“The Sell Sider” is a column written for the sell side of the digital media community.
Today’s column is written by Erik Matlick, founder and CEO at Bombora.
The data cooperative has emerged as a strategic weapon for publishers in the battle for online ad dollars against the Facebook and Google duopoly.
In data co-ops, media properties pool audience and campaign data for mutual benefit. We’ve seen more partnerships launch recently, with NBCU, Vox and Conde Nast signing an agreement, along with a separate pact between the New York Daily News, The Weather Co. and Penske Media. Meanwhile, 2,000 media organizations, including several newspaper publishers, are teaming up to fight the duopoly in a yet another collaborative effort.
The idea behind a co-op is that smaller entities can better monetize their data by working together to achieve scale. This collective strategy gives them far more power for pursuing buyers than they would ever have if they tried to take on Facebook and Google on their own.
To truly succeed with a collective data strategy, media owners must address several critical problem areas.
Complex Contracts
Collecting and sharing data is a complex process, resulting in byzantine contracts for all partners. While co-ops can certainly operate and even thrive in good faith, these contracts need to detail how every party gets paid and how the data is stored and processed in a mutually agreed-upon way, and ensure that the contingency plans for issues such as privacy, data security and leakage are laid out in detail before they become a problem.
Contracts also need to address any of the questions that may come up in the future, so that the involved parties aren’t sparring or disagreeing after the data starts flowing. Ironing out these details is no easy task – a UK alliance of publishers stalled last year due to disagreements with the terms.
Competition
AdExchanger Daily
Get our editors’ roundup delivered to your inbox every weekday.
Daily Roundup
Digital media often fetishizes innovation and the “new,” but a co-op’s goal should not be to introduce a brand-new product and force every participant to adopt it. This can be difficult, because it forces partners to support each other’s existing and sometimes competitive data products. And when a third party is used to facilitate a co-op, it’s important that it also resists the buzz of a new product and avoids introducing any products of its own that compete directly with the co-op and its partners.
While co-ops are built on the idea of mutual benefit, one huge roadblock is the fear that sharing data with competitors leaves partners vulnerable, with proprietary data somehow getting into the hands of their competitors. To kill this perception, protections must be built into a co-op’s charter to enforce both source and brand anonymity. This should allow media companies to share both first-party and visitor information without providing any unfair advantage to their competitors.
Data Security
As we’ve seen with the recent slew of data breaches, consumer privacy is still a thorny issue when collecting data. It’s important for contributors to maintain anonymity for the data they share, but in today’s marketing environment, that must also extend to the consumer level.
One of the benefits of a co-op is the ability to match users across a number of web properties, but it’s of the utmost importance to remain privacy-compliant while doing so. Co-ops need plans to mitigate the risk of any privacy issues.
Lack Of Contributor Diversity
One of the main reasons that co-ops fail, in general, is that one contributor accounts for a higher percentage of the data. Walmart, for example, pulled out of data-sharing agreements for CPG point-of-sale data with research companies.
Because of the sheer amount of data a particular entity is contributing, if and when it decides to leave, the co-op will quickly lose any value for the remaining participants. Co-ops can thrive only when there is equal input among the contributors.
Disagreement On Data Standards
Beyond the basic structure of the business, co-ops must define how the data and insights can be used. Once again, differences in data strategy, collection methods and proprietary practices can create a lot of confusion and disagreement. A failure by the participants to adopt any kind of universally functional standard will ultimately undo any benefit the co-op is meant to provide. After all, it’s this standardization and the portability of the data that makes a co-op potentially more valuable than the proprietary gardens of Facebook and Google.
Strategic Benefits
Google clearly offers value to media partners, mainly because it provides monetary compensation for sharing data. Co-ops differ in that partners receive access to the aggregate data, collective insights and revenue. While financial gains are always enticing, co-ops falter when partners no longer see or experience these strategic benefits. Participants should always feel that their own audience and data products are made better through the shared data.
Despite these common pain points, co-ops are likely to grow in popularity as publishers and media companies continue to search for competitive advantages against larger forces. For co-ops to truly succeed, they’ll require a great deal of commitment from every participant. If co-ops can build egalitarian frameworks that reward their partners both strategically and financially, ad sellers should be able to thrive in the face of the duopoly.
Follow Bombora (@bomboradata) and AdExchanger (@adexchanger) on Twitter.
