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Is audience data more valuable than advertising inventory?

Is audience data more valuable than advertising inventory? Eric Porres

A striking declaration has been making headway: Aggregated audience data is more valuable than advertising inventory. The growth of both ad exchanges and data brokers has transformed audience data into an important commodity. In fact, there is evidence suggesting that audience data collected over the course of a campaign on a major site or network could be five to 10 times more valuable than the actual messaging or creative on which it is based.


At first glance, this is counterintuitive. However, there's good reason to believe that it's true. To date, online marketing has generally focused on the cost of clicks or impressions. So how could the value of aggregated audience data surpass that of inventory?


An advertiser or agency approaches a major ad network or publisher, looking to serve a large number of impressions to consumers interested in home improvement. The agency offers a premium cost per thousand (CPM), and the publisher is only too happy to serve the requested impressions. Still, despite a highly successful campaign, the publisher finds that subsequent CPM offers from this agency are drastically lower. What happened?


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The difference is the data. Over the course of the first campaign, the agency-side data service provider "tagged" those consumers targeted as interested in, say, "home-improvement" -- enabling a more accurate serving of ads to these same consumers in other campaigns. Notably, this happens not only in campaigns conducted with the original publishing partner or network, but also across a variety of possible advertising inventories. Put another way, the amount of data available about online consumers is growing to the point where information about a consumer -- the collected audience data -- is becoming more substantial than the ad itself.


As more agencies and networks have begun to realize the inherent value of collected audience data, some publishers have actually seen a boost in remnant inventory sales and CPM. However, the true worth of audience data is something that publishers, as well as everyone else in the chain, will want to carefully consider.


For the moment, transparency is a major concern. It's not always clear from a publisher perspective which audience data are being collected, or how those data relate to either immediate CPM increases or potential long-term effects. One publisher I talked to likened certain current schemas of data collection (that lack adequate representation) to "strip-mining." There's good reason to demand to know -- at least in a general sense -- what data are being collected, by whom, and about what.


Secondly, several companies are interested in buying audience data, whether in connection with a campaign run on a publisher site or completely independently. But before rushing out to take advantage of this new revenue stream, it's worth thinking about the long-term effects on your business strategy. If a business sells off its audience data, is it losing the opportunity to learn about its own audience segmentation and optimization? Rather than throwing long-term data strategies out the window, time and effort should be invested in any new data partnership to ensure that value is being added over the long run.


It seems wise to sell audience data separately from media inventory. At the same time, one ought to give publishers who contribute data full access to it, so the publishers can sell it themselves if they get a better deal. This provides an opportunity for publishing partners to develop new and additional revenue streams, even as it enables them to retain a grasp on the data that, by helping them understand their own audiences, will boost their long-term value.


Rather than look to push audience data toward direct response or "click-to-conversion," it's now possible to drive premium CPMs by developing a marketplace for intent-related brand metrics like brand awareness, ad recall, and favorability. This way, publishers will not only increase short-term revenue streams, but also reap increasing rewards from their own audience segments.


Eric Porres is the CMO of Lotame Solutions Inc.


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Eric Porres provides oversight for marketing operations and heads up Rocket Fuel's research center of excellence for digital consumer insight. Prior to joining Rocket Fuel, Porres co-founded Underscore Marketing, a full-service digital marketing...

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