Data’s $20B Role in Marketing

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.

Third Party Data Study - Selected Chart
Credit: Data & Marketing Association by Winterberry Group

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.

Third-Party Data: A Quest for Quality

As marketing depends increasingly on data, a data quality regimen is an absolute necessity. While that’s been known to most “traditional” direct and database marketers for decades, I sometimes think the world of digital data is dragging along kicking and screaming.

Data mining
“Big_Data_Prob,” Creative Commons license. | Credit: Flickr by KamiPhuc

As marketing depends increasingly on data, a data quality regimen is an absolute necessity.

While that’s been known to most “traditional” direct and database marketers for decades, I sometimes think the world of digital data is dragging along kicking and screaming. Quality data is a quest, and seeking it out requires a discipline to test sources before appending and using the data.

The only mistake is not to test.

Coming from Data & Marketing Association’s &Then17, where a panel of brand chiefs were discussing perspectives on using first-, second- and third-party data in marketing, it seemed clear to me that the C-suite — to the extent that it is aware at all — appears to lack confidence in most third-party data sources, and how they could or should be deployed. Obviously the variety, volume and velocity of data can be overwhelming — particularly as digital, social and mobile channels churn a constant flow of data to evaluate and onboard – but the need to append and enhance first-party data with observed third-party data is absolutely the right way to go. Once an enterprise is ready to do so.

Still, third-party data has a confidence hurdle to overcome. But overcome we must.

If brands rely on first-party data alone, or second-party data from select marketing partners, and ignore third-party data sources, then advertisers are potentially shutting themselves off from cross-device customer identity recognition and resolution, better marketing attribution models, more refined lookalike, persona and acquisition models, customer journey mapping, omni-channel consumer discovery — and even a more complete customer view.

With all this on the line, it’s obvious (to me) that there must be executive buy-in to investigate and build-in third-party data. And integrating such data with first- and second-party sources. (Of course, first- and second-party data may have data quality issues, too.)

But let’s be clear — such a must is not just a grab-and-go data play. Maybe some brands have been burned on third-party data use. Hence, third-party data suppliers have a must of their own: either prove your quality now, or change your business processes so you can.

“If 2017 is the year of data, 2018 will be the year of data quality,” said Maureen Noonan, sales executive in the retail channel, LiveRamp, last week at the company’s Ramp Up on the Road event in Philadelphia.

On a Direct Marketing Club of New York Webinar two days later, Michelle Said, senior manager, New Marketing Institute at MediaMath, spoke of the TLC MediaMath goes through in evaluating third-party data sources and onboarding. Indeed, much of the Q&A on that webinar honed in on evaluating digital data prior to deployment. She said Data Management Platforms (DMPs) — where data are integrated — and Demand Supply Platforms (DSPs) — where audiences (media) are purchased — might best be merged to increase customer data match rates and improve data quality.

Unfortunately, there’s no industry report card on third-party data sources, nor one of the handful of onboarding players. Thus, it is imperative digital data users must adopt a discipline to test before the buy. If you’re not making time to test, then you’re leaving yourself vulnerable to garbage-in, garbage-out. Right now, the pursuit of quality is driving the data marketplace.

OK, Folks: Make Your Bet on Harry’s or Goliath

As the Bible tells us, the little guy can fight back against the big one. It’s a good biblical tale and it resonates in today’s competitive environment. While slingshots are out of fashion, now we have the Internet and social media as weapons when the odds are stacked against us.

Harry's Instagram page
(Image via Harry’s)

As the Bible tells us, the little guy can fight back against the big one. It’s a good biblical tale and it resonates in today’s competitive environment. While slingshots are out of fashion, now we have the Internet and social media as weapons when the odds are stacked against us.

Getting my morning fix of the latest news from the New York Times digital edition the other day, I couldn’t help but notice that the news summary was preceded by a dramatic headline that leaped off of the page (screen) at me: “The Truth Behind Gillette’s Recent Ad Campaign.”

Harry's content marketing in the New York Times
(Image via The New York Times)

That’s great positioning and a definite attention-getter, if a rather strange lead for a Times story. It’s more of what you might expect from a sensational tabloid or even Target Marketing. In decidedly smaller type, under the headline, it said “Sponsored|Harry’s.”

When I realized it was an ad campaign by an upstart against a giant that has an obscene market share in its category, I couldn’t help asking the question: Will this counterattack against Gillette be as promotionally valuable for Harry’s as a directly customer-focused campaign might be? Put more bluntly, will it be worth the money or is it simply the proverbial tree falling silently in the forest?

With that in mind, I did what I was told to do; I followed the link instruction to “READ MORE.”

NYT ad clicks through to Harry's landing page
(Image via Harry’s)

And there was a lot more. The landing page was all extremely low-key, engaging copy describing Harry’s start-up business where the partners had “worked our butts off to make sure guys across the nation are excited to shave again.” And Harry’s had been so successful that it had “threatened the bread and butter of a really big corporation” that was now striking back. (Getting excited about shaving is a claim I couldn’t identify with and found a bit over-the-top, but perhaps that’s just me. Maybe I should join the Millennials and grow a beard.)

“Here’s our story” is the wonderful bridge to the next item, what the copy describes intriguingly as a page from Gillette’s “dirty playbook.”

asterisk in Harry's ad in the New York Times
(Image via Harry’s)

The ad explains that Gillette took aim at “what we hold most dear — our customers and their satisfaction with our products.” Not a bad self-serving statement. And then it goes on to say that Gillette “dug up third-party sample ‘data’ ” to try and get Harry’s customers back to Gillette. And it pictures the aggressive Gillette ad.

Taking a leaf from the many publications that are chronicling the multiple lies of the Trump administration, it points a big red arrow at what it rightly calls the “super tiny” asterisk used to reference the Gillette third-party “data.” It says simply, “It is not true” and provides not only convincing customer loyalty statistics, 80 percent reorder, but customer Twitter postings to prove it.

It’s not all anti-Gillette angst, though. Harry’s wants to make sure that for those attracted to the ad, there is a free trial offer, a $13 value. This suggests that even at a 25 percent margin, the freebie must be costing Harry’s around $10 per taker, plus the cost of getting the message prominently on the Internet. That’s real money.

content marketing from Harry's
(Image via Harry’s)

And here is the rub. Will the powerful copy and offer, the Harry’s against Goliath approach, go viral or sufficiently viral to extend the reach of the promotion well beyond the media that has been paid for? Will it bring the cost of trials and conversions down low enough to be “affordable,” attracting customers whose loyalty generates sufficient lifetime value to amortize the total marketing costs over that lifetime and let Harry’s end up with more than a sustainable profit? I’ll bet it’s going to be a close shave.

Hopefully for Harry’s, God will be on its side.

Endit …

 

 

 

Authentication Alliance Marks Data Privacy Day With Consumer Trust Best Practices

To mark World Data Privacy Day, Jan. 28, the Authentication and Online Trust Alliance published its top 10 list of privacy principles and business practices. These practices, many of which have been widely adopted by AOTA members, are calls to action for companies to help maximize consumer confidence and ultimately spur economic growth.

To mark World Data Privacy Day, Jan. 28, the Authentication and Online Trust Alliance published its top 10 list of privacy principles and business practices. These practices, many of which have been widely adopted by AOTA members, are calls to action for companies to help maximize consumer confidence and ultimately spur economic growth.

To me, it’s pretty simple: Adopt these principles or suffer the consequences of a consumer trust meltdown. And that could invite regulation, according to AOTA Founder/Chairman Criag Spiezel. Here’s what the group recommends you do, edited a bit:

1. Ensure all privacy policies are discoverable, transparent and written to ensure consumer comprehension, accessible from every page of a Web site and/or e-mail.

2. Periodically contact users and provide them with your company privacy policy upon any changes for their review; allow for provisions for consumer choice or their data usage.

3. Establish and publish procedures for data collection, transfer and retention; perform third-party or self-audits for compliance.

4. Support collaborative, global, public-privacy efforts to increase consumer awareness and education, as well as the adoption of fair information practices and privacy/security regimes (e.g., the appointment of a national chief privacy officer).

5. Support self-regulatory efforts to adopt standard data retention/use policies.

6. Set and publish standards of privacy, security and data retention policies with clear accountability between first-party sites and third-party content providers and advertisers.

7. Create response plans for accidental disclosure of personal information and data breaches, including notification to consumers and governmental agencies. Provide relevant remedies to consumers (e.g., no-charge credit record monitoring services to those affected, or other remedies as appropriate).

8. Commit to authenticating all outbound e-mail with Domain Keys Identified Mail and/or Sender ID Framework to combat forged e-mail and potential privacy exploits within six months.

9. Transactional sites should adopt Extended Validation Secure Sockets Layer Certificates within six months or upon existing certificate expiration.

10. All consumer-facing sites should obtain privacy certification and seals from third-party providers or other third-party consumer dispute resolution mechanisms.

More details can be found here.

Are you following these best practices? If not, why? Let’s start a dialogue on the subject. Post a comment now.