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Cashing in on Second-Party Data: Time to Put a Strategy in Place

Ensuring content and ads are not targeting fake customers requires smart use of data. The personalization promise is the more relevant the content and ads served, the better things are for everyone. Viewers will watch more, advertisers will get better results, fewer people will use ad-blockers. To accomplish this media companies and brands need lots of good data.

Bringing Data to the Party

When first-party data—which includes login identities, email addresses, and phone numbers, plus maybe address, employment, income, content consumption information, website navigation details, details on playback environments, device type, and IP address—is licensed by another company it's called second-party data. The benefit is the exact source for this data is known.

A publisher or brand may have a certain amount of first party-data (see "Using First-Party Data to Build a Personalized Media Company") and to reach scale may have previously supplemented it with third-party data. The problem is the source of third-party data is not known and anyone can buy it, so there's less competitive advantage. This is where second-party data brings value.

Finding the right second-party data can create a higher value group of viewers for media buyers, as well as create revenue for the seller.

"(If) your data is performing so great, maybe others would pay you $2 CPM to use it," says Jay Prasad, chief strategy officer for VideoAmp, an integrated TV operating system for cross-platform advertising. "It might be a great way to make more money off of your digital assets."

A recent Forrester study found 54 percent of retail and 48 percent of durable goods companies have a second-party data strategy, 34 percent will develop one next year, and 12 percent will in 2 years. All but a few companies will have such a strategy in 2 years' time. The largest use (67 percent) is for digital advertising. More than half of retailers are realizing increased product sales. Brands were 52 percent more efficient in marketing or ad campaigns and 48 percent showed improved sales.

How Does Second-Party Data Work?

"Say I'm a medical website and I want to go out and pitch the NBA while the finals are on," says Tyler Blot, senior strategic client engagement for data management company Lotame. "I don't necessarily have audience based on my medical properties alone. I can go out and source NBA enthusiasts level data that would fit with that perceived target audience and I can go to them and say, I have access to all these users as well, who have a nice overlap with my site, let's run a campaign."

Lotame offers a data management platform (DMP) to a facilitate second-party data transactions.

In order for brands and media companies to do second-party data transactions their data first needs to be in a structured format. This generally takes the shape of a data management platform (DMP) where customer, sales, marketing other corporate information is categorized. Once data is stored in a DMP it can be securely sliced and diced to identify sophisticated audience segments.

Black Enterprise: A Case Study

Black Enterprise (BE) is a 47-year old media company that caters to African-Americans and helps them build wealth, say Shelly Jones Jennings, vice president and director of digital for Black Enterprise. It has two syndicated TV shows reaching 90 percent of African-American households, plus 6 million readers, a 500,000 paid circulation, and a 10 percent reader overlap with other financial publications. Jones is starting to plan her strategy, and is interested in both buying and selling second-party data.

"Can we partner with a brand that is totally different from what we basically do?" Jones wonders. "We could go out and partner with a beauty brand and take that to our advertisers and say, here are the African-American professional visitors who make over $75,000, $100,000 and combine that with that beauty content." Would L'Oréal or P&G see worth?

What should Jones plan for? "You need to think about who you want to partner with initially," says Blot "[The audience] could be very valuable, so I would encourage the publisher to figure out what the data will be worth in the open market."

"Run a few test campaigns with trusted partners. I would recommend doing this in a private marketplace type of setting," suggests Gustavo Morales, senior strategic client engagement at Lotame. In private direct deals sellers select who can offer bids. He's seen this type of transaction become more prevalent in the last year.

Black Enterprise Planning Advice

  • Identify the best potential partners: Should it partner with beauty companies or other media groups? What does the perfect match look like?

  • Determine intended viewer actions: BE wants more viewers and for them to spend more time on-site. Find similar demographic, psychographic, age, interests, and intent details to current customers.

  • Identify license terms: How often will data be used, on which platforms (mobile, social, desktop, app), for how long, and can it changed?

  • Respect privacy - If BE sells second-party data it needs to get consumer privacy policies up-to-date. Ensure users have provided consent to have their data used with second-parties. Provide a seamless opt-out opportunity.

DMP Vendor Questions

"For brand marketers or direct response marketers to really be able to lean into something there needs to be scale there," says Prasad. Ask:

  • Is there other second-party data and what are typical sizes of data sets that are available?

  • What data can be automatically ingested (by API) into the DMP? Is data format agnostic—can it go out to any DSP or SSP? What is the margin for error if data is in two different DMPs?

  • Is it possible to do audience modelling—to identify things like high lifetime customer value or high transaction frequency?

  • Is machine learning an option to find trends and opportunities?

  • How are privacy requirements met? What assurance are there that data will not be stored or captured for any other use than the license provided.

  • How is billing and reconciliations for data done?

There may be more questions than answers at this point, but these should be on the radar.

Knowing that almost everyone in the Forrester study said they will have a second-party data strategy in two years' time means media companies need to ensure they have their second-party data strategies together, as well. No one wants fake customers. Finding the right second-party data will make for more engaged and better prospects and that's what everyone is looking for.

Nadine Krefetz's article first appeared on OnlineVideo.net

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