AnalyticsAnalyzing Customer DataWho Owns Consumer Data, Advertisers or Publishers?

Who Owns Consumer Data, Advertisers or Publishers?

The battle between advertisers and publishers over consumer data ownership has been long and bitter. Dev says there's only one possible winner, and it's not either combatant: It's the colossus on the sidelines.

Online advertisers and publishers have always sparred over the cost of media. Lately, the match has been pretty one-sided. Advertisers are the clear winners. But some fights even the biggest advertisers, in the most favorable conditions, won’t win. One such battle is underway: the battle for consumer data.

Advertisers and publishers are debating ownership of consumer data gathered in online campaigns. The Interactive Advertising Bureau (IAB) is working with both sides to create guidelines.

At issue is ownership of the data created when advertisers buy space, publishers agree to display the advertisements, and consumers look at them. Though the treatise that is eventually produced from these discussions may prove to be imperfect, irrelevant, or both, one thing is clear: The IAB is addressing a topic that is absolutely central to Web advertising. Consumer data and its ownership have had a profound effect in shaping the Web as we know it, and the eventual resolution of this issue, shaped by economic and technological factors, will have significant ramifications for every interactive medium hereafter, from Web to wireless to interactive TV.

The factors that drive the issue favor neither publishers nor advertisers. The brief history of Web advertising demonstrates that only industry players who create a network effect can hope to turn consumer data into a useful asset.

The economics of advertising make it difficult for any advertiser to gain knowledge relevant for itself, much less for others. Most online advertising is event- or offer-driven. Insights gleaned from one campaign lose value when advertisers try to apply them to the next. Though the largest advertisers can certainly gain insight to inform their own campaigns, these results are unlikely to have value for others. Big advertisers almost certainly have advertising data valuable to them, but it is unlikely to be useful even to their closest competitors.

Very few publishers have a shot at aggregating data that can be monetized. Clearly, an AOL or Yahoo can collect data from its properties. But how effectively can it convert that data into insight that raises ad rates? Except for the largest media properties, most publishers don’t have enough volume to gain insight. The ones with the volume usually can’t turn data into dollars.

The economics of Web advertising favor the networks, even consolidation among the networks. Technology complicates matters further. Ad data insight is within reach of the few who have the technological resources to store and mine data and to apply the insight they gain. Though most advertisers and publishers have Web logs and other basic databases, few use them to deliver insight. To do this correctly requires dedicated technology resources, applied rigorously. Again, the advantage goes to networks.

Finally, there’s the issue of “cookies.” The ability to place a cookie on a computer is a competitive advantage. An advertiser can place a cookie on a user’s computer when the user lands on its site. It typically cannot do this from its ad banner on a publisher’s site (unless it’s serving the ad itself, which is rare). The ability to set third-party cookies within a publisher’s site and across several advertising buys belongs to the networks.

The apparent winner is DoubleClick, a business that gains from the network effect, has the technological resources to turn data into an asset, and a sales force to sell it. Alternatively, you could be a consortium of advertisers. The offline version of this is Abacus, a cooperative of catalogers that, incidentally, is owned by DoubleClick.

Of course, trying to mitigate DoubleClick’s runaway success is what the IAB’s current effort is all about. Imagine your ad dollars or visitors building someone else’s database! Attempting to limit DoubleClick’s ability to gain insight from advertisements that are bought by advertisers and sold by publishers is at the heart of this doomed effort.

But I’m sure you already knew that.

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