It was supposed to be. The culprit was to be the EU’s General Data Protection Regulation, which would cut off the flow of personal data to third party brokers and, even more devastatingly, prevent marketers from buying third party data for fear it wasn’t legitimately sourced.
The expectations are real. A recent Sizmek study found that 77% of marketers predicted data regulations such as GDPR would make targeting audiences with third party data increasingly difficult. In a Demandbase study, 60% of respondents said that GDPR was forcing a change in their global privacy approach. And 44% of marketers told Trusted Media Brands that they expected GDPR would lead to more use of first party data vs. cookies.
Marketers say they're acting on these concerns by cutting back on use of third party data. Duke Fuqua’s most recent CMO Survey found that use of online (first party) customer data has grown at 63% of companies in the past two years while just 31% expanded use of third party data. Seventy percent expected to further grow first party data in the next two years compared with just 31% for third party data. A Dentsu Ageis survey had similar results: 57% of CMOs were expanding use of existing (first party) data compared with 37% expanding use of purchased data.
The irony is that reports of GDPR impact seem to have been greatly exaggerated. A Reuters Institute study found 22% fewer third party cookies on European news sites after GDPR deployment, a significant drop which nevertheless means that 78% remain. Meanwhile, Quantcast reported that clients using its consent manager achieved a consent rate above 90%. In other words, third party data is still flowing freely even in Europe even if the volume is down a little. The flow is even freer in the U.S., where developments like the new California privacy regulation will almost surely be watered down before taking effect, if not blocked entirely by Federal pre-emption.
Of course, what regulation can’t achieve, self-interest could still make happen. There’s at least some debate (stoked by interested parties) over whether targeting ads with third party data is really more effective than contextual targeting, which is the latest jargon for putting ads on Web pages related to the product. Online ad agency Roast and ad platform Teads did an exhaustive study that concluded contextual targeting and demographic targeting with third party data worked about equally well. The previously-mentioned Sizmek study found that 87% of marketers plan to increase their contextual targeting in the next year and 85% say brand safety is a high or critical priority. (Ads appearing on brand-unsafe Web pages is a problem when ads are targeted at individuals, a primary use for third party data.) The Trusted Media Brands study also listed brand safety as a major concern about digital media buying (ranked third and cited by 58%) although, tellingly, ROI and viewability were higher (first and second at 62% and 59%, respectively).
But third party data isn’t going away.
It’s become increasingly central for business marketers as Account Based Marketing puts a premium on understanding potential buyers whether or not they're already in the company’s own database. Third party data also includes intent information based on behaviors beyond the company’s own Web site. Indeed companies including Lattice Engines, Radius, 6Sense and Demandbase have all shifted much of their positioning away from predictive modeling or ad targeting based on internal data and towards the value of the data they bring.
Then again, business marketing always relied heavily on third party data. What arguably more surprising is that consumer marketers also seems to be using it more. Remember that the CMO surveys cited earlier showed expectations for slower growth, not actual declines. There's more evidence in the steady stream of vendor announcements touting third party data applications.
Many of these announcements are from established vendors selling established applications, such as ad targeting and marketing performance measurements. For targeting, see recent announcements from TruSignal, Thunder, and AdTheorent; for attribution, see news from Viant and IRI.
But what's most interesting are the newer applications. These go beyond lists of target customers or comparing anonymized online and offline data. They provide something that only third party data can do at scale: connect online and offline identities. This is something that companies like LiveRamp and Neustar have done for years. But we're now seeing many interesting new players:
• Bridg helps retailers to identify previously anonymous in-store customers, based on probabilistic matching against their proprietary consumer database. It then executes tailored online marketing campaigns.
• SheerID verifies the identities of online visitors, enabling marketers to safely limit offers to members of specific groups such as teachers, students, or military veterans. They do this by building connections to reference databases holding identity details..
• PebblePost links previously anonymous Web visitors to postal addresses, using yet another proprietary database to make the connections. They use this to target direct mail based on Web behaviors.
You’ll have noticed that the common denominator here is a unique consumer database. These do something not available from other third party sources or not available with the same coverage. Products like these will keep marketers coming back for third party data whether or not privacy regulations make Web-based data gathering more difficult. So don't cry for third party data: the truth is it never has left you.
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