Of the big trends we’re seeing today across the digital landscape is the decoupling of the “media” with it’s “data” component (audience). VMM was founded on this very instance and agencies such as kbs+p and The Media Kitchen have harnessed this into it’s very backbone. We call this Audience Driven Media.
About two years ago, Summer of 2008, we were talking with some media companies and ad networks to just sell us their audience data. For every 10 we spoke to, 9 laughed at us. They didn’t mind selling us “media” but certainly not “data.” Some of the networks and media companies today that are touting their “data” products were those folks that laughed us out of the room; but funny how the world turns, isn’t it?
Today, media companies and ad networks make their margins on data coupled with media. The entire industry today is built around evaluating media (i.e. the traditional ad serving systems, analytics packages, etc) and this is why many companies refuse to unbundle – as the majority of the industry doesn’t know how to evaluate data for pricing. I expect this to change within the next 6-12 months and I’ve publicly spoken about it at many different conferences as a challenge to entrepreneurs.
While I think that data + media will be sold together for a long time, I don’t think it’ll be sold together 100% of the time in the not too distant future. There are very few large media houses that are purely buying data at any meaningful spend level (a single test with Bluekai or Lotame doesn’t count) today, but there are billions of dollars going into digital media (media + data).
I think the most successful media companies will have different products to sell us as advanced buyers; some of those products are public and some of them are private. When the tools to evaluate and value both media + data are pervasive, that’s when we’ll see the industry turn. While the majority of the industry isn’t there yet, we at MDC Partners, kbs+p, and The Media Kitchen are.
Ali Miran, Ali Mirian, VP, Product and Technology – Ad Solutions, IAC
There’s nothing inappropriate for a data company to also sell media. After all, publishers sell both data and media as much as any other entity. What is important is proper disclosure. A publisher is exposed when its data partner gets in the media game, and needs to manage that risk. Data companies may argue that the upside outweighs the risks, but until someone delivers a piece of paper that proves this out, pubs will think twice about any deep engagement.
Audience and data fragmentation remain key challenges for our industry. Advertisers need to connect with their target audiences, but fragmentation has made it difficult for them to efficiently reach those audiences. Likewise, the recent growth in the number of data companies in the market has created fragmentation at the data level in the audience targeting chain, and now as data companies move toward selling media too – our already too-complex ecosystem becomes more of a morass.
What we’ve noticed? Many companies that started as data providers are now finding media sales an opportunity to make near-term dollars. We see no inherent problem with data companies selling media themselves so long as they are transparent with their data sources. Publishers should be more proactive in leveraging data and selling specific audience segments, and ultimately, we think publishers need to be thoughtful and protective about where their data goes. The biggest threat to data sales are for publishers who have strong focused vertical audiences with excellent relationships with endemic advertisers.
“Appropriate” for whom? For the ecosystem as a whole to thrive, I think it is important to balance the needs of content creators (media), with the needs of the marketers to get value for their dollar. Decoupling data from media can drive value for both sides, but so far has been mostly to the benefit of the marketers. If data companies also sell media to the marketers, thus effectively taking more margin from the content creators, they are likely to drive the ecosystem further out of balance.
Using data to provide value to content creators is harder, because audience inventory management and pricing solutions (like Yieldex) are in early adoption. However, the opportunity to create value is tremendous, because the data can be applied and valued across all of the inventory, including premium. Content creators would love to buy data if it means selling more inventory as premium, but they probably don’t want the data provider competing with them.
In the short term it may seem like a good idea for a data provider to sell media in addition to data to their marketer customers, but the risk is that they alienate a much larger market of content creators that could be customers in the longer term.
We feel that data companies should focus on what they do best – amassing data and insights, and leave the media buying to media buyers. When our agency teams buy data and media coupled, it’s very difficult to understand what is actually driving the real value – the data, the media, or the optimization tactics. As a result, pricing can be very inefficient, and this can in turn sour what is an incredibly useful data relationship.
Additionally, data companies also have to focus resources on media acquisition and optimization when they run a network, which can compromise their core data compentency. Buying media on exchanges and/or managing upfront buys is not trivial, and riddled with challenges. Having mass and differentiated media is key in order to find matches, so why not work with those who already do that well vs. trying to compete with them?
Most importantly, optimization & the definition of success will vary by client. Managing attribution and ensuring accurate conversion tracking is best done by the agency / client, as they have optics into all channels being leveraged. Dropping yet another set of pixels on a client site, and developing elaborate, complicated models (that never are accurate anyways) for managing de-duplication is unnecessary in today’s digital environment. Integration of data into media buying systems, such as DSP or DMP (data management platforms) technologies, is the path to scalability for all data providers.