Data’s New Paradigm

there_will_be_blood_master__detail_carouselThe Rules of Data-Driven Marketing are Changing as Data Rights Management Takes Center Stage

Unless you’ve been living off the grid, you’ve seen the promise of “data as the new oil” slowly come to fruition over the last five years. Connected devices are producing data at a Moore’s Law-like rate, and companies are building the artificial intelligence systems to mine that data into fuel that will power our ascension into a new paradigm we can’t yet understand.  Whether you are in the Stephen Hawking camp (“The development of full artificial intelligence could spell the end of the human race”) or the Larry Page camp (“artificial intelligence [is] the ultimate version of Google”), we can all agree that data is the currency in the AI future.

In our world, we are witnessing an incredible synthesis of fast-moving, data-driven advertising technology coming rapidly together with the slower (yet still data-driven) world of marketing technology. Gartner’s Marty Kihn thinks the only way these two worlds tie the knot for the long term is centered around data management platforms. I think he’s right, but I also think what we know as a DMP today will evolve quickly as the data it manages grows and its applications evolve alongside it.

I think the most immediate changes we will bear witness to in this ongoing evolution are the changes in how data—the lifeblood of modern marketing—will be piped among data owners and those who want to use it. Why? Because the way we have been doing it for the past 20 years in incredibly flawed, and second- and third-party data owners are getting the short end of the stick..

Unless you are Google, Facebook, Amazon or the United States government, you will never have enough data as a marketer. Big CPG companies have been collecting data for years (think of rewards programs and the like), but the tens or even hundreds of millions of addressable IDs they have managed to gather often pales in comparison to the billions of people who interact with their brands every day across the globe. To fill the gaps, they turn to second- and third-party sources of data for segmentation, targeting and analytics.

In the wild and wooly early days, where most digital consumers were targeted on desktop devices using cookies, this meant buying pre-packaged segments of audience data. Website owners were happy to have some javascript placed on their pages, and let data companies gather cookies in return for a monthly rent check—as long as it didn’t interfere with the revenue from their direct sales efforts. Part of that deal included offering their data as a mechanism of insights and discovery for marketers and agencies. Adtech companies would showcase their data in various ways, or use it as an input to lookalike modeling. In the end, data owner would infrequently be rewarded if the data found its way into a delivered advertising impression.

The real usage of the data was sometimes unknown. Many cookies got hijacked for use into other—even competitive—systems, and there was little transparency into what was happening with the underlying data asset. But, the checks still came every single month. The approach worked when the best data owners (quality publishers) had a thriving direct sales channel.

Fast-forward to today, the game has changed considerably. More than half of enterprise marketers own a DMP, and even smaller mid-market advertisers are starting to license data technology. Data is being valued as a true financial asset and differentiator. On the publisher’s side, manual sales continue to plummet as programmatic evolves and header bidding supercharges the direct model with big data technology. In short, marketers need more and more quality data to feed the machines they are building to compete, and publishers are getting better and more granular control over their data.

More importantly, data owners are beginning to organize around a core principle: Any system that uses my data for insights that doesn’t result in a purchase of that data is theft.

Theft is a strong word but, if we truly value data and agree that it’s a big differentiator, it’s hard to argue with. For years, data owners have accepted a system that allowed wide access to their data for modeling and analytics in return for the occasional check. For every cookie targeted in programmatic that was activated to create revenue, a million more were churned to power analytics in another system. Put simply from the data owner’s perspective, if you are going to use my data for analytics and activation, but only pay me for activation, that’s going to be a problem.

In order to fix this, the systems of the future have to offer the ability for data owners to provision their data in more granular ways. Data owners need complete control of the following:

How is the data being used? Is it for activation, lookalike modeling, analytics in a data warehouse, user matching, cross-device purposes or another use case? Data owners need to be able to approve the exact modalities in which the data are leveraged by their partners.

What is the business model? Is this a trade deal, paid usage, fixed-price or CPM? How long is the term—a single campaign, or a year’s worth of modeling? Data owners should be able to set their own price—directly with the buyer—with full transparency into all fees associating with piping the data to a partner,.

What is being shared? What attributes or traits are being shared? Is it just user IDs, or IDs loaded with valuable attributes, such as a device graph that links an individual to all the devices they use? Data owners need powerful tools that offer a granular level of control for controlling data at the attribute level, and deciding how much of their data they are willing to share–and at what price.

Outside of big data and blockchain conversations, the phrase “data provisioning” is rarely heard, but it’s about to be a big part of our advertising ecosystem. However, it is those very security concerns that have kept data sharing at scale from becoming a reality. The answer is an ecosystem that offers complete control and transparency–and a smart layer of software-enabled governance tools that can stay ahead of nuances in law, such as the new GDPR requirements require. As adtech and marketing tech continue to come together, and systems evolve in parallel with their ability to make the best use of data, the systems of the future must first ensure data security before data innovation can truly happen.

Data may be the new oil, but will it be run by adtech wildcatters, or will the rules be governed by the data owners themselves?

[This was originally published in AdExchanger on 9/26/17]

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