“Knowledge is power. Power to do evil… or power to do good. Power itself is not evil. So knowledge itself is not evil.” Veronica Roth
There is power in information, although the economics of how information can generate the most value for a given business are not always clear. In the world of data-driven consumer marketing there is a constant battle between public, or syndicated, data that is broadly shared versus “private” data that are limited to select business partners. This has been the case from the times of customer list brokering to catalog co-ops and now digital exchanges.
Outside the obvious limits of data collection terms, company culture and business strategy typically have a larger influence on data sharing decisions than the results of a financial/economic analyses. As an aside, researching the pros/cons of sharing versus tightly controlling 1st party data would be high on my list of topics to investigate if I was in academia or the analyst community. Certain executives and business cultures that have a bias towards data and information hoarding often believe that the most value can be created by severely limiting and controlling access. This is natural to some degree as, all other things being equal, limiting supply can drive up demand for high quality data along with the potential price marketers are willing to pay.
On the other side of the equation, data generated as the exhaust of normal business has very little cost and can create tremendous value if exercised in a thoughtful way across many potential use cases. While some of the most valuable data sources are the by-product of consumers’ authentic engagement with businesses, there are many ventures already building new consumer-facing value propositions for the primary business goal of collecting data for third-party commercial uses.
Large consumer “platforms” are ultimately competing for people’s time and attention, which they then monetize through advertising. It’s only natural for big companies like this (think Facebook, AOL, Comcast) to use the data generated on their platforms to maintain and grow their business by improving both the consumer experience through more relevant content, and the advertising value of these consumers for marketers by better defining audiences. The catch is that none of these platforms know enough about their users to meet all the targeting needs of major advertisers. While they may not want to share, they need other organizations to share in order to fully activate the value of the consumers on their platform.
The reality is that there will always be tension in the market (and often within a given company) between those wishing to control data for competitive advantage and those seeking the opportunity to broadly monetize their data to drive a profit. The arguments, arguments and arguments about which type of data is most valuable are missing the point. And let’s not confuse 3rd party data with just online cookie data – it’s all data that is available to share with unaffiliated third parties. In fact, all things being equal, offline data is the most valuable type of 3rd party information as it can be used across channels with the assistance of linking and onboarding services. Whether the data is generated by an ad-supported platform, a data business, or as the exhaust of a consumer-facing business, there is one thing we see over and over again: this data is insufficient on its own for advanced advertisers.
Creating the most relevant consumer targeting, and delivering related measurement and analytics, requires a blend of 1st, 2nd and 3rd party data.
So my easy prediction is that the tension will persist: the need to control will limit some data while the opportunity and economics will continue drive the creation of 3rd party data. The one truth that will remain is that the real value and unique opportunity is at the intersection of these data.