Right on cue. My last blog post happened to discuss Europe’s forthcoming “Data Freeze.”
Enter a new U.S. study that articulates just how large the use of data for smarter marketing really is stateside — to the tune of $20 billion plus.
The Data & Marketing Association and Interactive Advertising Bureau’s Data Center of Excellence commissioned the “State of Data 2017” study [available as a download], conducted by Winterberry Group. According to the foreword:
“…marketers and publishers looking to become ‘data centric’ have had little choice but to embark on that titanic change effort without the benefit of clear and complete intelligence; the inherent complexity of data and its myriad applications has previously made accurate reporting — on how users are investing in data, putting it to work and evolving their marketing approaches in turn — too challenging to accurately compile.
“This report represents the first industry-wide effort to address that gap. By providing credible, practitioner-informed insight, we hope to demystify how U.S. companies are investing in audience data (and its associated support functions), helping practitioners benchmark their own spending against industry norms and establish a firmer basis for future investments.”
If 2018 will be the year of third-party data quality, this study perhaps underscores why: Third-party audience data spending will top nearly $10.1 billion this year, in omnichannel ($3.5 billion), transactional ($3.0 billion), digital ($2.8 billion), specialty ($0.9 billion) and identity categories ($0.6 billion). Another $10.1 billion will be spent on various data “activation” solutions, from integration, processing and hygiene ($4.3 billion); to hosting and management ($4.2 billion); to analytics, modeling and segmentation ($1.6 billion).
In short, marketers are investing heavily on knowing prospects and customers better — and communicating intelligently with them to meet demands and expectations. For more and more brands and organizations in both consumer and business-to-business markets, third-party data is essential in this process — online, offline and omnichannel. But it’s indeed complex.
The scope of the study includes commercially licensable data and/or audience segments, as well as third-party data solutions that seek to activate or apply any combination of first-, second- or third-party data. It does not include data for “insourced” product development, aggregated data for market research, data for custom audiences that bundled inside “walled gardens” of social media platforms and other publishers, and enterprise data usage not related to advertising, marketing and media.
The study is helpful in providing benchmarks for companies as they evaluate their own third-party data dynamics in advertising, marketing and media planning — but I can’t help appreciate this snapshot on a wider economic basis. Responsible data collection for more relevant engagement with customers is a $20 billion business – a substantial and likely growing slice of all ad and marketing spend. [Early next month, Winterberry Group’s Bruce Biegel will present firsthand a “2018 Media Outlook” for direct, digital and data — and how they compare to overall media spending.]
If CMOs increasingly are judged on business effectiveness, on how advertising and marketing performs in this context, then gaining prowess with data — including third-party data — is fast becoming table stakes. Building out data-driven marketing capabilities will serve them well.
Third-party data and activation is indeed fuel for consumer engagement and business growth. This reality — documented in this study — needs to be understood, recognized and respected far beyond the C-suite. But let’s start with the C-suite.