“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 written by Noah Jessop, head of data at Liquid.
A “wildcatter” is oil slang for someone who drills speculative oil wells, oftentimes in areas not known to be oil fields.
This term also applies particularly well to data, where publishers have the unprecedented chance to go off the beaten path by discovering new ways to unlock tremendous value from their unexplored data.
These trailblazing companies and publishers stand to rise above those who stick to the basics, including the well-established and significantly more competitive and commoditized data markets.
The Data Landscape
Today, data is turned into value for digital advertisers in several ways. First, there is the mapping of users. If two parties collect information, such as information about their customers, they can provide a link between Company A’s User 123 and Company B’s XYZ, which opens up a whole slew of new insights about that customer on both sides of the equation.
Mapping between email addresses and cookies or mobile advertising identifiers is an early sign of success in this area.
There is, of course, ad targeting. If you know something about User 123, chances are someone else may like to know it, too.
Ad targeting capabilities can range from the simple to the complex. Marketers, for example, probably wouldn’t target consumers they knew were male with a Tampax ad. But if a customer has Netflix and Hulu apps installed, a cell carrier may want to offer him a better-priced plan.
Finally, there is panel data. A complete view of a small group of users can help show a larger trend for an overall demographic audience.
There are many different implications here. For example, Facebook acquired a VPN firm that had complete access to 5 million users’ complete mobile phone usage behavior patterns. This acquisition opened up a world of possibilities for Facebook, which can now identify and track quickly growing apps, keep an eye on Snapchat’s penetration and possibly even verify user engagement as part of the WhatsApp acquisition diligence.
Start Drilling
When starting these wildcatting efforts, I recommend that publishers first assess the value of their data assets in three simple steps. They should first compile a list of what they can (responsibly) collect from their user bases.
They should follow with a determination of what is already being collected and is easy to access. Finally, they must figure out what they can calculate. What data do they already have saved that could lead to new conclusions?
Now What?
There are a number of marketplace offerings that already aggregate and list first-party data, primarily from the data management platforms (DMPs) led by Krux, Lotame and Oracle’s BlueKai.
These all tend to focus explicitly on ad targeting as a method of value creation. Using these platforms, it’s a relatively straightforward process to release first-party segments for sale in the wider marketplace, such as a “video lovers” segment made up of consumers with Netflix and Hulu apps installed.
Unlike oil, however, data has a unique challenge: Its marginal cost to sell is zero. So if two parties provide the same data, each can undercharge the other to gain market share until there’s no profit left. During brief moments in history, oil had a similar dynamic – too much supply and too few barrels and pipelines to move it all – leaving surplus oil to go to waste, released at the well.
As more data hits the markets, the cheapest data will win, unless the data is particularly unique. Data’s hyperinflation is still new, and its effects have yet to play out in the market.
Ultimately, beauty is in the eye of the beholder. Publishers must identify what is novel, compelling and rare about their data – and find the precise set of buyers for whom that data can unlock a unique edge. Or, if they have the appetite – and aren’t looking for more than purely incremental revenue – publishers can add their data to the evolving commodity markets and see what happens.
It’s still the Wild West of drilling for data, but it won’t always be.
Follow Noah Jessop (@njess), Liquid (@liquidPCH) and AdExchanger (@adexchanger) on Twitter.
