Consumer data ownership isn’t a new issue in online advertising. It’s been debated since the first online ads were delivered on Prodigy in the ’80s and been the subject of numerous industry committees and initiatives ever since.
With industry focus on consumer-specific targeting, whether behavioral, local, or personalized search or desktop adware, we can expect this issue to stay hot over the next 18 months.
Why is data ownership so important? Two reasons: money and privacy.
Publishers can use consumer data to sell more ads for more money. They use audience behavioral and registration data to turn undifferentiated, commodity-priced inventory into premium advertising products. These products perform better for advertisers. Advertisers reward publishers with premium pricing.
Bottom line: The right data, properly applied, mean dollars. This was evident to anyone at Avenue A’s summit in Las Vegas last week. All the speakers, from C-level executives to marketing directors, talked of an immediate need for data-driven audience targeting.
People care. They care how their data is used and how they’re treated. Anyone who doesn’t believe that clearly missed the Do-Not-Call Registry exercise last year, which essentially represented the largest, most resounding election in U.S. history. Fifty million people said, “NO MORE!” To most Americans, online advertising means pop-ups and spam.
Listen to what’s being said. People care about privacy. Direct mailers have liberally harvested personal data about consumers for years, but consumers didn’t know it. Those who did know didn’t know they could do something about it. That’s all changed. Online advertising is the battleground.
How might data ownership play out in this industry? The best place to start is to identify the constituencies: parties who play with data; own data; use data; provide data; sniff data; sell data. The list could go on. For our purposes, we’ll keep it simple.
Key players in the online advertising data marketplace:
- Consumers. Ultimately, they own the data. It’s about them. Should they choose to control that data, they will, and they’ll win.
- Web publishers. They have direct relationships with consumers. Many track, store, analyze, target, report, and personalize content based on consumer data. Most publishers, particularly the more sophisticated and those with offline media properties, recognize this data is a core strategic asset of their businesses. They want to protect their ownership of it.
- Online advertisers and Web merchants. They also have direct relationships with consumers. They also track, store, analyze, report, and personalize based on consumer data. They view data as a strategic asset and work to protect their ownership of it.
- Interactive advertising agencies. They generally have indirect relationships with consumers. They also track, store, analyze, report, and personalize based on consumer data. They also view the data as a strategic asset and work to protect their ownership of it.
Interactive advertising agencies typically operate as agents or contractors for advertisers and marketers. Generally, their clients prohibit them from owning any of the data, because those clients viewed it as a key asset. An agency’s ability to convert its third-party consumer relationships (e.g., capturing consumer data as a result of an online ad campaign) into first-party data ownership isn’t straightforward.
- Online marketing service providers. These differ from online advertising agencies as they typically operating more in the direct marketing space than in branding. Online marketing service providers use and capture the same types of data as agencies but aren’t frequently prevented from assuming ownership of consumer data. Their clients usually care more about the lead, sale, or conversion than the data. These service providers view consumer data as a strategic asset and like to harvest it much the way direct marketing list companies would.
- Technology service providers. These are ad-serving companies, Web analytic providers, audience segmentation and targeting companies, rich media companies, and research companies. They deal with lots and lots of data. Their systems and applications create it, consume it, crunch it, and spew it out in enormous quantities. They don’t have direct consumer relationships. How many consumers know who delivers the ads they see? Virtually none.
Data ownership battles will be fought among technology service providers, as well as between them and the other parties. Tech service providers are custodians of an enormous amount of valuable data. They possess technologies that can turn data into an enormous amount of advertising and marketing value. They don’t have direct relationships with consumers. The data they capture is a result of the fact they provide services to first-party data owners — publishers and advertisers with direct consumer relationships. Many of them view consumer data, or data about that data, as key strategic assets. Many buy data from third-party sources to further enhance and augment their data to make it even more valuable.
Battles will begin when parties with more direct ownership rights — consumers, publishers, and advertisers — understand what data are captured, what’s being done with it, and start to care about it. That will happen soon. Battle lines will be drawn around four concepts:
- First- versus third-party data. This will be a big one. What are the implications of having, or not having, direct consumer relationships when you want to capture, own, and exploit consumer data? Watch for publishers to use this to start limiting the data third parties can own or use.
- Personally identifiable information (PII) versus anonymous data. This is the one everyone in privacy advocates’ sight will try to hide behind. They’ll argue they’re capturing “anonymous” data, not PII, since it can’t be linked to a specific name, address, or other personal record, such as a bank account.
But is a marketer’s or a regulator’s “anonymous” the same concept as the consumer’s? I think not. If you capture data about a person’s surfing habits or his stock portfolio, tie it to standard industrial classification (SIC) data about the company he works for (based on his IP address), and deliver a targeted ad to him based on that information, not too many consumers would call that anonymous. Watch for a lot of fighting over this definition.
- Data versus metadata. The other side of the PII/anonymous issue. Publishers and advertisers who don’t want their service providers to capture, store, and exploit their customers’ data will realize the metadata (data about the data) many companies capture and claim ownership of is just as valuable and strategic as the primary data.
Is a Web analytics company permitted to own even generalized consumers data (e.g., she surfs personal finance content) that can be associated with a specific cookie? Watch for publishers and advertisers to pay lots more attention to their legal contracts and to the definitions of data and metadata.
Data ownership and privacy will be big issues for our industry this year and next. Get ready!
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