Columnist David Rodnitzky weighs the pros and cons of trusting Google and Facebook with your marketing analytics data.
Google and Facebook are in an arms race to provide the best ad tech they can to advertisers, and they’re willing to do it for little to no cost. This article examines why they are doing this, so you can better decide whether you should accept their offer of free or cheaper technology.
The Ad Tech Arms Race
Let’s start by reviewing what Google and Facebook are building, and why they’re building it. Google has been building and mainly giving away ad tech for years now – so they have a significant head start on Facebook. Today, the Google “tech stack” includes:
- Google Analytics (free) and Google Analytics Premium (approx $160K/yr when purchased through Google – competitor to Omniture)
- Google Tag Manager (free)
- Google AdWords “dimensions” and AdWords Editor (free business intelligence and campaign management)
- Adometry – currently at-market attribution
- Webmaster Tools (free SEO analysis)
- DoubleClick Bid Manager (DBM –at-market DSP)
- DoubleClick Search, a/k/a “DS3” (below-market SEM campaign management tool)
- DoubleClick Campaign Manager (DCM – at-market ad serving)
- DoubleClick data management platform “DMP” (in beta, price not known)
Facebook, as noted, has only just begun to offer ad tech to customers, but currently offers:
- Facebook Power Editor (free Facebook campaign management)
- Atlas – ad serving
Building all of this tech requires a lot of engineering hours, and given that most of it is available for free, clearly Google and Facebook don’t see these tools as stand-alone profit centers for their companies, which begs the question: why build it in the first place?
The answer is simple: the company that controls advertisers’ data and analytics has the best chance to influence advertisers’ budgets.
Think of all the decisions advertisers make that are influenced by the ad tech stack:
- Who gets the credit for a conversion? (Attribution, tag management)
- How should I allocate budget between channels and partners? (Analytics, attribution)
- What channels drive the best ROI? (Analytics, attribution)
- How can I leverage my data to optimize my advertising? (DMP, ad serving)
- What’s the best bid strategy for a particular channel (DSP, campaign management)
Subtle changes in user interfaces and bidding algorithms in these tools can have significant impact on advertiser budget allocation. What if, for example, Google changed Adometry’s UI to emphasize last-click (e.g. SEM) attribution over other attribution methods?
No doubt, some advertisers would increase budget on SEM as a result. Similarly, if Facebook’s Atlas ad server puts a spotlight on using Facebook’s data in combination with display campaigns, it seems reasonable to assume that this would lead to more budget being allocated to Facebook in the future.
Perhaps most importantly, however, both companies want to control measurement of cross-device conversion data. Few (if any) companies have better “deterministic” tracking of user movement between devices (and even to offline purchases) than Facebook and Google, simply because few companies are as ubiquitous on consumer devices as Facebook and Google.
Advertisers using Facebook’s stack (essentially Atlas, for now), however, will only be able to get “probabilistic” measurement of cross-device performance of Google ad channels, and vice versa. As a result, the choice of ad tech stack will likely have a major impact on an advertiser’s weighting of the two ad giants, with the company with the tech stack installed getting much more favorable cross-device credit. In an increasingly multi-device world, this is a big deal!
Build It, Buy It Or Get It Free?
For the majority of advertisers, using Google or Facebook’s stacks will be a fairly easy decision, simply because most advertisers can’t or don’t want to pay the true market rate for a full tech stack. For advertisers with the financial means to build or buy alternatives to Google and Facebook tech, the decision is far more complex than simply the cost.
As I see it, advertisers have three questions they need to answer in making this decision:
- What’s The Risk Of Using Google Or Facebook? Omniture has built a very successful business, in part, by telling advertisers that sharing their data with Google is tantamount to letting the fox guard the henhouse. For companies that are currently (or may someday be) competitors to Google and Facebook, this is a valid consideration. Conspiracy theorists will also argue that Google and Facebook will use your data to manipulate the prices you pay on their advertising networks – this seems unlikely to me (they have too much to lose if this was discovered), but it is a factor that some consider in making this decision.
- What Data Will I Lose If I Don’t Work With Google Or Facebook? As noted, Google and Facebook have more data about consumers across more devices than anyone else in the world (well, except for perhaps the NSA, but I don’t see them offering a tech stack anytime soon). Implicit in this statement is the fact that not using one of these platforms means that you won’t have access to all the data you might otherwise have. Lack of data results in less intelligent advertising decisions, which will likely result in lower performance.
- Is The Risk/Return Worth It? Combining the two questions above, the decision to use Google or Facebook or another third party really comes down to a weighing of risks and expected return. Simply saying “I don’t trust Google with my data” doesn’t count as a weighing or risk and return in my opinion; like it or not, there are strong financial benefits that may outweigh a general distrust of a large company.
Ultimately, I think there will be a vibrant ecosystem of third-party ad tech providers for the foreseeable future, if for no other reason than many big companies don’t trust ad networks with their data.
At the same time, as Google and Facebook continue to aggregate more and more data and offer cheaper and better ad tech, the adage “if you can’t beat ‘em, join ‘em” seems more and more apropos. The future of ad tech will be driven by these two juggernauts, and most advertisers will lay down their bets with one or the other.
Some opinions expressed in this article may be those of a guest author and not necessarily Marketing Land. Staff authors are listed here.
(Some images used under license from Shutterstock.com.)