Online Advertisers: Do You Know Where Your Data Has Been?

Data Providers Keep It Murky, but That's Bad For Publishers and for Marketers

By Published on .

As children, our mothers would often admonish us for picking things up off the street by saying, "Put that down, you don't know where it's been!" We listen to our mothers at that age because they're the authority in our lives.

Online, data providers are trying to exert the same kind of authority. The problem is that they're doing the exact opposite -- they're giving marketers and publishers data and telling them that "it doesn't matter where the data came from. Just write us a check."

When Google purchased AdMeld last month, it showed that major companies are taking data and the supply-side very seriously. Everyone's looking to drive consumers down the funnel, from display to search to purchase. The problem is , data providers run all of their display business through a black box. This means the companies holding murky information are the ones who determine how we measure success, and they expect all of their partners to keep cutting checks without any transparency.

Third-party data providers talk themselves up a great deal, promising social data, intender data, influencer data, or more intent-level search data than anyone else online. Forrester predicts that more than 50% of all consumer purchases will be influenced by the web by 2014, and that will happen largely because consumers turn to search as the first step in their process. This means search intent data has a lot of value for marketing, especially if you can connect it to display. Any company able to do this would have the power to determine market value for display ads because it can follow consumers along the sales funnel.

The problem with the black box, however, is that the provider doesn't have to share its data with anyone. Everyone pays the same, and publishers and advertisers never really know if they're actually buying the audiences they want. We know that the consumers most likely to click display ads are also not the customers brands are looking for. Is everyone going to shell out for bad data? Premium publishers aren't going to play this game, and they're going to move toward transparent data models.

Publishers know that the first-party data they generate is the most valuable resource they have. But they're also learning that supplementing that with third-party data gives them a better view of who is coming to their site, where these consumers have been before, and what kind of products they might be shopping for. The more insight a publisher has into its audience, the more it can charge advertisers.

But the most important factor in this is that publishers and advertisers want to know where this data came from. Advertisers aren't going to pay when they don't know where consumers have been. Publishers aren't going to pay for data unless it's transparent -- there's absolutely no point in just blindly buying data, whether it comes from an established company or a new player in the third-party data space.

Display is enjoying a renaissance right now, but the channel is quickly splitting into multiple parts. Advertisers now understand the difference between using cheap, dirty data and spending a little more for transparent premium data. It's never been more important for advertisers to work with top-tier publishers to get their message across, and these publishers are not going to work with black box clandestine data providers to sell their inventory.

Advertisers don't want to buy into a black box, and publishers don't want to sell that way. With a new emphasis on transparency, how long before the less reputable data providers start losing their entire publisher partners to other outlets? Everyone wants to be the authority on display, and the big providers want to tell everyone where to get their data and what defines success. Except, unlike our mothers, these companies don't always know best.

Alan Pearlstein is president-CEO of Cross Pixel Media.
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