Collaborative Marketing and the Future of Zero-Party Data

How Third-Party Data Deprecation will Affect Marketing in 2023

“The internet is constantly changing” —is probably a cliche at this point, but that doesn’t make it untrue. With Google’s plan to deprecate third-party data by 2023, the statement has never been more relevant.

Google Chrome won’t be the first browser to deprecate third-party data, but it is undoubtedly the largest. Accounting for 66% of all internet traffic, the choices the search engine giant’s browser makes in how it handles data will have a reciprocally outsized influence on the very future of online marketing.

What might come as a surprise to most is that there is a fair amount of uncertainty within the industry regarding third-party data deprecation and how marketing operations will proceed in this brave new internet world.

In 2020, when Google first announced its third-party deprecation plans, Adobe commissioned a study from market research firm Advanis, initially surveying businesses about their readiness to market effectively in the post-cookie, post third-party world. The results were pretty grim.

They followed up with their results in 2021, when companies understood more about the landscape. Surprisingly, during the intervening year between the first study and the follow-up, respondents’ confidence that they were ready for a cookieless future actually went down from 37% to 33%.

With all of this uncertainty expressed by prominent marketing companies, agencies with less experience and fewer resources must indeed be feeling the pressure in a more acute way.

Read on as we address some of the questions and concerns that many businesses and marketing managers are voicing about third-party data and its impending demise. We’ll discuss:

• Why you should care about third-party data deprecation
• The traditional first-through-third marketing data categories (The Three Data Horsemen)
• The rise of zero-party data as the answer to your marketing woes (The Fourth Data Horseman)
• The problem with traditional first-through-third party data (The first-through-third problem)
• Zero-party data and genuine relevance

And finally, we’ll dive into:

• A case study that illustrates how XIRCLS network is the future of marketing

A few questions naturally arise for business owners and marketing managers when it comes to this sea-change in marketing operations. Broadly, the most asked questions are:

1. How will my business’ marketing operations cope with the cookieless internet and third-party deprecation?

Another of perhaps equal importance and inherently related to the first is:

2. What are the alternatives to third-party data?

And, if you’re reading this article, you probably want to know:

3. How can our business prepare for this monumental change, and how can we do it efficiently, with agility, and in a cost-effective way?

The unfortunate downside of this marketing revolution is that many people out there see the third-party armageddon as a way to make easy money off of confused business owners. In a world already rife with gurus that only provide insight at great expense and marketing firms that strive to protect their own bottom line, not always yours—promising huge returns while failing to mention the huge investment you’ll make with them and without taking into account your specific needs and values—it’s easy to feel like the world of marketing is just out to get you.

And that’s just the thing, once you adopt their strategies or use their services, you’re beholden to them—you’re doing things their way. So, before getting lost in the quagmire of the many different strategies and schemes marketing firms are now suggesting to deal with the forthcoming changes to third-party data use, we want to teach you some fundamentals so that when all is said and done, you can judge the efficacy of our Collaborative Marketing solution for yourself.

We believe understanding the alternatives to third-party data is essential to assessing their relative advantages and the subsequent impact on your business, so we’ll tackle question 2 before we address the first one. After all, you and your team know your business best. You know what you want and what you stand for, and that’s what XIRCLS strives to preserve—your vision, your values, your way.

So let’s quickly define some terms before we move ahead.

There are three traditional marketing data categories that websites collect from users:

• Third-party data

  Any data collected by external data providers that does not have any direct relationship with the consumers whose data is being collected.

• Second-party data

  Any data collected second-hand (generally by a trusted partner) sourced from customer surveys, satisfaction surveys, etc. This data is usually collected by a given research firm, and sold to the business interested in it.

• First-party data

  Any data collected directly from your audience or customer base in any way. That includes customer feedback, surveys, site visitors providing personal information, or social media interactions.

You might have noticed that the previous heading alluded to a fourth data category, and, no, that wasn’t an accident. A new term in consumer data has arisen recently, popularised by market research giant Forrester Research :

Zero-party Data

is data that is proactively shared with a brand, typically in exchange for some value bestowed upon the customer.

Now, you might know these terms already. You might think about or engage with these data types every day. But, while a working understanding of the internal back-end uses of these data sets works fine for producing marketing material, developing an empathetic understanding of how their usage actually looks and feels from your customer’s perspective is of the utmost importance. Especially if you want to develop a relevant and effective marketing strategy.

Unfortunately, this empathetic design is often overlooked in third through second-party—and even in first-party data implementation strategies, too. And that’s what really hurts marketing efficacy, ROIs, and conversions.

It should be clear now that effective marketing strategies after the death of third-party data are going to require an investment in actually getting to know your customers.

The customer experience with advertisements implemented using these data classes is expertly illustrated in this comic from marketoonist.com

We see this as a major issue for each of the traditional data categories as far as marketing implementation goes.

There’s a problem with traditional customer data capture schemes. Namely, when impersonal data is recycled into targeted advertising and marketing content, it can feel, well…creepy. The general problem with these data sets is that when you’re grouped into a broad segment—in the case of third-party—or you’re targeted in an irrelevant and odd way—in the case of first-party data—the advertising message feels less like something you want to engage with, and more like you’re living in a surveillance state.

The ads just aren’t relevant. They don’t make customers feel like they can’t live without your product, and the truth is they usually just end up making your prospective customers want to get as far away from you and your brand as quickly as possible.

This lack of genuine relevancy is why many business owners across varied industries often feel like their marketing dollars are being wasted or, at the very least, that their investments aren’t providing them with commensurate value.

It’s a big reason why, for example, when surveyed by Rakuten Marketing, businesses all over the world estimated that they waste, on average, 26% of their marketing budgets.

We’ve thrown out a lot of statistics so far, and if all the numbers so far are getting you bogged down don’t worry…

The math really isn’t too hard here.

When we consider the above statistic and add in this survey performed by Innovid—wherein 500 senior marketers at brands and agencies across various industries were interviewed—we see that 83% of marketers consider third-party data an important factor in their marketing strategies, and 51% of respondents stated that third-party data was integral and indispensable to their marketing strategies.

In the case of the 51%, third-party data made up the majority of the data their companies used.

Adding this all together equals a colossal problem for a majority of marketing strategies, even at the highest levels.

While Google’s announcement regarding third-party deprecation is certainly the attention grabber, it’s also important to consider just how ineffective utilising data from third all the way through to first-party can be, primarily when used in a way that doesn’t bring genuine relevance and value to customers.

Companies and marketers in the surveys above may be rightfully worried about the fact that third-party data is going by the wayside, but shouldn’t they also be worried that even the ads they produce—using second and first-party data—often fall flat and alienate prospective customers?

It’s probably happened to you. You’re talking about something—a product or a service, perhaps—with a friend or loved one, and then you open social media a few seconds later, and boom, there’s an ad for the exact thing you were just talking about. Now, this exact example might be a case of a user just getting worked up over confirmation bias , but it illustrates the problem with third-party and second-party data and, to a significant—and criminally underappreciated extent—first-party data as well.

The example of first-party data in the comic above might be fanciful, but would it really matter if it was a targeted ad about the shoes you browsed last year, over shoes you browsed last week, or even just an hour ago?

The point is, people don’t like to feel like they’re being watched. For the average internet shopper, it’s an all too familiar experience, browsing a pair of shoes or a piece of clothing, maybe adding an item to a shopping cart only to navigate away, leaving it in the retailer’s dreaded “abandoned cart” purgatory. Then, the next time you open your browser and scroll through other sites, there’s the product you didn’t buy, in every single ad you come across.

It feels like a not-so-subtle version of harassment and bullying that doesn’t serve your customer and turns them off your brand. You can probably think of a product or two that has hounded you in this way, and ask yourself…are you more likely to buy it someday? Or are you more likely to purchase it from somewhere else that won’t follow you to every corner of the internet for the next six months?

The answer is pretty obvious. But, you might ask, how is zero-party data any different?

Zero-Party Data Builds Trust and Genuine Relevance

Why is Forbes calling zero-party data the new oil? Why are a staggering 90% of marketers responding to data deprecation by developing methods focused on reliably capturing zero-party data? The answer is right there, and it makes that kind of warm and fuzzy, intuitive sense when you stop to consider it:

Utilising zero-party data that has been collected in a transparent process actually builds trust with your customers. This data carries with it inherent relevance. But, it’s not just any old run-of-the-mill relevance (first-party through third-party data sets are, in a way, relevant too). It’s genuine relevance because it confers genuine value.

Let’s go back to the first panel of the marketoonist comic to illustrate the point:

The customer here is engaging with this piece of advertising because it provides genuinely relevant information to them. They are being reminded that they liked and were interested in this product before, and that they willingly offered their opinion on the product through a transparent process (surveys, questionnaires, etc.) to the brand or company.

They aren’t being harassed. They aren’t being swindled. They genuinely want to engage with the product and are instantly more likely to convert and buy because they have wilfully entered into an agreement and invited advertisers to personalise experiences on their own terms.

This is the heart of what we mean by genuine relevance. And this kind of relevance is what actually converts to sales.

Now that the case has been made for zero-party data as an extremely potent marketing tool, we hit what might be considered less of a fork in the road and more of a branching point. And, just like any time conventional wisdom and entrenched paradigms are turned on their head, you’re bound to be sceptical.

Too Many Forks In The Road

Many of the marketers and business owners in the studies outlined above know that one of the most challenging things to do is to get people to take the time to actually fill out surveys and questionnaires about products, even when they are—by all accounts—brand loyalists.

The difficulty of obtaining expansive, useful data sets, while relying on customer engagement and survey completions is a large factor in why third-party data has risen to such prominence in the marketing industry.

Simply put, people don’t like filling out surveys and questionnaires even when they are about things in which they have previously demonstrated interest.

At least they don’t like doing those things for free…

A lot of emerging market research is lending credence to a pretty common sense and intuitive understanding all marketing professionals and business owners probably have:

Customers like being rewarded for shopping with you. And they’re more willing to help you if you help them.

63% of US online adults and 71% of Italian online adults are actually motivated to share personal information with companies if they’re being rewarded for sharing it.

This is where most marketing consultants would tell you something that we’re willing to bet doesn’t sound like a real innovation at all, and that’s something along the lines of:

Start a loyalty program.

Or,

Reward your customers for filling out surveys with discounts or offers.

The question is…

Is a Loyalty Program Right for My Business?

While loyalty programs are indeed tried and tested marketing ploys, and many marketing firms, blogs, and news outlets ( Forbes, SheerID, Adweek, McKinsey & Co., Forrester, to name a few) are advocating for the use and adoption of these strategies to combat the coming third-party data apocalypse, we’d be remiss if we didn’t point out that these strategies just might not work for every business.

Maybe you’re a retailer who has tried a loyalty program in the past and it hasn’t worked. Maybe your business just isn’t geared toward loyalty programs and you fear a dedicated loyalty program might actually hurt your brand and how it’s perceived.

Maybe you don’t have the resources to effectively implement one yourself, and contracting out the effort to a marketing firm isn’t in your budget. Maybe your loyalty program is in place but has stagnated and is not providing the growth you want.

The list could go on.

That all being taken into account, we’d also be remiss not to point out some other strategies marketers are now investigating:

What are Some Loyalty Program Alternatives?

Customer data platforms, building out private ID graphs, moving to contextual targeting strategies, and data clean rooms are all techniques that companies of various sizes and resources are investigating in order to deal with third-party deprecation. However, this article from AdWeek dives into many of the drawbacks of these strategies.

We won’t cover them in detail, but suffice it to say a common theme is that the implementation and effective management of these strategies is generally inefficient and costly. Especially when deprecation is fast-approaching, and the implementation of these strategies takes a long time.

A lot of forks in the road, indeed.

But what if there was a way for businesses in non-competing but complementary sectors to come together to market in a collaborative way, providing the opportunity for growth together in a virtuous cycle of giving that benefits the customer as much as it benefits the member companies themselves?

Collaborative Marketing, Zero-Party Data, The XIRCLS Way

XIRCLS is perfectly poised to help your company navigate the impending deprecation of third-party data. Not only that, but XIRCLS is also entirely built on a foundation of zero-party data. So all of the marketing activity occurring throughout our network is highly effective.

Zero-party data, genuine relevance & value, and transparent practices that foster trust and promote value for customers are the driving forces behind why customers convert at a staggering 13% on average for our member businesses across all sectors.

Adhering to cutting-edge, internationally recognized privacy standards, we don’t own any customer data, we won’t ever sell it, nor will we hold it hostage and expect companies to bid on it for our profit. This is the power of collaborative marketing, and our results are why we believe that the XIRCLS way is the future of marketing.

Collaborative Marketing And Zero-Party Data, At Just The Right Time

We’ve spent seven years building our network, preparing for this moment—time that you don’t have to spend researching and testing strategies, right when the internet is about to experience this era-defining paradigm shift in only a few short months.

And sure, it might sound great, but you’re probably wondering how it all works.

How can a company that doesn’t hold the rights to any customer data effectively provide a service based upon delivering highly personalised, instantly relevant digital experiences and loyalty program rewards to partnered businesses’ customers at strategic moments throughout the buyer journey?

Well, it doesn’t happen by accident. It’s the logical result of being built from scratch by a guiding philosophy that aligns perfectly with the future of the cookieless internet. Because we’ve built our network on a foundation of transparency, privacy, and customer value, XIRCLS is the best tool companies can use in order to market effectively using zero-party data, and with nearly five times higher conversion rates than traditional marketing methods.

We didn’t do things like the rest of the marketing world. We didn’t look at a problem like third-party data deprecation and try to find an answer for it. XIRCLS started from a different vantage point. We used our inbuilt commitment to increasing value and equity for every involved party in the buyer journey—from marketing managers to the customers themselves—to provide something new and compelling that has the potential to turn the marketing world on its head.

In order to illustrate how XIRCLS works, let’s dive into a

XIRCLS Client Case Study:

One of our partner companies, Something Good , makes chocolates.

They’re a small company with one retail store and have an issue where they can’t capture customer information in a meaningful way because they don’t sell their goods online. They struggle with digital marketing and expanding their base because they don’t capture customer data and have limited to no internet presence outside of a couple of social media accounts.

They joined XIRCLS and were instantly matched with multiple suggested partner companies based on our internal machine-learning algorithms, which identify relevant, non-competing businesses with customer overlap.

Something Good decided to partner with PVR Cinemas, one of the largest movie theatre chains in India, with over 2,000 locations. This in and of itself would have been an impossibility without XIRCLS, and on its face would probably seem like a strange pairing until you consider the virtuous cycle of giving that makes XIRCLS unique and makes it work in such a powerful way.

While Something Good is excited about treating their customers to an offer from a popular movie theatre chain, PVR is looking forward to gaining loyal followers who are surprised and delighted to see their favourite local, small-batch chocolatier partnering with a major national corporation.

A convenient QR code (generated from the XIRCLS system) displayed on their packaging has become the gateway for Something Good, which so far had no meaningful way to connect with their customers, to gain invaluable insight into their customers on an individual basis. When the code is scanned, users are prompted to fill out a survey to receive relevant, valuable rewards that will make them brand loyalists for both companies.

What’s unique here is that in order to receive this enticing, personalised offer, the user is prompted to fill out a short, painless survey. And now, both Something Good and PVR have gained valuable insight into an individual customer and, furthermore, the types of customers that will be interested in engaging in their offers in the future.

Closing Thoughts

Through this straightforward, but powerful process, both vendors in the above case were able to capture valuable psychographic data, that they would have to spend a lot of money to get if they were on their own.

They’ve also collected zero-party data that will help them tailor future offers, reach customers with more relevant incentives in the future, and ultimately to convert more sales.

XIRCLS never keeps this data, never sells it, and never holds it hostage, even when businesses leave the network. The data isn’t ours; it’s yours. With XIRCLS, you’re doing things your way. And as we’ve explained, that’s something fresh and unique in the marketing world.

XIRCLS is a customer-first company, but…you’ll see that when you put customers first, you’ll begin to grow in ways you never thought possible.