The “Value” of Third-Party Data
Hello, digital advertisers. I am a 40-49-year-old located in Quincy, MA. My interests include luxury automobiles, arts and crafts, toy collecting, and celebrity gossip. I am an avid reader of the daily newspaper. I am interested in buying baby toys, home appliances, board games, and home improvement products. I have recently chosen Verizon as my Internet Service Provider and signed up for a brand new Credit Card.
If you are using third-party data segments in your display advertising campaign to try to reach the user described above, you would reach me…and you would be wasting your money.
In the world of online advertising, marketers have turned to third-party data segments to provide an audience for efforts such as display advertising. Third-party data allows marketers to reach certain “segments” en masse, but in turn, sacrifices accuracy and transparency. Third-party data segments are so eager to play to their strength of scale that they often throw relevancy out the window in order to increase the size of the audience being reached.
Third-party data segments work by placing a cookie on users who visit specific sites, as a proxy for expressing interest in purchasing goods or services related to the content of that site. In theory, the logic is sound. In practice, people visit websites every day that aren’t necessarily relevant to their purchasing interests. Even if this weren’t the case, third-party data segment providers have stretched the classification criteria so thin that it doesn’t even matter.
None of what’s in the first paragraph describes me in real life. I am 29 years old. I don’t own a house. I drive a Honda Element. I don’t have children, and, like most my age, I haven’t read the newspaper in years. However, according to a tool that identifies which third-party data segments you would be a part of, I am someone completely different, at a different stage in my life and with entirely different interests. Chances are if you are trying to reach the user in the first paragraph, I am not interested in what you are selling, and you are wasting money by advertising to me.
So why have marketers been using third-party data all this time? Well, until recently, it was simply the only scalable option available. Today, however, more and more websites have been sharing their online audience – also known as first-party data – with other interested advertisers. Once shared, this data is called, you guessed it – second-party data, and it provides a much better balance of transparency, relevancy and scale that can’t be matched using third-party data.
If you knew that you were paying for something, and not getting what you were paying for, you would probably look for an alternative. Third-party data segments are a way to access large groups of users, but if the users are not relevant to what you are advertising, then they are worthless. More and more websites are getting on board with second-party data. How do I know? Well, I certainly didn’t read it in the newspaper.