In the last few years, digital data collection has come under fire from consumers as things have gone awry, with information being used for purposes for which it shouldn't be used. Data is, however, the connection between consumers and businesses in the online world and is, therefore, an essential part of how that interaction works. So how can businesses improve their data collection methods while rebuilding trust with their customers?
Not all data-sharing is created equal. There are four different types of data sharing that range in collection and purpose — and one that doesn't share anything. It is this last one that could provide a new way forward in the search for more trustworthy and effective interactions between consumers and online brands.
Third-Party
Most people are familiar with third-party data; this is where marketing platforms, such as Adobe and Google, collect information about people's web habits, what they are looking for and what information can be discerned from their search entries. Third-party data has become increasingly difficult to justify from a consumer point of view. It provides business efficiencies by outsourcing data and analytic functions, but consumers have less control over what happens to their information once it is sent to a third party.
Second-Party
Second-party data is the reverse of third-party. Instead of a business sending data out to third parties, second-party data brings in information from well-defined sources, which makes it controlled and justified in many cases. For example, when requesting a home insurance quote, a consumer may provide pertinent information like their name and address. The insurer can then use that second-party data to enrich their understanding of the risks — such as the flood risk in the consumer's geographic area — in order to create a more accurate quote.
First-Party
First-party data is information a consumer agrees to share with a specific entity about their interactions with that business or brand. Previously, people may not have been aware that this type of information was collected, but with modern privacy legislation, people can opt out in most cases. In first-party data capture, it is the business that decides which information it would like to collect. This is an important point to keep in mind when we compare first-party and zero-party data.
Zero-Party
Zero-party data is shared by an individual. In fact, it is the consumer who chooses what they want to share or not share in that moment. Filling out a feedback form is an example of zero-party data. The downside to zero-party data is that its usefulness decays rapidly and is often only relevant in the moment or soon after, because the business does not know what happened after that information was shared. It can be compared to walking into a store repeatedly, each time restating your purpose or intent instead of being able to just continue your shopping experience.
No-Party
No-party data is the information about an anonymous user that is not shared with anyone. An example of no-party data is the consumer preference data stored on your phone. This information is valuable because it enables a relevant customer experience when you use the phone, but it is never shared. No-party data is the only type of data that does not flow anywhere and complies with all privacy laws since information is not sent to servers of any kind.
After walking through what these different data collection methods mean, I believe there is a new approach possible for opted-out consumers, where relevant messages are provided by using no-party data. In this approach, information about what is relevant and interesting to the consumer is completely determined and sealed within their browser while they visit a website, and yet it provides a seamless way for the brand to provide meaningful and relevant messages, offers and information in real time. In order to do this effectively, the rules concerning what to show to an individual, and when, would also need to be evaluated and performed entirely in the browser.
This could radically change the assumptions we have today about how messages are delivered when we interact with a brand online. In this new world, consumers can have relevant and meaningful customer experiences without sharing any data with any other party — first, second or third!
There is a lot of misunderstanding about data collection and what companies are using data for. Data is needed to deliver an experience that benefits the consumer; without it, there is no way to deliver messages that are relevant to that person. By utilizing zero-party data more effectively, brands can give consumers an optimized experience while maintaining their privacy and trust.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
