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In preparation for a cookieless future, marketers are reorienting their identity strategies around first- and zero-party data.
With Google, Apple, and Microsoft announcing plans to end the use of third-party cookies in their browsers, it seems like cookies’ demise is finally here.
It’s been a slow death, though. Marketers have had time to rethink their identity strategies and explore alternative ways to collect consumers’ preferences (in a welcome, privacy-friendly way). The clear replacements? First- and zero-party data.
With personalization strategies built around data consumers are willingly sharing, marketers will be able to deliver even more relevant experiences to shoppers. The real goal in 2024 isn’t what to replace third-party cookies with. It’s how to best collect and analyze first- and zero-party data.
Why Google, Apple, and Microsoft are finally ending third-party cookies
The primary driving force behind the end of third-party cookies is privacy.
Third-party data is collected and owned by a third party that doesn’t have a direct link to your customers. It's usually created by data aggregators, who buy data from other sources (including companies, governmental entities, or academic sources). This type of data doesn’t necessarily include data from your actual customers. Instead, third-party data represents an aggregate collection from a large, anonymized audience.
Consumers have become increasingly aware of what they share online, who has access to it, and how their data can be misused. As a result, they’re wary of brands having access to their data without their permission (or giving it to them directly).
Regulators and businesses are following their lead, introducing new laws (including the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA)), and Apple has already rolled out their own privacy updates to protect consumers. Now, Google and Microsoft are ending the use of third-party cookie collection in their browsers.
What are the third-party cookies alternatives?
There are two types of data that will form the core of marketers’ acquisition and engagement strategies in a cookieless future: first- and zero-party data.
These types of data help marketers get out of a historical personalization bind. While consumers aren’t always comfortable sharing their data without knowing how it will be used, 66% expect brands to understand their unique needs and expectations. Brands collect first- and zero-party data directly from consumers, with their consent. As a result, it’s more relevant and allows brands to deliver personalized experiences that build trust.
What is first-party data?
First-party data is information you’ve collected directly from your audience with their permission. Your brand has exclusive ownership of this data, and you get to decide how it’s collected, stored, managed, and parsed through.
It also gives consumers the benefit of controlling what information they’re sharing. When they choose to share their preferences, shoppers can receive more personalized experiences from brands.
You collect first-party data through your brand’s owned channels, like your website and email, SMS, and loyalty programs. Types of first-party data include:
- Website activity
- Email engagement
- Purchase history (both online and in-store)
- Demographics
- CRM data
- Social media profile information
What is zero-party data?
Like first-party data, zero-party data is information your brand collects and owns with consumers’ permission. The difference between the two types of data comes down to how they’re collected. Brands gather first-party data passively on their websites and owned channels (e.g. the products a customer has browsed). On the other hand, consumers actively give you zero-party data (e.g. a customer’s responses to a product finder quiz).
You can collect zero-party data through surveys, forms, quizzes, text messaging responses, and more. And because consumers are directly telling you their preferences and needs, zero-party data gives you the most accurate insight into your customers.
Zero-party data is based on a value exchange. When a consumer shares this type of data with you, they generally expect something in return. Product-finder quizzes (like Olive & June’s nail polish quiz) are great examples of this. When you’re shopping for a new foundation, you may take a quiz on a brand’s website to find your shade. You’re giving that brand information about your skin type and preferences with the expectation that you’ll get something in return—a personalized recommendation that will save you having to order and return several products.
Why do I need to collect both first- and zero-party data?
A sophisticated customer identity strategy relies on both first- and zero-party data to paint a full picture of an individual shopper. Because consumers aren’t thinking about what their actions tell brands, first-party data relies on inference and doesn’t give you the full picture of what your audience’s needs and preferences are. At the same time, consumers aren’t always willing to tell you exactly what they’re interested in unless they get something in return.
First-party data gives your brand a foundation for your personalization strategies, while zero-party data opens you up to new opportunities to deliver even more closely personalized experiences. And putting both first- and zero-party at the center of your marketing strategy comes with important benefits:
- Direct communication: When shoppers explicitly share their contact information with you, you’re able to communicate directly with them (cutting through the noise). Conversational channels like SMS are particularly effective when it comes to engaging 1:1 with your shoppers.
- Increased accuracy: When you get data directly from your customers, you know your data is accurate. Collecting on-site behavioral data and quiz responses can tell you whether a shopper is interested in a sweater versus shoes. Being able to target your messages with their preferences right off the bat saves you time and money trying to reach the right audience.
- Loyalty: Shoppers demonstrate trust in your brand when they share their preferences. Delivering personalized experiences builds loyalty and helps grow a more authentic connection with your customers.
How brands are adapting to a cookieless future with first- and zero-party data
There are lots of ways to collect this type of data and put it into action:
By collecting data directly from consumers, brands can establish a more transparent and mutually beneficial relationship. Here’s how they’re collecting that data, and putting it into action:
- Geo-targeted product recommendations: You can tailor your messages based on your subscribers’ location, promoting warm-weather clothing to subscribers in California, and coats to subscribers in Wisconsin. It’s a simple way to show your subscribers that you’re paying attention to their wants and needs.
- Guiding shoppers down the funnel: You can also use segmentation to gather more first-party data by tailoring your SMS marketing campaigns based on how often a subscriber engages with you. Encourage subscribers who haven’t purchased yet to convert by sending them offers and perks. Once they purchase, you’ll have a better understanding of their preferences—helping you personalize future communications.
- Engaging shoppers post-purchase: Personalized post-purchase text messages are another way to keep past shoppers engaged. Use your post-purchase series to share shipping updates, recommend similar products, and cross-promote your other marketing channels (including social media and rewards programs).
- Delivering recommendations with product-finder quizzes: Sun-care brand Supergoop! launched a detailed quiz to help shoppers find the right sunscreen formula for their needs. Consumers volunteer their information because they know they’ll get a helpful, personalized recommendation in return. Supergoop! is then able to use these preferences to customize future interactions, like sharing information about new products a shopper may like.
- Striking up two-way conversations: Brands are using conversational text messaging to ask consumers about their preferences, answer questions about products’ fits and features, and more. They’re then able to use this data to share personalized recommendations, tailor future campaigns, and more.
Identity management is going mobile
As marketers rely less on third-party data, they have an opportunity to rethink how they centralize their data. Increasingly, brands are moving consumers’ phone numbers to the center of their identity management strategy.
Our mobile phone numbers are great identity markers. Most of us have one phone number, and we’ve probably had it forever. And, we’re comfortable sharing our phone numbers during the discovery and checkout experiences, helping marketers tie behavior and actions to individual consumers.
There’s another benefit to using phone numbers as your primary identity markers. Mobile shopping is becoming more and more popular, making up 60% of global e-commerce sales. And with consumers being more likely to see and click on your text messages than they are your emails, they’re refreshing their cookies tied to their profile more often. Having reliably up-to-date data means you’re able to personalize shoppers’ experiences (across both SMS and email) with their most recent preferences and behaviors.
First- and zero-party data is generative AI fuel
Generative AI models rely on vast amounts of data to deliver relevant, personalized experiences. First- and zero-party data make up a major piece of the fuel that’s training these AI models. Choosing a marketing AI platform that's trained on first- and zero-party data that’s relevant to your brand—and then further enhanced with your own data—will be key to leveling up your customers’ experiences.
The end of third-party cookies marks a major step-change in how marketers approach personalization. But first- and zero-party data doesn’t just fill a gap created by the absence of third-party cookies. With 63% of marketers saying that having a set of trusted customer data is important to implementing generative AI solutions, first- and zero-party data is an opportunity to deliver more personalized, relevant experiences that build trust. And when marketers can rely on AI solutions built with highly relevant (and compliantly collected) data, they can truly live up to the promise of 1:1 experiences.
Want to learn more about the trends shaping marketing in 2024? Check out these resources:
