This week, Kenshoo releases enhancements to its audience data hub, Kenshoo Audience Manager, for more support of third-party data, including a new partnership with Experian that allows advertisers to target Experian’s renowned audience segments within the Kenshoo suite. Initially, advertisers can use Kenshoo to target the audience segments via Facebook advertising, but Kenshoo plans to extend this targeting to Amazon and Google soon.
Over the last few years, industry buzz has lauded the value of first- and second-party data, while third-party data has been somewhat called into question. Kenshoo’s new investment to tap the power of third-party data in today’s digital world shows a vote of confidence in this tactic even as some marketers continue to debate its effectiveness.
In short order, we aim to prove at scale what we’ve already seen unfolding: that applying third-party data like Experian’s audience segments with second party data from top publishers takes targeting to new and impressive heights. Consider the path to this point …
At the beginning of the programmatic era a decade ago, third-party data was the fuel that powered the channel. After a few years, however, marketers collectively realized the real value of leveraging their first-party data. The consensus perception of first-party data is that it’s extremely credible (a marketer knows where it comes from and how it was processed), it is free (for targeting, but still a cost to capture and harness it), and it is more relevant to a marketer’s own customers because it is inherently a customer-centric dataset.
According to eMarketer, “In an April 2018 survey of 522 brand marketers in the US, the UK, France, and Germany conducted by Sizmek, 85% of US respondents and 75% of respondents in Western Europe said that increasing their use of first-party data is a high priority.”
Second-party data, too, has been on the rise. Defined as first-party data leveraged by a second party, the data collected and leveraged by walled-garden heavyweights is clearly resonating with advertisers. Marketing budgets are flowing at an unprecedented rate to Google, Facebook and others, because they offer advanced targeting data on audiences at scale for free as part of the advertising fee with market-dictated pricing via their auction-based media marketplaces. “After all,” marketers reason, “Who has more data on consumers than Google or Facebook?”
The value of third-party data continues to be challenged. Take, for example, the argument presented in the Forbe’s article, Brands Are Wasting Money On Third-Party Data: “Advertisers have no idea where the data is coming from, and if they don’t know where the data is coming from, they also can’t know how accurate it is. This leads to massive cost inefficiencies: Brands need data to conduct advertising campaigns, but if the data is poor quality, then brands are wasting money on something that won’t do them much good. In order to combat this, brands need to bypass third-party data sellers…”
So, if advertisers have become skilled at leveraging their first-party data and are increasing marketing spend to second party-driven advertising outlets, what is third party data’s role in the marketing portfolio?
Ultimately, third-party data is simply a tool in the marketer toolbox along with first- and second-party data. Just like a screwdriver is better for screws than a hammer, third-party data is the right tool for some use cases where first- and second-party data fall short.
For example, first- and second-party data rely on data gathering within the confines of owned web properties, i.e. when a consumer comes to your website, you can retarget them or if they visit Google, Google can retarget them on your behalf. But what if you are looking for a niche’ audience such as in-market auto shoppers? Some, but certainly not all of them, can be found on your site or exhibit the proper signals or cues to be identified within walled gardens.
Third party data vendors act as an agent on behalf of marketers to gather audience data at scale from across the web and can help them use various methodologies and sources to find people clearly researching their next car purchase.
Maybe it’s not free like first-party data, but—especially for smaller brands challenged with undersized first-party audience pools—marketers cannot rely on first-party data alone for all of their data needs.
As long as third-party data is collected in a strict-PII way—and can be used to drive business goals in combination with first- and second-party data sources—it can clearly provide value. We’re applying it with Experian to offer advanced forms of targeting on Facebook, one of the world’s top providers of second party data.
Third party data viability evidence #2 – Marketers are still increasing spending
If the old adage that marketers vote with their wallets is true, then the vote is already settled, third-party data is still alive and well. In an August survey of 324 US marketers conducted by Duke University’s Fuqua School of Business, American Marketing Association (AMA) and Deloitte, a clear majority of marketers (90.7%) have either increased or kept their third-party data usage the same over the last two years and 86% of marketers surveyed plan to either keep their investment in third-party data the same or increase it in the next two years.
In a big industry study done at the end of 2017, U.S. firms invested a total of $20.18 billion on third-party audience data and activation solutions that support their advertising, marketing, and media‐related data initiatives. Commenting on these findings at the time of the survey’s release, Tom Benton, CEO, Data & Marketing Association said, “This research demonstrates that modern marketers are strategically investing in solutions to ensure their third-party data is not only ethical and secure, but effective and accurate.”
And, according to a report earlier this year by WBR Insights and Future Stores, nearly eight in 10 retailers now partner with third-party data providers to drive in-store traffic. In fact, versus all of the other data tactics in the survey—including retargeting and marketing automation—relationships with third party data providers was at the top of the list.
One of the hallmarks of third-party data is how rich it can be—both in depth and breadth. For example, it can be used to qualify leads coming from a website to fill in data gaps so that brands can score those leads better and know which to route to their fast response teams and which to deprioritized.
In a post by Axciom, “Leveraging third-party data is becoming even more valuable, expanding the realm of possibilities with audience segmentation, modeling, and personalization. Use cases for audience data continue to expand, providing fertile ground for marketers to supplement their rapidly growing first-party data sets to guide marketing strategy.”
Axciom offers innovative suggestions for leveraging third-party data that include:
As data continues to drive an increasing percentage of business decisions, there are many uses for third-party data beyond the marketing team across the wider organization. For example, Third-party data can be used by client support teams to enhance service by enriching customer profiles with data that can be used to better understand their needs. It can also be used by product teams to help segment user feedback and product usage by audience type to drive the right roadmap decisions.
Certainly, the age of audience data is upon us. But as far as the marketing industry has come in a relatively short time, the deep understanding of the right way to utilize data is still a nascent practice and being figured out. It seems that marketers are clearly interested in being data-driven, and third-party data can be a great tool when used for the right task.