Second-Party Shared Marketplaces: Big Upside Potential, Plenty Of Risk

neilglassThe Sell Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Neil Glass, senior vice president of data at IDG.

Today’s socially driven digital culture is all about sharing – some might even say oversharing. And therein lies a fine balance: Where exactly does one draw the line?

This question pertains also to the latest digital advertising trend of shared data marketplaces, where parties share first-party data to mutually leverage audience segments.   

Yes, the proposition of “second-party shared data marketplaces” is intriguing to marketers and publishers alike, but there are challenges in implementing such an agreement. Just as with social media, the underlying concern should be: “Are my ‘friends’ being respectful of what I share and are we all operating within a shared code of conduct?”

For that very reason, most publishers are still in the early stages of adoption. Obviously publishers are extremely protective of their data. Data captured from their audiences is intellectual property and sharing it with secondary partners can be risky. 

The Risk Of Sharing

A publisher understands its audience base better than any marketer; it has developed and cultivated a deep level of trust with that user base. 

Exposing these users to outside parties could threaten that relationship, especially if they are targeted by the marketer in ways the publisher did not intend. For example, sharing insight into the collection of the publisher’s audience segments allows resellers to drop cookies on these users and create lookalike modeling, and then apply those models in the open marketplace to capture the same users at cheaper prices. 

This scenario is obviously undesirable to a publisher looking to fairly monetize its valuable content and audiences.

Decoupling Can Be Devaluing

Shared data marketplaces can often mean decoupling data from media, and that is not something many publishers are willing to do. Selling data alone doesn’t add the same value to the publisher as a media buy layered with data, and decoupling it also leads to a lack of control for publishers over their trusted constituencies.

The Plumbing Problem

Beyond the potential concerns over the sharing or pooling of audiences, the technology pipes between data management platforms (DMPs) and ad-serving systems are not always “open for business.”

In the event that a publisher and marketer are operating on different data management platforms, the transfer of or pooling of first-party audience segments may not be possible. DMP leaders would need to work with one another to make the technology more compatible to allow for the transfer of first-party data in a more seamless fashion. This would help to accelerate the viability of these marketplaces – when both publisher and marketer are, in fact, ready to transact.

Remember, it’s critical that publishers can be confident that they know precisely what the marketer’s planned program is, in terms of what they are trying to achieve, what their tactics will be and exactly how the publisher’s data will be used during that program. Publishers need to be 100% certain the contractual stipulations for a shared data marketplace are closely followed by the marketer.

Key Takeaways

Any publishers considering such a shared data arrangement should develop rules of the road for these arrangements so that their largest asset – their data – is confidently protected. Of course, they should engage their legal department and vet their partner and their partner’s data.

Publisher should consider hiring a third party that specializes in brokering these types of agreements. They bring expertise to these deals that most publishers don’t have in house.

Publishers must also ensure that their DMPs can “talk to each other” without too much operational burden.

Finally, success will depend on both parties being confident the arrangement will deliver value. This means knowing what the baseline value expectations are and being sure that they are met.

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