Author: Al Henderson, Chief Sales Officer at Eagle Eye
For years, the success of a brand’s marketing and sales activation efforts has been linked directly to how well the brand collects and leverages first, second and third-party consumer data. But as the ability to utilise third-party data wanes, a new source of valuable consumer insight has emerged: zero-party data, collected and leveraged through a brand’s direct-to-consumer channels. Knowing how to effectively generate and use zero-party data could make or break your brand’s growth goals in 2022.
Zero-party data refers to information that a customer willingly and intentionally shares with a brand, like their email address, what they’re interested in purchasing or their communication preferences. That contrasts with more oblique insights gleaned from tracking data aggregated by platforms (third-party data), bulk retail data trends (second-party data) or transactional data collected when a consumer shops directly with a brand (first-party data).
When a consumer volunteers to share personal information with a brand, it’s a mark of trust and loyalty, furthering the relationship that all brands want to build with their audience. So much of this trust-building happens through effective marketing, which is critical to growth.
If CPG companies want to drive more sales, they must understand their consumers at a basic level. Data-led marketing campaigns that leverage personalisation at scale is necessary for brands to achieve their aggressive growth goals. However, most brands don’t have (or don’t effectively leverage) a direct channel for gathering zero- or first-party data on their customers, which is the best way to learn about them and from them.
Differing data needs
Collecting reliable and informative data can be challenging for CPG brands that generate most of their sales volume from retail intermediaries. These manufacturers are often disconnected from the point of purchase, and data provided by retailers is typically expensive and not as granular as necessary for a brand to gain any valuable insight.
As a result, brands have to get creative to succeed with different forms of data collection. There are three main types of data currently widely used by consumer-facing brands: first, second, and third party.
- First-party refers to customer behaviour data generated by purchase and browsing tracking, gathering information on transaction frequency, basket composition and other firsthand activity monitoring.
- Second-party sales data is collected by retail partners and shared with manufacturers. From this type of data, brands will learn trending information, but it’s filtered through the lenses of the retailers’ collection practices.
- Third-party data is collected by tracking cookies and aggregated by different platforms, ecommerce channels, browsers and social media, with or without shoppers’ express permission.
While these data sources are helpful, the insights they generate hinge on inferring consumers’ intentions from past behaviour. Zero-party data, by contrast, is the consumer speaking with their own voice. Because consumers provide zero-party data directly (and willingly), intentionality is baked into the process. That type of information allows for true personalisation of the buyer experience through recommendation engines, email marketing, and ad retargeting.
Personalised marketing campaigns are the gold standard—we know they work. Backed by zero-party data, these campaigns will better target and activate a brand’s buyers, increasing purchase frequency and driving repeat purchases.
Surpassing third party limitations
Setting up reliable channels to collect zero- and first-party data is becoming increasingly important as the use of third-party tracking cookies fades away. Third-party data has been a powerful tool for CPG brand marketing, and it has fuelled many successful campaigns.
But Google’s looming ban on the use of third-party cookies has forced brands to rethink their data collection. The Google Chrome browser makes up 65.2% of all web usage, and before the pandemic, retailers were spending about 48% of their budget on display ads that used third-party cookies.
Third-party data was valuable, but it had its limitations. Because the data is aggregated, it doesn’t allow for true personalisation, and consumers also dislike the way web tracking infringes on their privacy. It’s better for both brands and consumers if reliable customer data is collected right from the source, using opt-in engagement channels like loyalty programmes, subscription services and specifically-designed zero-party data campaigns.
Leveraging that data helps brands to personalise their marketing and execute smarter initiatives. That’s crucial at a time when 80% of CPG brand CEOs are looking to marketing to drive growth and offer both broad reach and customised relevance.
Zero-party marketing in action
McKinsey & Company research indicates that marketing can indeed deliver that growth for CPG brands – as much as a 3%-5% increase in net sales if the marketing strategy is sufficiently data-driven and implemented at scale. But to achieve this, brands need the right marketing tech stack – one with AI or machine learning capabilities to navigate the volume of data and deploy messaging intelligently - and the right tech partner to deliver this kind of purpose-built solution.
Consider a recent customer activation campaign our team at Eagle Eye conducted for Coca-Cola. Our objective was to drive brand sampling and customer engagement through promotions on social media and mobile gaming apps that offered customers the opportunity to get a free beverage in exchange for providing basic personal details on a Coca-Cola microsite.
Seems pretty straightforward – a consumer sees an ad on Facebook or Twitter for a free Coke Zero in exchange for providing their name and email address, they get a coupon code and then redeem it at their local shop. But this campaign didn’t generate more than 370,000 redemptions at more than 2,500 retail locations because it was a simple exercise in coupon clipping.
Our technology enabled Coca-Cola to monitor the effectiveness of every issuance channel, allowing the brand to allocate resources in near real-time to those channels that were performing best. That resulted in viral responses online and through social media, boosting participation. The campaign microsite – the zero-party data collection mechanism – was also integrated into the Eagle Eye AIR marketing platform, which generated unique redemption codes for each user, allowing us to track where and how each code was redeemed. The codes expired immediately once consumed, eliminating the potential for fraudulent redemptions.
Another example is BrewDog whose objective was to encourage lager drinkers in Northern Ireland to sample Brewdog Punk IPA in their local pub. By targeting a specific consumer demographic through social media (Facebook and Instagram), drinkers filled in a simple form to opt in for marketing communications and were then emailed a code for a free pint which they could redeem in their local pub.
Perhaps most importantly, by creating a compelling and frictionless interaction for consumers, we established a new channel to collect zero-party data for Coca-Cola and BrewDog. Channels like this can be tracked and measured for effectiveness, enabling brand owners to monitor and modify initiatives in real-time. And by investing in channels that generate engagement, brands effectively track their path to purchase and get to know their customers better.
Get unique with zero party
Comprehensive performance and data tracking are no longer “nice to haves” but necessary for informing budget and growth decisions. Tracking all channels and every brand activation for performance will be critical for brands over the next few years. In 2022 and beyond, CPG manufacturers that lead with data will be category winners as the industry grapples with the third-party cookie ban.
Zero-party data is the way forward and a crucial part of personalisation in marketing. Using fewer mass promotions and more unique, single-use promotions that individualise your customers is just one strategy brands may employ to achieve their growth goals.
This type of personalised data, which comes directly from your audience and is shared intentionally, is more definitive and trustworthy than other forms. Working with an experienced partner like Eagle Eye will help you navigate this confusing, post-third-party data landscape and take your brand to the next level.
For more examples of how we help CPG brands collect zero-party data and track the effectiveness of campaigns, click here to book a call.