Marketers are confronted with the urgent need for more relevance in digital advertising. It’s not just a growing requirement based on what consumers want. It’s also shaped by the alarming rise in the use of adblockers, especially in mobile browsers, a phenomenon that has sparked a new wave of discussions about what advertising consumers will accept and appreciate. In today’s “Age of Context” it’s becoming quite clear that consumers expect — even demand — targeted ads that not only consider their general interest, but their current situation as well.
This is also the key takeaway contained in Google’s recent Micro-Moments white paper. It reveals that 69% of consumers agree “quality, timing, or relevance of a company’s message influences their perception of a brand.” This view is amplified on mobile, where usage is shaped by a frequent number of quick sessions throughout the day — all linked to a specific context, intent and immediacy. Clearly, the foundation for “moment marketing” is rich and reliable data — data that goes beyond traditional socio-demographics and channel targeting.
While there is a lot of data available to power more contextually relevant advertising for audiences, each has its share of shortcomings. First-party data, highly valuable because it is collected by an advertiser or a publisher through their direct relationship with a consumer, is limited in scope. Third-party data, which is essentially data aggregated or collected by a company that doesn’t have a direct relationship with a consumer, offers reach — but data quality and costs can differ widely.
This is why second-party data is shaping up to be both the biggest opportunity — and challenge — for the industry.
At it’s core, second-party data is first-party data from other companies, such as publishers, telcos or app developers, sold to advertisers with an aim to add depth and additional meaning to audience targeting. The data, highly valuable because these data owners are drawing from their direct relationship to their customers, provides insights on what audiences do and enjoy in the digital realm — the products they search for, the music they listen to, the content they access — and how they act and interact in the physical world.
The aim must be to harness second-party data in order to improve targeting and advertising relevancy, thus removing the requirement for adblocking technology altogether.
Ironically, despite the big business opportunity for data owners, there are not many takers. A recent Forrester Consulting study commissioned by Adroit Digital finds that only 9% of digital marketers and customer insights professionals in the U.S. sell their data (and advertising is just a small percentage of this). Respondents cited “Privacy concerns” and “Security controls” as the top reasons why they did not leverage the opportunity. Read between the lines, and these results tell us data owners are worried about losing control over their data after it gets out of their hands.
They are cautious for a good reason. It’s an open secret in the industry that some companies, black sheep along the advertising food chain with access to data, are abusing this privilege — enhancing their models and products with data and without regard to data ownership. Even worse, in some parts of our industry it seems that “data leakage“ and the blatant disrespect of data ownership have become the New Normal of doing business in the age of data-driven advertising.
But there is no „gray zone“ when it comes to working with data. There is a clear definition of ownership and contracts which determine who is allowed to use which data, and for what purpose.
To unlock the full potential of targeting and — ultimately — make ads so relevant that users do not feel inclined to use adblockers, the ecosystem has to work together to make second-party data available to advertisers and their agencies. It must also address the rising concerns around data ownership that threaten to have consequences for the continued growth and health of our industry. From my perspective, three things have to happen.
First, the market must recognize that misuse of data is not a trivial offense. Everyone in the industry has to be in agreement on this and demonstrate this through their actions and choices, beginning with the resolve to purposely seek partners that uphold the rights and interests of data owners and providers. After all, even though you might argue companies are not directly harmed when data is misused or compromised, I would counter that an insecure ecosystem — one that potentially discourages brand advertisers and their budgets — will only harm us all in the end.
Second, the market needs a new breed of innovative technology solutions to ensure that second-party data is exclusively used for the targeting of a specific campaign, not handed around without recompense. A good blueprint to follow is the mechanics behind iTunes. It has succeeded in offering a secure streaming platform to uphold the rights of the content owner and enhance the experience of the consumer. The platform allows users to license a movie, watch it in the defined environment and timeframe, and the movie deletes itself after 24 hours. The existence of a pre-determined and defined agreement, enforced by Apple playing the role of a trusted and neutral party, clearly benefits all parties.
Finally, data owners need full control and transparency regarding who has access to their data. In the media world this challenge has already been solved for premium inventory within programmatic advertising. It’s here that ad exchanges make use of private marketplaces to select who has access to their inventory, negotiate private deals and unlock new revenues. The concept of a private marketplace should be applied to data, including mobile data, and adapted to meet the needs of data owners. Such an approach would succeed in building trust, providing these companies the needed instruments to make their assets available in a transparent way.
From the advance of adblocking technology and use, to the increase in concerns about data leakage, the ad tech industry is marked by hot topics and heated debate. These discussions, focused on understanding the issues and seeking a silver bullet solution to the problems, underline the pivotal role of second-party data in efforts to boost advertising relevancy and build a prospering and sustainable economy. As more brands explore the new opportunities around mobile advertising, programmatic platforms and data, we, as an industry, must take charge of keeping our environment clean.
Editor’s note: Tom Laband is co-founder and CEO at adsquare, the neutral mobile data exchange with offices in Berlin, London, Paris and New York. In addition to enabling advertisers to take advantage of a marketplace for private deals with first-party data owners including app developers, publishers and other companies, adsquare is also a founding member of the MMA Germany. This column is based on the author’s insights originally published by AdExchanger under the title: Second-Party Data Can Solve Advertising Relevancy, But Misuse May Stop It In Its Tracks.