The Bandwidth Economy

I’ve been thinking about this for a while, but wasn’t sure how to organize it until I overheard a conversation on my commuter train this morning. It was a conversation a sales rep for a DMP was having with a prospective customer. I don’t mind reporting on it because it couldn’t have been that confidential, as I was sitting several rows in front of him, but could hear most of what he said.

I don’t know what company he represented but I know it competes with Neustar, because at one point during the call, he pitched the benefits of his firm vs. Neustar’s offering.

“We have by far more data than them,” he said, continuing with various pitch points that would no doubt make more sense if you could hear both ends of the conversation: “we load more than 20 billion data points… repository of data… we’re doing things to help our customers onboard their data, then take all the offline data…” etc.

From what I could tell, he was pitching a “brand” client directly about becoming a customer. But the thing that really struck me, and the reason I’m posting this blog about it today, was how he described the DMP’s pricing model.

“It’s all about mark-up on data,” he said, adding that the basic offering was “$500 a month and they go up from there. The higher the monthly plan is, the lower the surcharge.”

From what I could tell, this DMP was basically charging not on the quality of its data, but on the volume-based usage of its data.

Here’s how the rep described it: “As the brand needs more data to do whatever they want to do -- identify more about the consumer -- we charge them less over time.”

The truth is that I have no idea how DMPs currently price their services, and for all I know, this is the industry standard approach. If so, I think there’s something wrong with an equation that fundamentally commoditizes what should be the most valuable -- you know, “premium” -- part of the business: the data and insights that identify a person as being a valuable audience to target.

The notion that they are commodities -- priced based on how wide your firehose is -- is just counterintuitive to me. But what do I know -- maybe we’ve entered a bandwidth economy, where it’s not about the quality of what you do or the premiums associated with doing it. It’s just about how much of the bandwidth you use.

1 comment about "The Bandwidth Economy".
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  1. Ari Rosenberg from Performance Pricing Holdings, LLC, October 22, 2015 at 6:25 p.m.

    Wow fantasic insights on the nuts and bolts of how DMP's transact aka charge for their stuff -- so the more data a client buys, the better the targeting becomes, the less they pay "per unit of data"  -- that also appears to incentivize collecting data at all costs versus being more particular no?

    Thanks for listening so well :)

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