Why zero-party marketing is a great value exchange for Gen Z

Zero-party marketing (ZPM) exists to help brands put advertising spend directly into shoppers’ pockets.

The result: thriving shoppers with newfound purchasing power and thriving brands thanks to “modern-day word of mouth” (especially in a recession).

Zero-party marketing is brand marketing driven by customers who are empowered to create their narrative and are incentivized to spread it. This marketing type only has value if it comes from an authenticated customer. It’s wholly incentive-based. This means it requires an authentic exchange of value.

Zero-party marketing in practice, for example, could look like a brand rewarding a customer with cash back for sharing her purchase on TikTok.

Here’s a look at zero-party marketing, how it works, and why it can (and should) replace traditional advertising and influencer marketing.

How zero-party data is redefining marketing

In a nutshell, for marketers, zero-party data is the new oil. Zero-party marketing is the new engine.

Zero-party data, as Forrester first defined it in 2020, is data that a customer “intentionally and proactively shares with a brand in exchange for some value.”

In contrast, third-party data is information gathered from outside sources, largely without the knowledge or express consent of the customer. (Read more...) regulations like the General Data Protection Regulation (GDPR) and the imminent death of third-party cookies are evaporating the value of non-consented consumer data. And more importantly, Gen Z is the least trusting generation to date.

Cue zero-party data and the mad dash for consumer brands to collect it, which has even spawned a cottage industry of tools such as Octane AI to facilitate the collection and personalization of their marketing campaigns for their customers.

The problem: there’s not much you can do with zero-party data if customers don’t listen to you in the first place. Edelman’s 2020 Brand Trust report found that:

• 99% of Gen Z skip ads
• 42% say they tend not to trust the average American company
• 71% globally agree that if they perceive a brand to be putting profit over people, they’ll lose trust in that brand forever
• Americans’ trust in traditional advertising weighs in at 16%

But that’s not to say young adults aren’t open to learning about new products; they’re just looking for trustworthy sources. “61% [of Americans] say they trust a ‘person like me.’ Human beings – with personalities, emotions and, well, souls – are innately more trustworthy than faceless ads.” (Source)

Zero-party marketing has entered the chat. Say, for example, a brand has a $100k marketing budget to acquire Gen Z customers. The brand has three options.

Option 1: Run digital ads on TikTok

Option 2: Influencer marketing campaign on TikTok

Option 3: Zero-Party Marketing on TikTok (via Swaypay)

How to make the switch

First and foremost, if this concept is still feeling a little alien, you may wish to leverage third-party plug-and-play solutions instead of attempting to do it in-house. Swaypay, Bounty, Flip (for beauty brands), and Kale are all potential partners making impressive movements in the space.

However, for marketing teams who want to implement zero-party marketing strategies natively, I recommend adhering to these five tips to create and implement a successful zero-party marketing strategy:

1. Double down on Gen Z – Who rules TikTok? Gen Z. Who’s in charge of the rapid pace at which trends get picked up and discarded by the world? Gen Z. Think about whether this demographic is a good fit for your product, not just right now but also in the future, as they move into your target audience.
2. Create a channel-specific strategy and focus on the channel where your customers are. Hint: The clock is TikToking!
3. Prioritize video content and keep it short (Gen Z loses active attention for ads after just 1.3 seconds—less time than any other age group. Source)
4. Design a strong incentive structure and be transparent, especially on how much customers stand to earn. Gen Z expects to capture the value they create.

How to tie zero-party marketing to wider business goals

Zero-party data (ZPM) is an emerging concept in marketing. Your CEO or Board of Directors has likely not heard of it, let alone recognized its importance. To bring them on board, it’s best to think of ZPM as modern-day word-of-mouth marketing. It always has been and always will be the most valuable form of marketing. It speaks for itself as it pertains to broader business goals, but here are some recent data points as a refresher:

• 74% of consumers identify word-of-mouth as a key influencer in their purchasing decisions.
• When specific case studies were analyzed, researchers found a 10% increase in word-of-mouth (off and online) translated into a sales lift between 0.2 – 1.5%.
• A word-of-mouth marketing impression results in 5x more sales than a paid media impression.
• 64% of marketing executives indicated that they believe word-of-mouth is the most effective form of marketing.
• 82% of marketers use word-of-mouth marketing to increase their brand awareness, but 43% expect it to improve their direct sales.
• Word-of-mouth drives $6 trillion in annual global spending and is responsible for 13% of all sales.

2023 will accelerate the need for zero-party marketing

My biggest prediction for 2023 is the radical decentralization of brand control. Business-to-consumer brand leaders need to cozy up to the idea of putting their customers in the CMO seat and leaning into next-gen marketing strategies, such as zero-party marketing.

There is a massive cultural divide between Gen Z and all other generations because Gen Z was born online. Failure to understand this will leave brands far behind during a pivotal moment in history.

Gen Z is impacting not only culture but every industry at speed and scale through their digital behavior – as such, brands should no longer view them just as consumers. They should look at Gen Z as co-creators.

Gen Z doesn’t visit your e-commerce site; it’s the reason 99% of them are proven to skip ads. It’s not where their sense of community and individuality is being formed. Actively seek them out and include them, not just for selling but for collaborating and co-creating.

Their digital connectivity enables them to build authentic communities built on real human connection, which allows for greater immediacy and intimacy. Tapping into these communities through co-creation means brands can see, validate, and amplify new market opportunities to solidify their place with Gen Z.

In 2023, continuously adding value for the Gen Z audience will be key. They must be rewarded for the immense value they create. This will build a competitive advantage for building more relevant products, content, experiences, and closer communities that create lifetime value.

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Kaeya Majmundar is the co-founder and CEO of Swaypay, an app that gets social savvy shoppers up to 100% cash back (and in special cases even more) on their everyday purchases.

Kaeya got her entrepreneurial start in college by accident after landing a deal on Shark Tank for her first company. She went on to build viral eCommerce brands with celebrities and influencers like NBA player Derrick Rose. This sparked the idea for Swaypay.
Kaeya graduated from Emory University with a BA in Economics. She’s spent every summer since 2015 mentoring young aspiring entrepreneurs through LeanGap.
In her free time, you can catch Kaeya running for miles on some scenic path vibing to deep house music blissfully zoned out from the world.