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The benefits of Zero-Party data in the age of AI

How to leverage customer insights for better marketing outcomes

Starting an article writing about ChatGPT is mundane, almost overly obvious these days. That was not the case just four months ago. We all know how big of a splash ChatGPT made, which for the vast majority of users was also the first direct use of a generative AI tool. While things like Jasper (formerly Jarvis) or Midjourney had thousands of users, ChatGPT took AI mainstream.

Now, here’s something many business influencers have already said: be careful using ChatGPT for work because IT. IS. NOT. FACTUAL. ChatGPT is the fine-tuning of the large language model (LLM) from OpenAI: GPT. Hence ChatGPT, a specific type of GPT made to be really good at simulating natural conversations. ChatGPT’s only concern is “writing something that sounds good”. Not helping you, not finding information, just determine the right chain of words depending on the prompt.

That means that if you want to use the power of a conversational bot, but based on factual information, you have to either train the AI yourself or prime every conversation with the right data. For example, if you want to use ChatGPT to generate a product description for your new shampoo, you need to provide it with accurate and relevant information about the shampoo’s features, benefits, ingredients, and target audience. Otherwise, ChatGPT might produce misleading or inaccurate content that could harm your brand reputation or customer trust.

And that’s where data comes in: everyone now has access to ChatGPT. Writing a passing-grade blog post is not a problem anymore. Anyone can do it, and they will.

That means one thing: the data you use to train your AI will make ALL the difference. Which makes data even more important than before. If you thought “data was the new oil” before generative AI, get ready for a whole new level!

Marketing leaders know that finding the right data source can make or break a successful marketing strategy. Zero-party data is one such source that provides unique market research that can answer any business question and provide solid data for data-driven strategy implementation and development.

Let’s take a look at why zero-party data is superior to other sources.

What Is Zero-Party Data?

But first, what is zero-party data? Zero-party data refers to any information regarding customers or users that is willingly provided by them through surveys, forms, and other direct interactions with companies. This type of information includes preferences, habits, interests, purchase intentions, and more. It differs from first-, second-, and third-party data because it comes directly from customers themselves instead of being acquired from external sources such as cookies or third parties like Google Analytics or similar services.

Zero-party data can be collected through various methods such as quizzes/polls, customer profiles, messages with customers, and so on. For instance, a fashion brand can use a quiz to ask customers about their style preferences and then recommend products that match their tastes. A travel agency can use website activity to track customers’ browsing behaviour and then offer personalized deals based on their destination interests. A health app can use customer profiles to ask customers about their wellness goals and then provide customized tips and feedback based on their progress. A restaurant can use messages with customers to ask them about their dietary restrictions and then suggest dishes that suit their needs.

Notice how in all those cases, there is an explicit request for information, so that the user can decide if they want to provide it or not. They’re not coerced, they’re not secretly tracked. It’s the most ethical and effective way to deal with that type of information.

What is the difference between zero-party, first-party, second-party and third-party data: a brief overview

Who collects the data and for whom determines which kind of “party” your data is. 

  • ZERO-PARTY DATA: people directly give you data about themselves
  • FIRST-PARTY DATA: you directly collect data about your users on your platforms
  • SECOND-PARTY DATA: someone else collects data about their users for you on their platforms
  • THIRD-PARTY DATA: someone else collects data about users on their platforms and other platforms, tracking users silently, and selling it to multiple buyers
At first glance, that should already clarify some doubts. For example, 2nd party and 3rd party are similar: someone else is collecting the data. But 2nd party companies do it for you, specifically, while 3rd-party companies do it for anyone who will buy it.

First-party data is collected by a company’s own website or apps such as preferences expressed on product pages, logins by users, or which button they clicked, etc… Second-party data is similar, but it comes from a partner company’s website or app and can include valuable customer insights such as buying habits. Third-party data is collected by external sources such as cookies and web tracking services that provide data on user behaviour across multiple websites, and most of the time users are unaware of the data collected on them.

The ever-present cookie alerts we see on every website on the planet should solve that issue, but the truth is that the vast majority of users don’t check cookie alerts just like most people don’t read any Terms & Conditions before accepting them. According to a paper released by researchers from the University of Michigan and the Ruhr-Universität Bochum in Germany, only 14% of users read cookie notices before accepting them. This means that most users are unaware of the third-party data that is collected on them and how it is used. Moreover, the European Union’s General Data Protection Regulation (GDPR) requires websites to obtain explicit consent from users before collecting any personal data. This explains why we see cookie alerts on every website we visit nowadays.

Zero-party data, on the other hand, is provided directly from customers in surveys or forms.

Here is a recap:

Type Definition Source example Example
Zero-party Information that customers voluntarily and proactively share with a brand Surveys or forms Style preferences in a fashion quiz
First-party Information that a company collects directly from interactions with its customers and audiences on its own channels Website or app activity Preferences expressed on product pages
Second-party Information that a company collect directly from interactions with its customers and audiences to pass on to a specific client Partner website or app activity Buying habits from a loyalty program
Third-party Information that an external source collects from multiple websites or apps without direct customer consent Cookies or web tracking services User behaviour across multiple websites

Knowing the difference between these types of data is crucial for marketing leaders who want to leverage customer insights for better marketing outcomes. Zero-party data, when produced well (like we do) and analysed even better (also something we do) is superior to other sources because it gives you the underlying reasons for consumers’ behaviour. 

Zero-party data as the antidote to AI fever

“AI fever” is the not-so-nifty term I use to describe the current rapid and widespread adoption of artificial intelligence tools and applications in various domains and industries. AI fever has also affected digital marketing (unsurprisingly) as more and more marketers are using AI to generate content, optimize campaigns, and analyze data.

This is not the first time digital marketing has been disrupted. We faced a similar transition when the first marketing automation tools came to be. Marketing teams are always on the lookout for ways “to produce more and better output faster”. 

Generative AI will help so many marketers in their day-to-day work, but then a question arises: are all marketers going to end up producing the same assets?

It’s already something the SEO industry has been talking about for at least a couple of years, as there has been a surge of AI-generated SEO copy “wild west style”: users have automated scraping content from competitors to feed to the GPT model, produce content, and automatically publish it, with little or no human intervention at all.

What does that mean for SEO, though? Google has updated its algorithm in 2021 to detect and penalize low-quality AI-generated content. This means that marketers need to be careful and ethical when using AI for content creation.

So are we all going to have the same content? Not if you use original zero-party data!

Zero-party data is the perfect antidote to AI-generated content because you can use it to fine-tune your AI. Take ChatGPT, for example. You can explain what you need and how you want it to work for you adding custom instructions. When those are based on original research, your ChatGPT will generate unique output just for you. That means no more cookie-cutter copy. 

Beyond just content, zero-party data can also be used to better understand customer behaviour and preferences, allowing marketers to create marketing strategies that will truly resonate with their target audience. This could include running A/B tests on various messaging strategies, or fine-tuning website design and usability to better suit customer needs.