Emad is the CEO and co-founder. retina AI.
Customer acquisition costs have skyrocketed due to the upcoming death of third-party cookies and new iOS and Android updates that remove cross-app tracking. According to report At the IAB, “Digital Advertising Will Grow 35% to $189 Billion in 2021,” the highest jump since 2006 and an increase of $50 Billion from 2020. Businesses now need to take a very strategic approach to zero-party data to survive, and when combined with first-party data, insights can be invaluable.
What is zero-party data?
Have you ever thought twice about entering your phone number into the grocery store checkout? It’s a bit of a habit because most people know it saves some money and don’t think much more than that. This routine exchange is a good example of zero-party data. according to Forrester is “data that customers intentionally and actively share with the company”.
In this example, you are willing to give up personal information, such as your phone number, so that the store can track your buying habits. The reason is that it saves money. Businesses need to create compelling reasons for consumers to provide zero-party data and then come up with a game plan to make that data actionable.
Create compelling reasons for customers to provide data
Brands need to find ways to effectively collect customer information without intrusion. Previously, advertisers could rely on third-party data, cross-app tracking, or a variety of other methods to get the information they need to acquire customers. Now the name of the game is to find a way for consumers to be willing to provide information. How do businesses do this successfully? One constant fact is that consumers trade conveniences and discounts for information. Especially when it comes to delivering value consistently.
Pursuing a loyalty program has its advantages because it creates a clear value for customers to share data with. They benefit directly from the feeling of a discount or monopoly. Another challenge for businesses is determining what kind of data to collect to build strong customer profiles. The information you need will look very different depending on the type of business. A sports apparel company, for example, collects very different data than a software company. However, to gain insight from customers, each organization must evaluate the data that is most valuable to gain insight and ensure that it has an actionable plan.
More effective advertising with zero-party data
The simple truth is that retaining loyal customers is always more cost-effective than finding new ones. And the privacy changes taking place today make this even more true. Zero-party data can help customer retention and loyalty programs while reducing costs and optimizing spending. Since zero-party data comes directly from the source, it is usually very accurate. This is explicit consumer-supplied data and allows brands to more fully curate their customer experience.
The new digital environment means new business strategies.
remember blockbuster video? In the early 2000s, blockbuster was a $6 billion business. It declared bankruptcy by 2010. $40 late fee trigger A startup that defeated a giant. A blockbuster could have made it to the top, but the management was too confident, ignoring the signal ahead and changing their strategy too late. This has made one of the largest companies in the world a dinosaur in less than a decade.
Although Netflix was a startup triggered by late fees, the changing technology landscape was fueled by the need for a new business strategy. From a technical standpoint, DVD players became popular and VHS became obsolete. And consumers are driving change out of frustration. Consumers find convenience in the fact that they can schedule a DVD to be sent and know in what week it will arrive, rather than rushing to a video store to be disappointed that the latest movie is out. Over the years, Netflix has Billionth DVDAnd Blockbuster Video went out of business (exception that one location Oregon).
Likewise, we are currently in a state of tremendous change. There is a storm of scenarios that could go bankrupt if new strategies are not considered. Zero-party data and the insights it provides can be game-changing. Analyze your risks and strategies before it’s too late. Don’t be a blockbuster, be Netflix.