As the audience-buying space grows, data has become a hot commodity. You can buy the ability to reach online consumers based on their behavior, purchase intent, and what keywords they searched for. Credit card companies and internet service providers are even getting into the game to provide unique segmentation that would be of huge value to marketers. Audience data is clearly the new currency, and advertisers and trading desks have a huge appetite for this targeting information.
How audience data reaches the market varies from company to company. Many data providers sell access to their anonymous user cookie pools that marketers can then apply to help target just the users they want to reach with virtually no wasted impressions. Other data providers couple the data with media. To work with them, you have to buy display impressions at a CPM and let their teams run the campaigns in their closed systems.
For some media buyers, this is a great solution. They get the great data and the team to run the media all from one spot. For others, like me, it feels like a missed opportunity to bring in another fantastic data stream to add to my own data management platform and use it in a variety of ways outside of just targeting ads to users.
To learn more about why companies choose to couple, decouple, or even provide both product models, I spoke with executives from AT&T Ad Works, Magnetic, 33Across, and Bizo. Each of these organizations has a unique data set that marketers would truly love to get their hands on. After speaking with these smart folks, I have learned there are many issues surrounding coupling and decoupling and why a company would decide to enter the market either way.
One such company that has taken the coupling stance is brand-graph and social-graph pioneer 33Across. The folks at 33Across feel that their combined product is the best way for the company to help marketers. Sky Holden, national sales director at 33Across, details the company's stance in the blurb below:
"We couple because we believe there is a truly synergistic relationship between the data and media sides of the equation. We began our business four years ago by developing what has proven to be a pretty sophisticated algorithm for understanding and predicting online social connectivity and interests. At the end of the day, however, the success of the algorithm is very dependent both on the scale and the quality of the data that's being fed into it. For that reason, we've built a substantial data business as well. We feel that having a company that incorporates data with a media offering gives us a huge competitive advantage, particularly with so few players in the social data space still."
However, the most frequent pro-coupling argument leans toward the fact that some of these companies feel that releasing their data naked to marketers is just a bad idea. Yes, some marketers would be able to apply the data properly and really get awesome results from it. But others, especially with the RTB exchange space still being so young, would not get good results because they just didn't have all of the other pieces in place to leverage this data accordingly.
James Green, CEO at search retargeting company Magnetic, agrees that coupling data with media is crucial not just for clients' digital campaigns, but for the company's continued success in the marketplace. According to Green:
"The execution piece of combining data and media is just as important as the data itself. Marketers should utilize technology partners that understand how data powers media and that have full control over how the data is being used. If others use our search data and their campaigns fail, we get a bad name in the marketplace as does the category of search retargeting."
Coupling also keeps the data in-house to ensure it stays exclusive and premium. The problem with having others repurpose your data in more ways than you intended -- called data leakage -- is something companies should be concerned about. "AT&T AdWorks uses a reflection process on AT&T's aggregate first-party data for two main reasons -- privacy and scale," said Pablo Cohan, director of digital product marketing for AT&T AdWorks. "By extrapolating our sample to everyone in the U.S., this prevents data leakage and ensures respect for consumer privacy throughout the process. We then take already 'anonymized' data to create clusters of users and combine it with other anonymous first- and third-party data to create aggregate segments."
The topic of exclusivity is not as crucial right now as the current data market is still maturing. However, as it grows, more marketers will be buying the same data that most pundits believe will devalue the inventory from pure data providers. "As soon as data is available to everyone, it becomes commoditized and people are not prepared to pay for it," Green said. "Think of it this way: If all campaigns have access to the same data, no one is going to have an advantage over anyone else."
The search engine marketing industry faced a similar challenge. In the beginning, because relatively few advertisers bid on paid keywords or optimized their sites for natural listings, the channel was incredibly effective. A few years later, as more marketers entered the mix, keyword costs skyrocketed, and there was more competition for the top organic spots on search engine results pages. SEM and SEO are still highly utilized channels, but the ROI from the early days was exponentially higher before the market saturated.
None of the executives I spoke to specifically identified profit as an important driver to coupling, but it would seem reasonable that there would be more money in the coupled business model, right? You can charge "X" amount for the data, but you can charge "X" and "Y" for the data combined with the media. After talking to other industry experts in this space, I realize that this is a common misconception. Sure, coupling allows you to make more margins from the media, but the reality is that building a media department is not just expensive -- it's tough! The profit a company makes off of data could completely be gobbled up by the cost to run the operations and infrastructure for media buying.
Finally, a company that has completely bypassed this entire issue is the well-known data provider of business-to-business audience segmentation, Bizo. Bizo offers its service in many forms to any marketer who would benefit from the data. Bill Furlong, Bizo's VP of business development, feels that by providing both the data segments and the media choice helps get Bizo's product in more hands. "Bizo has always been channel agnostic and provides its data via a variety of distribution channels," Furlong said.
Furlong went on to explain:
"Whether it is via an ad network like Collective or direct from a B2B site partner, the driving objective is to allow the marketer and their agency to choose what fits their initiative. When we are selling direct to agencies, it is always the most effective medium to buy both the data and site, and most folks do just that. However, we have found that feeding our data into the other major channels provides a ton of value for the agencies in their goal of 'one-stop shopping' and, of course, provides our publisher partners that much more incremental revenue. Since Bizo is the premium -- if not exclusive -- B2B data provider in the ecosystem, opening and serving every valuable channel has given our brand huge lift, and in turn, generates significant revenue."
Whether it's best for these companies to decide to couple or decouple with media is still debatable.
My opinion is that as marketer skillsets grow with audience buying on self-service platforms such as trading desks and DSPs, they'll want to have the flexibility to utilize the data for their own needs and reject coupling. On the other hand, there's a lot of value for overworked marketers to lean on data companies to apply their deep expertise and included man-hours to the campaign execution. The one thing that seems certain is that this channel is going to grow. It's going to grow big, and it's going to grow fast. As with any maturing industry, there are going to be all types of business models that will have to prove themselves out in marketplace Darwinism.
Josh Dreller is VP of media technology and analytics at Fuor Digital.
On Twitter? Follow Josh Dreller at @mediatechguy.
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"Data searching" image via Shutterstock.