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It may just be my opinion, but over the years, I think we seem to have developed, as an industry, a certain complacency when it comes to discussing the third-party data ecosystem.
A complacency that in 2018 verged on contempt for this vitally important component of the media and communications ecosystem. I think, In 2019, we need to reverse this narrative and the approach to third-party data to ensure that we don’t continue to alienate our suppliers, bemuse our advertisers, and disappoint with respects to results.
Commoditised through generalisation
I think at the core of our complacency is a lack of understanding and engagement with the individuals within the third-party data marketplace, which leads to an over generalisation and ultimately a devaluation of an industry estimated to be worth over €106.8bn in Europe by 2020 (FT, 2019).
In oversimplified discussions, we often refer to third-party data as a broad and largely indistinguishable set of non-first-party data sets, and worse, when discussing individual providers of third-party data we refer to them as not just comparative or complimentary, but as completely duplicative in capability, service and portfolio.
We must do better in transparently addressing the virtues and the vices of individual providers of data sets, identifying and demonstrating to our advertisers the salient points of distinction across and between third-party data suppliers, not least because my experience leads me to believe that when you truly investigate the underlying datasets, there is an absolutely crystal clear difference in the way in which data providers collect, validate, segment, and distribute their data.
Under attack on privacy
Since the introduction of the General Data Protection Regulation (GDPR) the third-party data marketplace has been looked at with growing discontent. This coupled with Facebook’s Cambridge Analytica scandal and the introduction of private browsing in the form of Apple’s ITP2, and the stage was set in 2018 for a media landslide, with one negative article after another predicting in no uncertain terms the demise of the third-party data marketplace.
A cursory Google search reveals several articles forecasting the downfall of third-party data suppliers, including this article from Martech Today from 2018 prior to the introduction of the GDPR, which states “with the General Data Protection Regulation (GDPR) soon to be in full force, marketers are looking to move away from their reliance on third-party data”, or this piece from Mobile Marketing asserting that “from GDPR to Apple’s ITP 2.0, in 2018 a digital marketing industry that relied on third-party data had to wake up to the reality that the oil that greases its engine is becoming scarce commodity”.
It should be stated that there is no empirical evidence to support the argument that the third-party data market is in decline. If anything, it appears to be growing and has demonstrated a great deal of resilience to the changing conditions in regulation and technology, a testament to the agility of those operating within the marketplace, and to the value of the service that they provide to the ecosystem. Data providers have proven that they can continue to operate in a privacy compliance fashion and to do so at scale.
Furthermore, predictions on the rise of use of second-party data (of which I am a big proponent I must admit) appear not to have come to fruition in the market, as agencies and advertisers vote with their media dollars and clearly continue to favour diverse, competitively priced, and easily-accessible audience segmentation provided by third-party suppliers.
Not without fault?
Do the third-party data suppliers have nothing to account for then? Are they simply victims of an over-burdening regulatory framework, red-tape, bias media, and an ignorant buy-side? Unsurprisingly, my answer to that is no. The reality is that third-party data suppliers have failed to drive the intrinsic value of their own solution and to differentiation, their capability, across several key areas, summarised below:
- Quality – higher accuracy, increased transparency, efficient performance, and validation were for too long sacrificed in favour of scalability. Far from being “nice to have”, these issues have become absolutely core to the proposition of third-party data suppliers and cannot be ignored. Data suppliers must do more to illuminate the buy-side on these aspects of their service.
- Access – The Demand Side Platform (DSP) has been, for many third-party data suppliers, the only method of distribution offered to agencies and advertisers. This has cost data suppliers the opportunity to front their own product, build their own brand, and control their own sales channels effectively. It also meant that many third-party data suppliers have been very slow to pick up advertiser direct discussions, create custom data deals that integrate with an advertiser’s pre-existing data infrastructure outside the DSP, or to offer more granular, firehose opportunities to agencies and advertisers to license data.
- Cross-Pollination – After working in the data ecosystem for over half a decade, I can more or less accurately identify which data providers are co-branding, re-branding, or obfuscating other third-party branded data within their marketplace. In a race to distribution and in the face of having small sales teams, partnerships have inevitably formed between data suppliers which revolve around obscuring data supply. Data suppliers need to, in my view, return to their brand, and build equity within their own brand, reducing dependency on competitors to productise, distribute and sell their data.
Doing things differently in 2019
I think we need to work harder in 2019 to engage with data suppliers in the third-party data marketplace, to establish their approach and to interrogate their data sets. This is no longer simply the task of the programmatic teams or the procurement teams, but the data scientists.
We need to put scientific rigour behind evaluating different suppliers, and to do this we need to make it a worthwhile exercise for both internal teams and for the data suppliers themselves, we do that by focussing on deep, strategic and long-lasting data partnerships, more transparent relationships, service-based approaches, join-data science projects and a completely restructured relationship with partners across the third-party data ecosystem.
It’s time we made it our business understand the data supply chain, to verify privacy and compliance throughout that chain, to investigate aspects of quality, accuracy and veracity, and to work together with data partners to create bespoke opportunities for advertisers, that cannot be easily replicated on the open market. It’s time to stop over-generalising, devaluing or grouping together a diverse range of suppliers under one label.
It’s time to stop viewing third-party data suppliers as a necessary evil, or a blight on the addressable ecosystem, and start seeing them as they are; innovative and data-focussed organisations with a wealth of specialist resource and expertise, that can partner with us to advance mutual goals and improve performance, drive efficiency and improve results for clients and businesses across the board.
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