/ An inside look at the business of digital content
Why zero-party data is publishers’ secret weapon in a post-cookie worldMarch 2, 2020 | By Michael D. Silberman, SVP Strategy—Piano @msilberman
The clock is ticking on third-party data.
The death of third-party cookies — courtesy of Google, Apple, GDPR and CCPA — also means the accelerated fade of third-party data. And from ad tech companies to marketers and media companies, the shift has left many wondering how they’ll proceed. Many fear the effect the changes could have on their business.
At Piano, though, we see opportunity where others see threat. And we think the shift away from third-party data is an opportunity to thrive. It puts new emphasis on first-party data. It also enables those companies to draw on something even more powerful: zero-party data.
Every day, users provide media companies with the type of explicit, accurate, data other businesses covet. Consumers willingly volunteer this data as they register or subscribe in order to unlock more content or build a deeper relationship with their site of choice. And it’s exactly this type of information that, if used right, can push those companies ahead in this new data landscape.
The problem with third-party data
To understand their audience and find new users, companies in and outside of media have long been relying on third-party data. This type of data, sold by data aggregators, is available in huge (if shrinking) volumes and can potentially shed light on many different consumer types. However, there are three primary problems with it:
- The rising consumer concern around online privacy. Consumers are becoming increasingly aware of tracking and privacy. And that’s driven government privacy and consent regulations like GDPR, as well as the changes in browser cookie policies. This has reduced the reliability of third-party data.
- It can be out of date and unreliable. This is why consumers are often targeted for a product they’ve already purchased or decided against, only to have ads “follow” them around the internet for weeks. If you’re building a strategy around data that’s two months (or even two weeks) old, it’s likely already outdated. And the trend towards limiting third-party cookies only means third-party data will become even less reliable in the future.
- Sourcing is often hazy. How third-party data is collected, aggregated and then sold is generally a black box. User consent isn’t always known or verifiable. As the industry moves to tighten rules around data transparency, the value and utility of third-party data will continue to decline.
Unlike third-party cookies, third-party data probably won’t necessarily vanish completely — though it will certainly diminish in value. Even so, there are better alternatives available, especially to media companies.
If third-party data is finished, what now?
Some important questions still remain unanswered in this post third-party cookie world. However, what’s not unclear is that the more reliable the data, the higher the value for publishers’ marketing partners and the more they’re willing to pay for targeted ads. And for that, third-party data falls short next to the other options:
Zero-party data is intentionally shared with a business by its customers. This could range from customer relationship management (CRM) data, such as the email address or gender filled out in a registration form, to preferences selected during website customization. As data explicitly shared as part of a value exchange or to improve the customer experience, it’s the most valuable data a company can collect. Critically, it belongs to the customer, not the business. It can’t be used without consent and must be carefully protected. However, it is highly accurate, reliable, and transparent in sourcing.
First-party data is often thought to encompass zero-party data. However, it also includes behavioral data collected by observing customers as they browse your website or app, or visit your store. This type of data is implicit, rather than explicit, but is still considered premium for many reasons. It’s collected by you so is more likely to be accurate. And any insights drawn from your own audience are likely to truly reflect their preferences and behaviors. This means that campaigns and strategies are more likely to succeed. Crucially, there are fewer concerns over data misuse and GDPR non-compliance as you control the conditions in which data is collected and stored.
Second-party data is when first-party data passes through a second set of hands. In other words, second-party data is someone else’s first-party data. It occurs in like-minded publisher alliances, when suppliers exchange data with their retailers for mutual benefit. It also happens when agencies strike exclusive deals with major publishers to empower programmatic buying. Gaining explicit consent to use and share second-party data isn’t always an easy feat, but can be handled reliably with the right technology setup.
Media companies are in a unique position to take advantage of these data sources . This is particularly true for first-party data and the gold standard of all user data: zero-party data.
Maximizing your zero-party data
In the media landscape, companies can use zero-party data to both benefit their advertising partners and personalize the experience they offer users themselves. All while finally aligning the interests of their subscription and advertising teams — something many media companies have been striving to do for years.
Zero-party data is already available through registration and subscription sign-ups. But the savviest companies will maximize their store using many of the same techniques subscription companies have already implemented to optimize their business. That starts with quality content that puts users at the center of the audience experience. It continues in the form of exclusive content, personalized recommendations and customized offers that engage the user and personalize the experience. Only when a true value exchange is in place will users be incentivized to provide their data to improve their experience even further.
A data management platform, or DMP, can then help companies use that data to understand and segment their users. Lookalikes will also allow them to extrapolate the data to cover their entire audience. In doing so, they’ll be able to target ads to relevant users and engage more effectively with their chosen demographic.
Take Piano customer Mediahuis, for example. One of the largest publishers in Europe, they built a substantial base of 4.4 million registered users. They then used the zero- and first-party data collected to create a significant, audience-based advertising business across Belgium and the Netherlands. Audience campaigns grew to 27% of total ad revenue, with clickthrough rates 26% higher than non-targeted campaigns.
That’s the power of zero- and first-party data. Combining your advertising and subscription businesses through a focus on known users leads to a stronger and profitable monetization model, drawing from multiple revenue streams.
And that, as far as we’re concerned, is hardly something to be afraid of.
About the author
Michael Silberman, SVP Strategy, leads Piano’s Strategic Services team. He helps clients develop reader revenue strategies and drive success and revenue on the Piano platform. He joined Piano in 2018 after 10 years building the digital media business at New York magazine, and earlier, as one of the top editors launching and growing MSNBC.com in the early days of the consumer Internet. Visit piano.io to find out more about Piano Zero, an end-to-end solution that empowers zero- and first-party data.