For years, companies have been using cookies — that is, small text files stored on the browser that keep track of website visits — to monitor consumers’ online behavior. Cookies can provide rich data that helps brands get a better sense of who their customers are and enables them to target those customers with more relevant offerings. But this personalization comes at a cost: Consumers are increasingly concerned about who is collecting this data, how much of their behavior is being tracked, what companies are doing with that information, and who they may be selling it to.
In fact, a recent Pew report found that 79% of Americans are concerned about the way companies use their data. Forty-one percent of U.S. consumers regularly delete cookies, and 30% have installed an adblocker. And of course, this growing distrust has increasingly been reflected in government regulation. One of the most well-known pieces of legislation targeting cookies was the 2018 General Data Protection Regulation (GDPR), which substantially expanded data privacy requirements in the EU. More recently, European regulators have begun to call for a complete ban on ad targeting, both the states of Virginia and California have passed comprehensive privacy bills, and Google Chrome announced plans to end its support of third-party cookies altogether by 2022.
The era of cookies is coming to an end. But that doesn’t mean that companies should abandon personalization — it’s just time for a new, better approach.
The Rise of Zero-Party Data
So, what does it take to leverage the benefits of data-driven targeting without falling prey to the privacy issues (and mounting regulatory obstacles) that surround cookies? The answer lies in a concept known as zero-party data. In contrast to third-party data, which is passively collected from cookies and used by companies to make inferences about broad demographic segments of people, zero-party data refers to information that is intentionally and proactively shared directly by individual consumers.
Specifically, many brands have begun using mechanisms such as polls, quizzes, sweepstakes questionnaires, or interactive social media stories to collect explicitly opt-in data that provides highly specific insights into consumer preferences. This type of data collection is a win-win: It offer customers greater control and transparency into exactly what data is being collected, while giving companies access to much more useful information that enables them to target personalized offers much more effectively.
When setting up these systems, it’s important to…
