Ten years ago, Target made headlines for a first-party data fail. It’s a story from the “Privacy-Last” era of marketing that offers insight into the new “Privacy-First” era.
Consumer data fuels the marketing industry. Over the last two decades, companies have sought to obtain as much data as possible about as many consumers as possible. And at the same time, marketing technology vendors made it easy by providing systems designed to aggregate, interpret, and activate all of that data. Consumer privacy was an afterthought — it was a privacy-last era, made possible by privacy-last technology.
Consumer trust in brands plummeted during the privacy-last era. In 2014, Deloitte reported that 67% of people were happy to share their personal information with brands if it improved their experience. By 2018, an Acxiom report showed that number had dropped to 51%.
Consumer data was continuously tracked (usually unbeknownst to consumers), interpreted (sometimes incorrectly), and activated (whether the consumer liked it or not) to target consumers and personalize their experiences.
Not surprisingly, the result was sometimes misdirected, unwelcome, or downright creepy.
First-Party Data Fail: Target
It’s easy to understand why privacy matters so much to consumers when you put it in real-life terms. Take, for example, the well-known story of the father who learned his teenage daughter was pregnant through a Target marketing campaign. Target had developed an algorithm that leveraged in-store purchase data to predict when a consumer was expecting. This is a crucial life stage for consumers where they tend to make large purchases and form specific buying habits, so Target wanted to make sure they reached out to consumers exactly at the right time.
Their primary strategy was to send coupons to customers who exhibited the shopping behaviors of expecting parents. But that strategy meant they reached out to consumers in an unsolicited and fairly public way — coupons in the mail aren’t an entirely private form of communication.
Case in point: after gathering info about her in-store purchases, Target reached out to a young woman with coupons on baby- and pregnancy-related products. Her father saw the coupons in the mail, addressed to her, and was outraged that Target would encourage teenage pregnancy. That, of course, wasn’t the case: the truth was, his daughter was pregnant. The father apologized to the store employees, and the blunder irrevocably compromised the teenager’s privacy.
The Privacy-First Era and the Rise of Zero-Party Data
Times have changed. Privacy-conscious consumers and rapidly evolving privacy regulations (starting with GDPR in 2018) have permanently altered the marketing landscape, creating once-in-a-lifetime opportunities for businesses.
Among big tech platforms, Apple has taken a leadership role with respect to privacy. They’ve introduced Privacy Nutrition Labels which facilitate transparency, and they’ve given consumers tools to protect their personal information. In June, Apple announced Hide My Email, Mail Privacy Protection and Private Relay — three features in iOS15 and iCloud that obscure consumer identities and block behavioral, location and device signals that many brands had come to rely on. Google and Facebook are now playing catch up.
Like Apple, forward-looking brands see privacy as a strategic opportunity to build trust with consumers, and differentiate themselves against competitors. They’re embracing transparent and ethical data practices built around zero-party data, which (on its own or in combination with first-party data) makes it easy to deliver highly-personalized experiences that customers actually want — and avoid first-party data fails.
Zero-party data is personal context data that customers knowingly and intentionally share with a brand in order to get a more personalized experience — such as one’s personal values, attitudes, needs, preferences, interests, motivations, etc. Unlike first-party data (which is based on historical events and requires interpretation), zero-party data is explicit data that reflects how a customer wants to relate to a brand in the future, and why.
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