"The Sell-Sider" is a column written by the sell-side of the digital media community.
Tom Chavez is Founder and CEO of Krux Digital, an advertising technology company.
According to recent analysis (PDF) presented by Tolman Geffs of JEGI, in 2011, roughly 30% of the ~$10 billion in display advertising spend will be via audience-based buying, representing an astonishing 38% CAGR for this segment of the market. This trend, coupled with the advent of real-time media sales channels, introduces huge opportunity and equally huge risk for publishers.
Responding to this trend is an imperative for publishers. In preparing for digital media’s data-driven future, publishers must protect audience assets, adopt new techniques to address consumer privacy concerns, and lay the groundwork for making responsible use of consumers’ digital signatures. Dirty, ill-gotten data is our industry’s blood diamonds, and no one wants to be caught buying, selling, or moving it. Certainly, protecting data and consumer privacy come first, which is why those issues have been at the center of recent press coverage and industry dialogue. But perhaps it’s sensible for us to at least begin to explore the challenges of audience monetization at scale.
The good news is that growing demand for consumer targeting offers publishers new ways both to enhance the value of existing media assets and to create entirely new revenue streams from data. The bad news is that buyers currently have the technological advantage, and middlemen are offering an increasing number of ways to identify audience segments and secure targeted media placements that bypass publishers entirely.
With this post I hope to catalyze further discussion about how publishers can make profitable use of data on their own terms. To that end I’d like to introduce the Audience Data Value Chain, a framework for identifying and organizing all the elements of data management and monetization.
Five Core Functions
As publishers look to make use of consumer digital signatures in a secure, responsible, and profitable way, there are five critical areas of need. Each of these represents a core business function in data management and monetization. In my view, it’s difficult and unwise to decouple any one from the others.
- Monitoring and protecting data assets: Data protection is key not just in terms of meeting the requirements of an evolving privacy regime, but because data itself is one of publisher’s most valuable assets. You can’t monetize something you don’t control. You don’t control something that’s being pilfered or that others believe they own.
- Making data collection practices more efficient and more secure: The more pixels and tags that get crammed onto a publisher’s page, the more opportunities there are for third parties to skim data, and the longer it takes for the page to load – an increasingly worrisome issue as search engines start to rank pages according to load time. Orphan pixels from inactive, abandoned campaigns, meanwhile, litter publisher pages. The provisioning and activation of a new pixel can take weeks to complete in some companies. A process as leaky and messy as tag management circa 2010 cries out for control and automation.
- Dynamically and intelligently productizing data assets: Millions of users and billions of digital interactions generate billions of fine-grained particles of opportunity for publishers. In this sense publisher data is like extremely fine gold dust billowing about the crevices of an underground mine. Capturing all that dust, extracting it from the mine, turning it into purchasable bars, shipping them to buyers – all of these aspects call for new technology, new process, new roles.
- Making audience enrichment and extension scalable: Lots of players have interesting data that, in theory, can be used to create new insight, new value, new reach for publishers. To date the publisher has had to choose between significant first-party ‘roll your own’ investment or third party co-opetition risk with intermediaries and buy-side players. Perhaps there’s a way for publishers to gain access to third-party data and increased user reach under safer, more sensible terms.
- Driving choice for sell-side data monetization: Remember all of the excitement around net markets in 1999? There was going to be a central marketplace for DRAM's, another one for auto parts, even one for underwear. What happened? All the principals resolved that they didn’t like the idea of giving a single intermediary so much pricing power. They also realized that it was perfectly feasible for them to digitize, streamline, and accelerate their buying and selling while still participating in broker and exchange models where appropriate. If a central, efficient marketplace with enough supply-side liquidity emerges, then publishers can simply dump their data there and voilà – the sell-side data monetization problem is solved. Another model worth considering is for publishers to create peer-to-peer connections with any external entity looking for access to data. Think of it as a real-time handshake from the supply side delivering controlled connectivity to market-ready audience data at scale.
Publishers looking to “do data right” need to take an end-to-end perspective. A patchwork or piecemeal approach will yield suboptimal results, as any publisher who has managed their display business with disparate systems for order workflow, pricing, inventory management, and ad serving can easily attest. With an end-to-end mindset, the determination to control their own destiny, and attention to the five critical areas I’ve overviewed here, tip-of-the-spear publishers will define and execute winning data strategies.
As William Gibson put it, “The future’s already here, it just isn’t evenly distributed yet.”
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