The Importance of Zero-Party Data in Today’s Digital Age
Technology has continued to display its ability to steamroll ahead.
Thomas Edison patented and commercialized the first light bulb in 1879. Today, we have RGB lights that can be turned on and off through voice commands, and last for thousands of hours.
The first gasoline-fueled vehicle was built in 1879. Fast forward to today, we have vehicles with auto-pilot and self-driving features.
In data, the advancement of technology in recent years has pushed the evolution of data and big data analytics significantly. It has reshaped how businesses and societies leverage information for valuable insights and decision-making.
The changes have been massive. One example is the proliferation of artificial intelligence (AI) and machine learning (ML). In today's world, they have revolutionized data analytics. These advanced algorithms can analyze vast datasets at quick speeds, uncovering patterns and correlations that were previously inaccessible.
Another example would be that the Internet of Things (IoT) has expanded the scope of data collection. They can generate massive volumes of real-time data from interconnected devices and sensors. From smart appliances to wearable devices, IoT technologies collect granular insights. These insights include the likes of consumer behavior, operational efficiency, and product performance.
How the rapid advancement of technology has affected zero-party data collection
The advancement of data collection and analysis technologies has brought about bountiful benefits. This includes enabling businesses to create better products that improve users' quality of life.
Yet every light has its shadow and the widespread collection of personal data has led to several dire issues that warrant intervention.
The main issue at hand is the erosion of privacy rights and the increase in surveillance practices. Widespread adoption of data collection technologies enables these issues. This extensive tracking of individuals' online activities, coupled with the cross-collection of personal data from various other sources, has raised significant privacy concerns.
As such, there is a need for regulations to safeguard individuals' rights to privacy and data protection.
This has manifested in the form of various government regulations, such as Europe’s General Data Protection Regulation (GDPR). It requires companies to ask for permission to share data and gives individuals the right to access, delete, or control the use of that data.
The United States also has a mix of laws that go by acronyms like HIPAA, FCRA, and VPPA. They are designed to target only specific types of data in special circumstances. Standards like SOC 2 and ISO 27001 have sprung up around these regulations to give companies an easy way to determine if the technology vendors they choose to work with follow similar standards of data protection.
Increased data regulations - the impact on eCommerce marketers
With the implementation of new regulations, this begs the question of how it affects you and other eCommerce merchants.
This takes shape in your platforms, such as Shopify and WooCommerce. They have to meet specific standards in their data security and collection, and need to meet specific certifications.
ISO is a global standards organization that gathers the expertise of several key stakeholders with vast knowledge in the subject matter. They research and understand the needs of the organizations they represent. They set the standards for various industries across the board. If you take a look at some of your housing appliances, chances are they have an ISO certification sticker with a number behind it.
For eCommerce, your platforms are expected to achieve ISO 27001 certification. It is the world's best-known standard for information security management systems (ISMS). This provides the platforms with the guidance for establishing, implementing, maintaining, and improving an ISMS. Achieving it means that they have a system in place that is able to manage risks related to the security of data owned or handled by them.
Then we have the System and Organization Controls (SOC) framework developed by the American Institute of CPAs (AICPA). They have defined 3 SOC reports, all serving a different specific purpose.
With regards to eCommerce and data security, the SOC 2 attestation report is what your platforms need to achieve. It covers the internal controls for security, confidentiality, processing integrity, privacy and availability of customer data,
This report attests that the platforms have a safe and secure data cloud and have certain data center security controls in place.
Where zero-party data comes in
As established in Fairing’s 2024 Ecommerce Brand’s Guide to Zero-Party Data, big data in eCommerce is pivotal for businesses.
Many are reliant on this data to guide their marketing and sales. The implementation of these regulations has affected data collection practices in recent years. It takes place most notably with Google’s Sandbox initiative. The initiative aims to create technologies that both protect people's privacy online, and also give companies and developers tools to build thriving digital businesses.
The sandbox will aim to phase out support for third-party cookies when new solutions are in place. This will reduce cross-site and cross-app tracking while helping to keep online content and services free for all. This has a direct impact on third-party data and will make its collection harder in the near future.
Privacy laws are becoming stricter and governments are constantly looking to clamp down on businesses more and more. This means that the need for lawful and consensual data is becoming ever so pressing.
This is where the need and importance of zero-party data comes through. While the cookie-and-pixel world of digital advertising slowly evolves, businesses will need to start relying on other means of collecting information to guide their marketing—so why not get that information straight from customers?
Zero-party data is a valuable asset for businesses and can provide essential attribution data to help make more informed decisions. In the realm of data, the only close comparison is zero-party data versus first-party data, as first-party data had long been the most ideal form of data. It was seen as the most accurate and precise.
However, first-party data is passively collected through interactions with a company's owned channels. The main difference is that zero party data is willfully shared by individuals directly with businesses. What makes zero party data important is that it is consent-driven.
Privacy concerns continue to grow and regulatory scrutiny continues to increase. The transparent and explicit nature of zero-party data aligns with the various data privacy regulations such as the GDPR and the California Consumer Privacy Act (CCPA) and helps brands stay in compliance while continuing to collect valuable data from their customers.