The bundling of data and media makes perfect sense where an advertiser only wants to work with one company. In the past, data companies had to partner with large publishers or ad networks in a painful, cumbersome process to get distribution of their data and where often forced to play a secondary role with the advertiser. Now, demand side platform (DSP) technology and real time bidding makes getting access to media scalable, transparent and simple. A data company can work with a DSP to buy impressions against their data and provide the complete package to the advertiser. It is really just a business model question about what the advertiser prefers.
As an industry, we have taken on the task of breaking up the life of a campaign into many pieces, including data acquisition, data management, media buying, creative generation, inventory access, and verification. In this new world of single point solutions, those managing data have a unique position in that they know more than the rest of the chain about the target audience, and they protect one of the most valuable assets in the space. As we start putting the pieces back together, re-integrating the buying process, the data companies are in a unique position to act as systems integrators, leveraging the core asset they have access to.
Data companies will play in the media game. The questions that arise will be around data rights, and true optimization. Optimization must take into account all of the components of a campaign as a bias toward data ONLY will not allow the full potential of a campaign to be met. Data companies must also resist the pull to leverage data from sources where data rights might be a point of contention.
First, it depends on what your business model is. If you are creating a free market like BlueKai, you are hoping that there are enough rational buyers, where the information used to purchase data is indicative of the true value of data, and that laws of supply and demand ultimately dictate price accordingly. Conversely, if your business is delivering audiences to advertisers, you must understand the impact that the data has relative to specific sets of inventory in order to be able to deliver the most responsive audiences.
Second, if you are a buyer of data, how do you buy data without understanding the impact it has on media? Unless you are buying irrationally, the value derived has to be based on running actual campaigns with specific objectives and restrictions, on various sources of inventory. This gives you the true value of the data you are buying.
So, its actually not important whether or not a data company sells media, what is important is whether or not buyers actually understand the value of the data that they are buying.
Let’s look at this question from two perspectives; first that of marketers. The question that clients will need to answer as they look across the landscape of choices is, is the pairing effective? For pure-play, direct response campaigns, where knowledge of the data is a key driver of success, it might be a solid choice. To do this, and to do it well, however, data firms would need to attract top quality media buying talent.
Beyond that, clients will also demand strategic insights and broader perspectives from the data companies, while much of their business is about the quantitative aspects of marketing. Lastly, how likely is it that data firms will be able to scale campaigns beyond their own data set?
I asked Ken Rona, our VP of Analytics & Data Strategy, to think about the question from the data companies' perspective. Here is what Ken had to say: It's really a business model question. On one hand, it is difficult for a data company to unbundle the data it generates, in effect, giving away its competitive advantage. If a data company makes its data available to the market, it enables direct competitors who are going to go take market share. Here, the natural response is to bundle media. On the other hand, no data company has been able to maintain its exclusive use of its data. Once people see that a data source generates incremental lift or can find a specific audience for a brand marketer, someone will figure out how to create a competitive product. So, trying to keep the data proprietary works for a little while, but eventually competitors will enter the market and take share. Therefore, data providers should get the data out there and get first mover advantage. Their natural response in this case is to unbundled media. Back to the business model issue, if the data company insists on coupling data with media, they don’t maximize the value of their data, but receive some extra revenue from the media. Which strategy maximizes value? It depends. Each company needs to value the different business strategies and come up with its own answer.
I don't think that this is too big of an issue. If a data company has the ability to sell media then by all means they should be able to do so. There's no issue of conflict of interest with clients. This speaks to the larger trend of streamlining advertising buys. We're seeing it with demand-side platforms and now with data companies selling media. Everyone is trying to provide the best ROI for advertisers, while capturing as much of the value chain as possible. Part of the value proposition to advertisers is providing fewer moving parts. It's a good idea in theory, but the issue is execution. Media optimization has different challenges and requires different competencies than what a data company will be typically used to. Some companies will succeed at doing both, but I expect many to fail in their execution. Companies are trying to offer everything, but by doing so, they're failing to provide the basic services that a more specialized provider can offer.
The online advertising landscape is constantly evolving. Today, the marketplace is filled with ad networks, media exchanges, demand-side platforms, media trading desks, verification businesses, and now independent third-party data providers and data exchanges are part of the mix.
As a media professional, I am excited to have access to data that may provide incremental value to advertisers. Third party data can be very valuable and the data exchange model provides an efficient way to access lots of data from multiple sources. In the end, this type of access will provide the testing required to truly understand what data driven targeting can do.
Data capture and data retransmission are very specialized, and potentially highly regulated businesses. Companies that acquire and resell or rent data for targeting purposes should remain independent of the media channel. The separation of data collection and data usage will provide the safest environment for the consumer, and the industry will be best positioned to self-regulate. The most valuable data is often found directly on a publisher site. Media companies that have access to this primary data should continue to find ways to monetize it directly or through partnerships that extend targeting and reach opportunities.
As the industry evolves and regulation looms, it is increasingly critical that data companies maintain transparent business practices. At Undertone, we build partnerships with the highest quality data providers available that will fulfill our client demand. We focus our expertise on using, understanding and collecting data that drives results and adds value. Then, we leverage that expertise to develop in-demand solutions for the marketplace; including products that are designed to help publishers better monetize their own data.
Whatever your stance may be on this topic, it’s going to continue to spark conversation, debate and possibly even regulation in 2010.
There's no inherent conflict for marketers if a single business entity sells both data and media; traditional media companies have already indicated that they will likely sell data to complement their inventory offerings. What is critical for marketers is receiving the highest level of transparency for both the data and media.
Successful campaigns most often begin with a well-developed campaign strategy that guides the combination data and media. I think technology is key to accomplishing this effectively and efficiently. The question really comes down to what are the core competencies of any given vendor -- Do they understand data, media, and strategy all together, and can they assimilate the data in real-time and at scale to truly maximize its potential? For instance, from an end-to-end DSP, a media buyer can research and build a campaign strategy, and then centrally negotiate their data and media deals themselves from multiple sources. Alternatively, that buyer could depend on a single service provider (media or data provider) to bring both data and media together for them.