Second-Party Data and the Rise of the Transparent Data Economy
A major shift is taking hold in the world of digital marketing and advertising. With the industry’s pursuit of data integrity reaching its peak, the demand for transparency and choice has crystallized at last. Marketers have long sought answers to the “third-party data” dilemma: just who is my data reaching and what value, if any, does it really bring? With all the doubt amassing, something has to permanently change. And it does.
Enter second-party data, or transparent access to a non-competitive and relevant partner’s first-party data, creating a new means for advertising revenue, greater brand awareness, and most importantly, data reliability.
The need for a transparent data economy clearly stems from fulfilling what’s missing in data, or more specifically, audience data used to power marketing activations such as media targeting or campaign insights. First-party data doesn’t scale, and third-party data doesn’t provide us with the insight we need to properly understand and target the right consumer.
Moreover, because we’re quite literally swimming in all things data, we’re increasingly relying on better data to stay afloat and advance ahead of our competition. Where first and third-party data leave a gap, second-party data not only provides marketers with more data but also discloses what exactly is in the data, filling the gap. This changes the digital media game as we know it. Going forward, it’s all about a data marketplace that’s moving toward transparency and choice.
Think about it, when purchasing a third-party data segment, are you in the wrong for requesting (even demanding) full data transparency? This is the data responsible for either making or breaking your campaign initiatives – for driving more sales. Of course you want to know what’s in it! Let’s say you’re set on reaching millennials, then we’re willing to guess targeting the predominately male demographic set of an obscure and politically charged website might not be ideal. Just a guess. But it’s precisely what’s happening today!
According to a recent article from Digiday:
“A ChoiceStream study found that a particular data vendor had identified 84 percent of users as both male and female. While that case was an extreme outlier, ChoiceStream also examined the two vendors that were least likely to identify people as both male and female. By getting the third-party data internally from the vendors and syncing IDs across data sets, ChoiceStream found about a third of the time the two vendors disagreed on what gender an individual was. Similarly, Mediasmith research found that data from four of 11 vendors wasn’t much better than chance in targeting age and gender.”
Houston, we have a problem.
The solution is reflected in improved data accuracy via transparency and the ability to choose a data provider (i.e. second-party data). And there’s good reason it’s taking the industry by storm.
In fact, a new Forrester Research report found that “85 percent of retailers and brands will have second-party data integrated into their overall marketing strategy within twelve months.” But if you’re somewhat new second-party data, no worries – the concept is easier to grasp when considering how accessible the data is in a transparent data marketplace.
Marketing relationships, or data partnerships, that flourish in a transparent second-party data marketplace can take on many forms, but the mechanics of participating in such open exchanges are not at all a far stretch from what marketers and advertisers are already doing on a daily basis.
Moreover, forming these partnerships is much the same as, say, tagging your website for common advertising practices and media optimization. It’s a cinch with experience. For instance, the same pixel used in tagging can be used in the collaborative process of targeting users, only with minor additions such as cataloging and segmenting your data for addressing the diverse needs of your marketing partners. But more on this later.
In our next article, we’ll introduce the specifics of CoEx, ownerIQ’s second-party data platform and the industry’s largest and most transparent data economy, where retailers and brands share and activate their first-party data with marketing partners of choice. While it’s fully tailored to user needs, the overall goals of participating in the marketplace are the same: making readily available audience data more relevant, scalable, and effective to reach qualified prospects.