February 8, 2023

The future of digital marketing with zero-party data capture

minute read

Marketers are approaching a crossroads as one of the most widely used digital assets — cookies, are dying a slow death. But, as one chapter ends, another begins. Retail brands in the digital space can now leverage zero-party data in a CDP to improve customer experience (CX) in a cookieless world.

Approximately 2.5 quintillion bytes of consumer data are generated daily, with no signs of slowing down. Without cookies to rely on, digital advertisers must look to other resources for targeting information. That's because Google is planning to phase out third-party cookies by 2024 in Chrome to encourage marketers to use a less intrusive advertising approach. Zero-party data is currently the most popular buzzword in the digital marketing environment.

As an alternative to third-party cookies, Google will introduce a Privacy Sandbox. The interest-based algorithm forms a collection of technologies aimed at providing businesses with successful advertising tools that help protect buyers' privacy online. Third-party cookies will soon be a thing of the past, and here's what you need to know.

What is zero-party data collection?

Zero-party data is information a brand can obtain through a customer's profile, website activity, quizzes, surveys, or messages. Buyers voluntarily share their information with an eCommerce business, which is then used for targeted marketing or personalized product suggestions for each buyer. Due to strict data regulations and increased buyer concerns about personal data, zero-party is transforming how businesses interact with customers.

Zero-party data capture has gained momentum in the past few years because it's playing a critical role in personalized marketing. Personalization has become a priority for most businesses in an effort to create strong engagement, customer loyalty, and retention. Buyers are likely to be loyal to a brand that remembers their preferences and provides relevant offers over one with a poorly-run website.

With zero-party data capture, the customer freely hands over their personal info for a specific purpose. As a growth-driven business, keeping that purpose in mind when re-using the said data ensures you aren't betraying your customer's trust. CDPs are built for data unification. So, when combined with zero-party data, both will enable intelligent ad targeting and ensure users' active consent to establish trust between consumers and brands.

A "cookieless" future: Who does it benefit? 

When Google announced the dismissal of third-party cookies on their browsers, the initial reaction to the news was one of concern among digital marketers. The decision has an understandable impact on the online landscape, from users and advertisers to publishers and service providers. Also affected by Google's phase-out will be small to midsize companies as they may struggle to retarget customers, unlike larger companies with greater access to first-party data.

Big B2B brands have the budget and resources to develop effective algorithms for maximizing profits with first-party data. The general panic has since subsided because Google won't make any radical changes until mid-2024. This has given all involved parties ample time to process this major technological shift and see what the implications of a cookieless world would be for them.

When utilized correctly, a comprehensive zero-party data collection strategy will allow companies to employ the power of artificial intelligence (AI) to enhance customer experience. Transitioning to rely more on zero- and first-party data means more businesses will need to revise their data collection strategies. Failure to do so, their capability to drive ads in a cookieless world will be heavily impacted.

It's not going to be easy without third-party cookies. In fact, technologies are already in the process of phasing out storing of cookies, thus impacting retailers' ability to drive ads. However, encouraging the management of first- and zero-party data and correctly gathering personally identifiable information (PII) will be beneficial for customers as their privacy will be secured.

Disadvantages of a cookieless digital ecosystem

For years, brands have depended on cookies and Google ad-tracking tools to collect consumer insights that helped them target ads to the right audiences. Using cookies to track site visitors to learn what they're looking for online has also played a pivotal role in improving user experience throughout all customer touchpoints.

But, with Google's plans to phase out third-party cookies on Chrome browsers, data collection strategies will change dramatically. Some areas may suffer without alternative identifiers in place to effectively track site visitors and product engagement across the web. As with changes involving advertising, data collection, and privacy, the level of precision in three main areas of digital marketing will be impacted;

  • Audience creation: Consumers are more conscious of data-privacy concerns. This leaves marketers with a shortage of data because how does one collect zero-party data if buyers are reluctant to share personal information?
  • Measurement: Although zero-party data comes directly from the customer, marketers are worried about its accuracy and want reliable ways to verify the information gathered is of high quality.
  • Data unification: There's an enormous amount of data flow in enterprises that needs to be unified. A lack of data unification with monitoring tools potentially compromises a company's ability to counter today's evolving data threats.

While the looming death of third-party cookies has caught many marketers off-guard, it certainly isn't a surprise owing to the recent crackdown on data privacy issues. Europe's General Data Protection Regulation (GDPR) ruling means eCommerce sites cannot rely on or capture opt-in consent without web tracking (browser analytics) cookies in place.

Adjusting advertising strategies in preparation for Google's third-party termination

Without cookies, most websites are basically blind and, in essence, disconnected from their users. Third-party cookies weren't necessarily a major threat. However, their use has become increasingly problematic, especially because shoppers are more aware of their rights to online privacy. So, how can retailers, marketers, data engineers, and advertisers adopt a cookieless future since third-party data capture is no longer a viable ad tool?

Keeping up-to-date with the latest data privacy moves is an excellent place to start. You should also look into alternative software and solutions to help you better transition and manage first- and zero-party data capture strategies. For conversion tracking, consider enhanced conversion Google Ads to improve the accuracy of your conversion data.

Know your customer, grow your business 

Lexer is the CDXP of choice for over 150 leading brands including Kathmandu, Supergoop!, Cotton On, Billabong, and True Religion. We transform disconnected data into actionable insights, and provide the tools to automate and optimize the customer experiences that drive sales.

Interested in learning more about how Lexer can help you improve customer engagement and retention? Book a demo with one of our retail experts.

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Margaret Cascio
SVP Sales
Margaret has had a wide variety of experience spanning her sales and marketing career. She has worked for start ups to large global companies such as Apple and NTT Data. She recently came to Lexer after heading up revenue for an impact fashion brand. She lives in Bend, OR with her husband and dog Ellie, where they spend their time enjoying all the outdoor activities the area provides.