Brands Are Wasting Money On Third-Party Data

In a recent article in The Atlantic, Caitlyn Renee Miller wrote about buying a report of everything known about her online, including any personal information. When the report finally arrived in her inbox, she wondered if reading it would allow her to learn something about herself that she’d never before realized — or, even better, to “discover a pattern in [her] life that could point to the future – a palm reading constructed from metadata.”

Given how much time many of us spend on the internet, it seems natural to feel that the internet knows more about us than we know about it. Just think about the thousands of Google searches you’ve done, the number of times you’ve entered in your email on an online form and the number of websites that ask to use cookies. But when Miller opened up the zip file containing all her information, she was slightly disappointed to find that “nearly 50 percent of the data” was inaccurate, and the information that was accurate was presented in wide ranges that drastically lowered the margins for error. This is a reality that most marketers and advertisers are already aware of.

The problem lies in the fact that most of the data that’s being utilized for advertising targeting today comes from third-party data sources. As a result, advertisers have no idea where the data is coming from, and if they don’t know where the data is coming from, they also can’t know how accurate it is. This leads to massive cost inefficiencies: Brands need data to conduct advertising campaigns, but if the data is poor quality, then brands are wasting money on something that won’t do them much good.

In order to combat this, brands need to bypass third-party data sellers and start buying data directly from second-party data sources. This will enable them to collect more accurate information, which will, in turn, allow them to provide advertisements, products and messaging that better align with their target customer. By going directly to publishers and asking them for the data they have on their consumers, brands can eliminate much of the inefficiency that results from having to rely on opaque and often irrelevant data from third parties.

Who you, as a brand, choose to partner with for second-party data is ultimately dependent on your industry and the information you hope to receive. If, for example, you’re a CPG company looking to get more information on the people who buy your products in stores, it would be ideal to team up with the retailers who sell your products, as they can give you valuable insight into your existing consumer base. On the other hand, if you want to draw customers into a store to buy your product, it would be better to have information on their movements and shopping habits, which might require partnering up with a beacon company or mobile app developer.

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Partnering with a second-party data supplier is especially important if you’re trying to target a relatively specific audience. As Miller’s example shows, the online data about a user can vary from being wildly inaccurate to fairly broad. While it might be important to know if someone identifies as a male or female, that information is far too general to serve as the basis for a targeted advertising campaign. In the Hispanic audience, for example, people are being segmented on the basis of their last names or other pieces of data that are potentially misleading — which is not good for either brands or consumers. Considering that the Hispanic ad market is worth $9.6 billion, this seems like a particularly inefficient way of doing business.

As a final point, using second-party data suppliers will bring transparency to the data market. Third-party data partners will have to become more open about their data sources if they wish to maintain market share. They will also have to be more accountable to brands, as well as more responsive to their needs. Instead of brands being given a broad swath of data that may or may not address their needs, the growth of the second-party data market will allow brands to dictate the types of information being collected.

Data powers the world. It powers the decisions that people in every field and industry make, and it affects the way we think about the world. Given that, it is extraordinary that people continue to rely on inaccurate and misleading information to make important and complex decisions. From purely a business perspective, it makes very little sense to continue using information from unclear sources of unknown efficacy. The data market needs to become more transparent, not just for brands’ sakes — but also for its own.

[“Source-timesofindia”]