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BizReport : Advertising archives : June 25, 2019

Expert: How data will impact the next 5 years

Data collection and analysis continues to become more important for business success, but consumers continue to worry about data breaches and how their private information is used, leaving many merchants and marketers wondering just what they can, could, or should do for their customers. We asked a digital expert how the data wars would change the digital space over the next few years.

by Kristina Knight

Kristina: Are consumers becoming more comfortable with data collection and use, or are the worries over breaches and scandals like Cambridge Analytics still hindering their willingness to be tracked?

Evgeny Popov, Head of Global Data Solutions, Lotame: Consumers are more discerning than ever. From fake news to data scandals from mega stack companies and walled gardens, they are savvier, smarter and stingier about providing data online. As a result of this, companies like Apple and Google are prioritizing privacy controls. And this is where connectivity becomes more important. As marketers and publishers prioritize first-party and second-party data assets, making sure these segments can be used everywhere -- e.g., marketers can share data with publishers, publishers can share data with marketers and publishers can share data with other publishers -- is critical.

Kristina: A couple of new reports - one from Monetate and the other from Juniper - underline the importance of data, targeting, and personalization in ecommerce conversions. What can businesses do to reassure consumers about the collection and use of data?

Evgeny: Data targeting and the usage of consumer data deliver better online experiences -- whether they be advertising, content or ecommerce -- and it's only going to grow moving forward, and considerably. It's critical for marketers and ad tech vendors to be open and transparent about data usage to ensure that consumers feel confident in providing their data for a benefit. It's also critical to provide a clear and simple opt-out method for those consumers averse to that trade-off.

Kristina: What trends are you watching in data currently?

Evgeny: As the importance of audience data grows, sophisticated marketers are becoming more interested in the quality of data to ensure they optimize their ad spend. We're seeing marketers move away from the shortcuts that helped them achieve scale as those solutions have been found to undermine quality. These tactics include cookie stuffing where users with online behavior only tangentially relevant to a brand are being used to expand the types of data that "fit" into a certain segment. Another issue is the mischaracterization of data which happens when audience segments are incorrectly identified or labeled as interpretations can vary. This problem is only growing as data has become more valuable.

Another trend is connectivity. With third-party cookies under pressure by Apple, Mozilla and Google, it's critically important for companies -- whether they be marketers or publishers -- to not only lock-down their strategies for collecting and organizing their omnichannel first-party data assets, but also figure out how to share those assets across key business partners and platforms. Connectivity maximizes the value of your data.  And a connectivity suite can provide marketers with the ability to collect, organize, share, activate, and enrich their valuable first-party data despite the challenges in the marketplace.

And finally, the "unstacking" of the DMP. Five years ago, a brand or publisher would take stock of their data needs, then tap a one-size-fits-all mega martech provider for support. But today's data use cases are more varied, complicated and sophisticated than ever. Marketers and publishers are demanding bespoke, flexible solutions, meaning data technology partners have to provide a diverse portfolio of capabilities that cater to specific challenges and opportunities. This is what I mean by "unstacking." DMPs need to offer a menu of options.  

Kristina: What kind of growth are you expecting in the data space this year? What about the next 3-5 years?

Evgeny: For publishers and marketers, first-party data is critical for business, driving everything from product and content recommendations to personalized ad experiences and messaging. First-party data has become even more valuable (and, in turn, vastly grown in use) as things like cookie-blockers, ITP, and GDPR limit access to data. First-party data is data that publishers and marketers are collecting from their users and therefore consent is clear and third-party cookies aren't an issue.

In the transparency era, interest in second-party data is also skyrocketing with advertisers. There is a sense of security with the data since it's someone's first-party data, meaning marketers know where the data comes from and how reliable it is. In fact, we saw 460% growth in global second-party data adoption in 2018 with Lotame Syndicate, our private second-party data marketplace. We anticipate that growth continuing in the coming years as privacy regulation continues to play a role.

Additionally, we're seeing third-party data grow. At Lotame, we consider ourselves a barometer for interest in third-party data adoption since our third-party marketplace now has over 4 billion data points and is actively selling more than 5,000 segments across 50-plus countries. With that in mind, year-over-year, we saw our third-party data sales grow by 50%. This growth is driven by a shift in the industry from data scale to data quality. Third-party data providers have installed more safeguards than ever to ensure data is hyper-accurate and reliable. The increase in quality has maximized performance, ultimately boosting demand.

Tags: advertising, advertising data, data analysis, data collection, data trends, Lotame, online advertising

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