

ZPD helps re-balance this value exchange. It restores the agency of the consumer, affording them the ability to either volunteer or withhold their data – in effect, their digital identity – to brands at will. Furthermore, ZPD is authoritative, not observational. You’re not relying on a game of telephone played by third and fourth parties to matchmake you with brands. That one-off refrigerator purchase should no longer follow you around the web for years like a hunter stalking its prey.

And eventually, your data won’t have to sit in an unreachable database, potentially exposed to theft or abuse by nefarious actors. This is a realization that thousands of consumer brands are now coming to: 1st, 2nd, and 3rd-party data is expensive to collect, manage, secure, process, glean insights from and keep compliant. In many cases, it’s even become more of a liability than an asset. 

Zero-Party Data Is Happy Data 

ZPD should make all parties – consumers, brands, and media companies – happier when it comes to personal data.

Consumers get more control and agency, which means more trust; brands don’t have to worry as much about byzantine data management processes, and media companies get to optimize inventory and develop content without the need for guesswork.

Currently, there is no technological barrier to instituting and normalizing zero-party data. In fact, if anything, it should alleviate much of the headache brands and publishers face as they shift into a cookieless future at the behest of GDPR and CCPA.

The only change required for brands is the adoption of a true consumer-first mindset when it comes to using their customers’ data to create better business outcomes. Likewise, for media companies, it means working in coordination – not unilaterally – with consumers about their data and their preferences.

For consumers, having more control over ZPD will streamline personal data and privacy management.

My work at Caden is concerned with making that experience fit for this new future. With the advent of centralized digital safety deposit boxes, like the Caden Vault, consumers can begin lending out their personal information to their preferred brands and publishers at their own pace, while denying access to those they deem untrustworthy.

Brands and publishers can – and should – view this as an opportunity to scale back the cost and headache of in-house data warehousing, and utilizing Caden as a literal turn-key portal to accessing only the relevant information for the relevant (and consenting) consumers.  

Good, clean, timeline, relevant data makes everyone happier, including other nodes in the brand/consumer/publisher ecosystem. Because it’s not just a better, cleaner way of conducting e-commerce, it also enables more effective communications and media strategies. When individuals voluntarily share their ZPD, brands and their suppliers can use it in ways that actually enhance relationships, engender loyalty, and increase lifetime value.

ZPD is a timely answer to the over-proliferation and abuse of personal data. For the average consumer, ZPD is their ticket to personal agency, affording them complete domain over their digital identity and online destiny. And for brands and publishers, it’s an antidote to the increasingly onerous demands of data management, compliance, and privacy regulations  – which means you can continue to pursue those one-to-one customer relationships with the customers you actually want, and not just the ones you think you need.