“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is by John Lee, executive vice president at Merkle.
First-party data-driven marketing is becoming increasingly pervasive.
Marketers use data to individually match and engage their own customers and prospects on addressable platforms like Facebook and Twitter. Spending on this first-party data approach is scaling quickly and paying dividends in ROI, particularly for advertisers in data-rich industries like financial services, insurance, retail and travel. Publishers are investing heavily in products and integrated tech stacks that enable automation and optimization of this spend. Generally, this is a good thing.
However, a core principle of data-driven marketing is an integrated customer experience across touchpoints. This requires a master record and identity “currency” that allows trading among multiple platforms. A single cookie and demand-side platform (DSP) enables you to manage audience and frequency for your entire anonymous real-time bid buy. But this doesn’t work for first-party data. The capabilities that major publishers are creating for first-party data are great within their networks, but they create “walled gardens” that make cross-platform audience management complex.
Three macro trends propel this story and influence the future of data-driven marketing.
Trend No. 1: First-Party Data As The Fuel
Advertisers demand more individually addressable inventory that uses first-party data as the primary fuel. Facebook opened the floodgates with Custom Audiences. Others are following suit, such as Twitter with Tailored Audiences. These initial offerings are improving with greater automation and third-party data enhancement. They also utilize additional publisher data, such as off-network browsing behavior. Even Google offers first-party data addressability in its remarketing lists for search ads product. And nothing beats your own CRM database to precisely target and engage your best customers. The “Big 5” publishers – Facebook, Google, Twitter, AOL and Yahoo – know this and are adjusting their product and technology strategies accordingly.
Trend No. 2: Accelerating Consolidation Of The Ad Tech Ecosystem
The fragmentation in the ad tech marketplace is not sustaining, as evidenced by the growing number of mergers and acquisitions. What’s interesting is where this consolidation is taking place. Predictably, the big “marketing cloud” players, such as Oracle, Adobe and IBM, are active, even acquiring DSP and strategic preferred marketing developer capabilities, illustrated by Salesforce.com’s acquisition of Buddy Media. And they’re setting their sights on middle-tier components of the tech stack, including attribution and data management platforms, which we saw with Oracle’s recent BlueKai purchase.
But even more interesting is the movement of the publishers to buy and develop their own integrated buy-side stacks to allow advertisers and their agencies to leverage first-party data and addressability at scale. Examples include the Facebook-Atlas marriage, Google’s pick up of Adometry, LinkedIn’s purchase of Bizo and Twitter’s addition of MoPub. By integrating these tools, publishers are enticing advertisers to consolidate more spend on the platforms.
Trend No. 3: The Rise Of The Walled Data Garden
Remember the tenet that good marketing requires a single view of the customer? With the publishers’ integrated solutions that only allow first-party data-driven experiences to be executed within their platforms, your first-party data gets onboarded and linked to their proprietary ID, such as cookie, person or device, and all tracking and optimization are built off that. The problem is the publisher only returns aggregate-level data instead of an ID-level link that chronicles the individual’s experience. As a result, the advertiser and agency must utilize multiple ad servers and bidders to execute buys, creating an impression-tracking and logistical mess. This breaks the core tenet of first-party data marketing, negatively impacting the customer’s experience and the marketer’s ROI.
The First-Party Data Future
Relax: The first-party data trend will take another 24 months to develop fully. Meanwhile, you should take a few proactive steps.
Enthusiastically test and scale on these platforms. The walled garden effect may be a problem in the longer term, but in the short run, there is a ton of value in learning. Better to have three walled gardens outperforming the rest of your mix, even if you can’t optimize across them yet.
Develop your own first-party identity management apparatus that allows you to use your first-party data ID to associate a single view across paid, earned and owned platforms. Your first-party domains and data are yours, so when a consumer you onboarded clicks through from a publisher network, that becomes your data. You know you onboarded him and you know what ad he viewed. You should also know what other gardens you onboarded him into and every first-party domain and direct-response interaction you had with him. All of this allows you to build a consolidated consumer view. It’s not perfect, but it’s better than nothing. It shows the conversion path and experience for those who converted, and that is incredibly valuable, even without all of the impression data.
Voice your concern to these publishers. Let them know you want the data to create efficient, compelling consumer experiences. Walled gardens serve neither the consumer nor the advertiser, doing nothing to protect consumer privacy and causing fragmented brand experiences. The only real winners are the publishers. In the end, the power should rest with the advertiser and the consumer.
Ultimately, these walled gardens are not sustainable and they will have to come down. In the meantime, get your first-party data strategy in place and start testing and learning right away.
Follow John Lee (@johnleemerkle), Merkle (@merkleCRM) and AdExchanger (@adexchanger) on Twitter.
