Are you up to speed on the best ways to collect and use data? Columnist Scott Rayden answers some of the most frequently asked questions marketers have about data.
Remember the year of mobile? (Could have been 2013, 2014 or 2015, depending on how early an adopter you were.) Well, 2016 is most definitely the year of data. Marketers everywhere are scrambling to figure out their options for collecting and using data to optimal effect in their campaigns — and the smartest ones are using data to craft their marketing strategies.
Of course, not everyone is up to speed. I hear data-focused questions all the time from clients and prospects, and I’ve listed (and answered) the nine I’ve been hearing most often these days.
Let’s get started.
What is the most common form of first-party data that marketers gather today?
The most common forms of first-party data that we see today are composed of the basics (name, address, email address, gender and so forth), paired with behavioral data, product or service preferences and products/services purchased.
Brands that require additional steps to complete a purchase may also gather more advanced data like lifestyle preferences (brands, car(s) brands, clothing size and so on) and other personal information (for example, home size, family size, financial information, business industry).
What do most marketers not realize about leveraging first-party data? What basics or value do they typically miss out on?
Many marketers today continue to fear privacy and the “big guys” doing something unethical with their customers’ data. Because of that, they do not leverage their data fully by bringing it into platforms to do lookalike modeling, which can find them more people who look like their customers.
Lookalike modeling is available on a range of platforms, but most marketers start with Facebook and Google (where it’s free).
How would you define third-party data and the value it provides?
Simply, third-party data can be defined as data that was not provided to you by your customers or collected by your company in one of the several potential interactions that you may have had with your consumers.
The value that it can provide is somewhat limitless. But focusing on some of the basics can give you visibility into information about your prospects and customers that you would never have previously had: gender, age, marital status, employment status, whether they have kids, whether they’re looking to buy a house or a car. All of this can be yours.
The most logical and obvious next step once you have this insight is to use this data to define more precisely what your ideal customer looks like — and to find them in media spaces.
Who should consider leveraging third-party data? How advanced does your marketing need to be for it to make sense to make the investment?
Given how readily available and accessible third-party data has become, I’d say everyone should be using it. (Who doesn’t want to at the very least know more about their customers and prospects?)
Marketing strategies don’t need to be advanced at all, just measurable! We can’t define an ideal customer for a brand if we don’t know how to measure and identify that customer, after all.
Who are the big third-party players in the market? How are they different at a high level?
The bigger data providers today are Acxiom, BlueKai, Datalogix, Experian and Bombaro. We’re starting to see more specialized data providers (NinthDecimal for mobile targets, Visual DNA for emotive/psychographic targets, Kantar for media consumption, AddThis for social behaviors, and so on) enter the market. These new providers may be better fitted for a unique business need and can drive conversions more efficiently because of their specialized and super-targeted nature.
Many of these providers have a lot of the same data and same types of data, and some have a specialty segment, whether in-market for specific product categories, B2B, finance or something else.
Is it expensive to leverage third-party data? How is leveraging this data typically priced by the providers?
There are two ways to get access to third-party data, and they have two very different pricing structures.
A brand can buy an “all you can eat” license from a specific data provider and use that data basically any way (and as often as) desired. It’s becoming “the old way” of getting and using third-party data, and it really only makes sense if a brand’s volume usage means that paying a variable-cost CPM with a pay-as-you-go option is more expensive than the unlimited license.
The pay-as-you-go option is becoming much more favorable and affordable with the introduction of third-party data marketplaces offering reasonable CPMs. The additional benefit of these marketplaces (which are offered through most highly ranked data management platforms) is that you don’t have to sign separate deals with each provider. Your agreement with the DMPs covers your use and rights to all of the data providers available in their exchanges.
What internal technology is needed to be able to leverage third-party data effectively?
The most practical approach would involve leveraging a DMP to bring together your first-party data, media-generated (second-party) data and marketplace (third-party) data to create a centralized repository that bridges the user across these different data sources. This would enable a single platform for real-time insight; it would also almost immediately give you the ability to target the same prospects/customers or users who look and behave similarly to them.
The other use case is to work with a third-party data provider directly. You’d share your first-party data with them and have them send back a “dump” of all of the third-party data attributes, which you would ingest back into your customer database.
This would allow you to leverage the data to segment users for email/offline campaigns, for example. You could also leverage that data to apply some predictive/propensity models to segment prospects more likely to become customers so that you as a brand can focus more of your attention and spend on those users.
What are some of the most basic benefits marketers can get by combining first-party and third-party data?
There are two main ways to benefit from combining the two data types. One is to understand who your customers are, to get new insights that can inform changes that you may want to make to your product or the experience that you provide for these customers.
The second is to find other customers who are going to be more likely to convert and engage with your brand and products based on new information and attributes.
What is the biggest misconception about third-party data and what it can do?
The biggest misconception is that it’s still very expensive. The biggest misunderstanding, meanwhile, is that the only thing it can do is provide lookalike modeling, which not everyone believes in.
The biggest “missing piece” is the insights that it can uncover about who your customers are, the life stage and lifestyle that they’re in, and the things that they may likely engage with and be interested in.
All of these are insights that marketers would greatly benefit from knowing before we invest in media. More often than not, though, the use is an afterthought, which means a lot of spend is less efficient than it could be.
If you’ve read this far, chances are you’ve got (or had) more than your share of data questions. I’d love to hear any that have been bugging you, so post yours in one of the social channels mentioned below, and we’ll dig in.
Some opinions expressed in this article may be those of a guest author and not necessarily Marketing Land. Staff authors are listed here.