What Are Customers Really Worth? Turning the ‘Customer Data’ Concept Into Something Meaningful

What’s the value of customer data? What is its value to our political aspirants, a value measured by many different and often conflicting metrics, not least of which is the power of the elected to change society for better or worse? And often, sadly, as we increasingly see around us, for personal economic gain?

The headline, “Legislation Would Force Google, Facebook to Report Value of Customer Data to SEC,” in the Media Daily News got this maverick marketer wondering just what kind of a gargantuan task it would be to try and determine the value of customer data.

Imagine what you would do if some legislation or only your boss asked you to put a rational price tag on the data in your company’s possession? The easy way, if you are a direct-to-consumer marketer, might be to add to your total year’s profit, a factor for the likely future profit contribution driven by your knowledge or assumption of the lifetime value of your customer base. Or you could offload the task to your bean counters and let them have a field day playing with the numbers, instead of doing something more useful.”

Searching for what the British call a “bargain,” or the price at which a willing buyer buys and a willing seller sells, can be said to establish real value. The traditional way of determining a bargain for the acquisition of a data-driven marketing business is to pay a negotiated multiple of the number of customers, times the best guess of discounted future revenue from these customers. From there on, it’s horse trading. The fact is, we all may have ideas (usually over-optimistic) about data value, but few if any of us know for sure what it is. And today’s “bargain” may not seem so attractive a couple of years down the road.

That’s why you have to wonder if the financing of our political election system has gone completely off the rails. According to the Wall Street Journal, “Political Ad Spending Will Approach $10 Billion in 2020.” That’s an increase of almost 14% over the last time, which is far greater than the population increase during the same period.

Political ad spending will total $9.9 billion in 2020, according to the latest U.S. advertising forecast from WPP PLC’s ad-buying unit GroupM. That would be up from $8.7 billion in 2018, when midterm congressional elections were held, and from $6.3 billion in 2016, when President Trump was elected.

The growth between presidential campaign years is accelerating. Political ad spending rose by $2 billion between 2012 and 2016, according to GroupM, and by $1.1 billion between 2008 and 2012.

If we look at this against the number of likely voters, we can estimate the spend for each one. The Census Bureau estimated that there were 245.5 million Americans ages 18 and older in November 2016, about 157.6 million of whom reported being registered to vote. Historically, about 60% of those eligible to vote actually show up to do their democratic duty in a presidential election. This means that the actual number expected to be voting is 94.5 million.

If the political marketers were able to target only those 60%, the cost per voter would be $38.07. Because that kind of tight targeting of marketing spend is almost certainly impossible, and we spread the total spend against all the 157.6 million registered voters, the cost per voter is only $27.86.

A maverick marketer’s fantasy view is that it might be more cost-effective to use the $27.86 just to buy those voters not already committed to one party or candidate or the other, just as long as you could determine who they were.

Only $27.86 or $38.07 per prospect? That’s more than consumer goods and services advertisers spend in a year, a lot more. Proctor & Gamble, one of the largest FMCG companies spent $4.39 billion last year ($13.43 for each member of the population) or less than half the estimated cost per voter, and AT&T spent $3.52 billion.

What does this tell us about the value of customer data? (Or, in this case, potential voter data?) What is its value to our political aspirants, a value measured by many different and often conflicting metrics, not least of which is the power of the elected to change society for better or worse? And often, sadly, as we increasingly see aound us, for personal economic gain?

One thing it certainly does tell us is that in our society, where more than three-quarters of the total wealth is owned by the top 10% of earners and the lowest 50% own only 1.2%, valuing each cohort is extremely difficult. Ironically, at least in theory, every vote — whether from the 10% or the other 90% of the voting population — has equal value.

That’s a big difference from the relative value of segmented cohorts of buyers and prospects who make up the Google and Facebook universe, buyers who can be valued based on past performance and prospects, whose value can be guesstimated — based on other characteristics.

Ask yourself, “How much am I worth? And please comment below on how you determined the amount. It should be fun to share the different answers.

Please Stop Stealing

With the tumultuous 2016 presidential election ahead of us, you can’t crawl out of bed without something political crawling in — or maybe that’s just my problem with reading the news in bed on my phone most mornings. But that’s how I came across this Ad Age story about Gary Johnson’s presidential campaign stealing agency Spark’s brand concept.

Business cat copyright memeWith the tumultuous 2016 presidential election ahead of us, you can’t crawl out of bed without something political crawling in — or maybe that’s just my problem with reading the news in bed on my phone most mornings. But that’s how I came across this Ad Age story about Gary Johnson’s presidential campaign stealing agency Spark’s brand concept.

Sigh.

Today I don’t want to talk about politics … instead I want to look at the major issue of people not understanding that you can’t just rip things off. This isn’t Instagram basically copying the Stories idea from Snapchat (you can’t copyright ideas … though it’s still not highly advisable unless if you can innovate upon it).

I already yelled about this when Quirk Ford, a franchise dealership of Ford, stole art from indie developer Campo Santos’ game Firewatch. And now here we are about six weeks later.

Now, I recommend reading through the Ad Age story “Agency Says Libertarian Candidate Gary Johnson Stole Its Brand Concept” because Kate Kaye nails it with her reporting. But the quick version is this: Tampa, Fla.-based agency Spark came up with a brand concept for Gary Johnson’s campaign … essentially for kicks. And then the campaign started using it, without permission.

From Ad Age:

In June, the agency published its quarterly magazine, Stick, which featured a variety of articles relating to the “underdog” theme. The agency — which does not work with political clients — decided to take a stab at creating branding specs for an underdog political campaign and chose to use the third party hopeful, former New Mexico governor and triathlete, as its guinea pig.

“We looked at it from a pure brand standpoint,” said Elliott Bedinghaus, VP-creative at Spark, adding, “Our intent for this was never to work with Gary Johnson.”

How hard would it have been for the Johnson campaign to reach out to Spark to discuss their work, and perhaps ask for permission to use the concept? The campaign, according to Ad Age had not returned multiple requests for comment.

In response to this whole snafu, Spark made this video responding to the issue. Watch it … all 41 seconds of it … to see how the pros handle things.

Spark … you are CLASSY. “If you’re going to swipe, swipe right.” Even classier is the site, hellogaryjohnson.com, and here’s a little taste of it:

Hellogaryjohnson.com site Hellogaryjohnson.com site“Here’s a little guidance for how we intended the concept to be executed,” the site reads or, in other words, “Hey, you’re doing it wrong.” Spark even provides downloadable working files.

And then includes this short note:

All in all, we’re excited that you’re giving our work greater visibility by making it a part of your campaign. And, political views aside, that’s a pretty big win in our book. Let’s just do this thing the right way.

If you’re gonna steal, steal smart … and as Spark said, if you’re gonna swipe, swipe right. Now Spark acknowledges the visibility it will receive, but still hits home the message: There’s a right way to do this.

You rarely win when you steal things, and with Gary Johnson’s political campaign and Quirk Ford … you end up looking dishonest, incompetent and … well, lazy. No one wants that, and it’s not that hard to avoid.

Marketers, strive to be above board. Agencies and consultants, do the work to keep your clients informed. And maybe we can all move past this.

Oh yeah, and here’s my video on Quirk Ford’s “art heist” if you want to see me get all up in arms and legitimately yell:

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Quick update: According to Spark, the Gary Johnson campaign DID reach out and apologize. You can see this mention here on the Youtube page comments for the video (though they mix up Ad Age and Ad Week …)