The conversation and ensuing debate around consumer data use has skyrocketed in the past year—including within mainstream channels. This attention, in part due to major changes such as the General Data Protection Regulation changes in Europe, has according to a recent report from eMarketer, led to 11 percent of marketers saying they will be reducing their use of third-party data over the next two years. However, there should be little doubt that third-party data continues to have a place in the strategies of data-driven marketers and it continues to contribute to a degree appreciated by the minority.
Before we go any further, let’s pause to ensure we’re agreed on our definition. Third-party data for marketing is non-sensitive, customer data, collected and curated by one company, to be made available for other companies to license to improve their marketing. A pillar of many cohesive marketing campaigns, it reduces randomness and enables marketers to improve the relevance of their marketing to individuals, at scale.
Used by marketers for over fifty years, third-party data has become caught up in the growing attention rightly given to data in the digital age but, critically, at a time when the understanding of data remains comparatively low. As a result, in this era of evolving regulation, creating and using third-party data in an ethical manner is critical for all. Equally important is stakeholder education, including consumers, about the measurable benefits of third-party data when it is harnessed and utilized within stringent ethical data use guidelines. Marketers across the ecosystem must be aligned in how they discuss and promote the values of third-party data use today and into the future. Let’s take a look at just three fundamental ways in which this data makes a positive contribution.
Enhances the Customer Experience
No matter which way you slice it, third-party data enables companies to focus their marketing efforts on the right consumers—those who are more likely to engage/buy from their brand—with personalized communications. By swapping the randomness of ad-targeting for relevance, a brand’s ads and communications are more respectful of their target customer. Third party data, used properly, should result in fewer people seeing an ad or marketing message; equally, those that do see it are more likely to find it relevant to their needs and even helpful. In an era where brands are competing on the customer experience, data that can improve it by making it relevant and reducing ‘random noise’ remains highly valued.
Promotes A Strong Economy & Job Growth
We’ll come on to competition but before we do, we should remind ourselves that third-party data keeps costs down for business and reduces waste and environmental impact. As described, the best marketers use data to reduce marketing volume and waste. While it is true first-party data (a brand’s own customer data) is often the most powerful, it doesn’t always follow that a brand has the right data on their customers and then there are new and potential customers. Third-party data helps improve relevance across the board, but especially with new and potential customers where competition is at its most intense and the need to reduce the volume of unwanted marketing is most necessary. Remember, if companies spend less money marketing, they are able to pass those benefits down to the customer in the form of lower prices.
Additionally, a 2017 IAB study revealed the ad-supported internet contributed more than $1.2 trillion and 10 million jobs to the U.S. economy in 2016. Third-party data powers a large portion of the ad-supported internet; therefore, it is a strong driver of jobs in a variety of sectors including internet infrastructure, e-commerce, online video and more.
Levels the Playing Field
In a world without third-party data, there would be a handful of “dataoploies” where companies with millions of users (e.g., Google, Facebook, Amazon, etc.) would effectively dominate customer data. Third-party data provides the capability and choice to businesses large and small to embrace the best standards of data-driven marketing, opening up the market to greater competition.
In addition, third-party data ensures every publication can be heard. It’s critical to sustaining online publishers, social networks, search engines, games developers, etc., who provide free access to their online content or services in exchange for sharing information to viewing ads. Third-party data enables content creators of all sizes—ranging from major newspapers and national magazines to niche bloggers—to sustain themselves without having to put up paywalls that would create barriers for readers who couldn’t or wouldn’t pay for content. Thus, it ultimately subsidizes free speech amongst big and small brands alike.
Third-party data is often misunderstood; it brings better customer experiences, betters the economy and promotes competition. In this era of people-based marketing, it is time it was better understood and fully appreciated.
Learn more about the innovative uses for third-party data Acxiom powers, here.