Recently, Criteo has released news that it’s proposing to create a new data cooperative, the Criteo Commerce Marketing Ecosystem, which is an interesting development for programmatic advertising. According to Criteo, the new ecosystem will give “participating clients the option to share anonymized, or ‘hashed,’ aggregated data sets of customer email addresses or other customer relationship management (CRM) data, plus purchase and other ‘event’ information from their physical stores, websites and apps.”
This “new” model is just a variation on traditional data co-ops that, in the end, is sub-optimal for participants for a number of reasons.
The most important reason is that in every single use case that you can imagine for activating a data cooperative, data transparency is always a better option than data anonymity. Existing data co-ops know this and I suspect Criteo knows this, too. If they could solve for transparency while still achieving scale, they would. Data transparency among co-op participants leads to more informed and relevant targeting.
This type of transparent data sharing that supports partnerships between retailers and brands is part of the modern marketing mix. For a retailer like The Home Depot, it makes more sense to target the audiences of the brands they sell first before exploring “look alike” audiences based on questionable data from third-party providers or even aggregated data provided by a blind co-op. It also leads to better insights and reporting. For example, Acer would no doubt love access to Office Max’s CRM and POS data in order to create attribution models that directly connects their digital ads to in-store sales.
But data co-ops operate on the naïve premise that participation is not possible without anonymity. In other words, transparency can’t scale. This is a false assumption.
Yes, there is likely zero chance that Criteo would category competitors to share data with one another without opacity. But I would argue that it’s ridiculous to suggest that it’s in Whole Foods’ best interest to share audience data with Trader Joe’s in any scenario. In this case, as it’s currently just for “targeting online ads,” it’s borderline irresponsible. These are businesses, not nonprofits that operate for the greater good. In addition, in most, if not all use cases, transparent data cooperatives should be able to meet the marketing needs of an organization by allowing them to share data with only trusted partners and other non-competitive retailers and brands: for modeling, for customer identification, for attribution, etc. And in all cases, data transparency makes the execution better.
That brings up another key flaw in the old data co-op model Criteo is following. It requires data owners to give up way too much control. Governance of the cooperative itself should be shared with all participants, both data providers and consumers. The model should be designed to support their business needs, not those of the co-op. They should be able to decide what data they would like to share, who they would like to share it with, for what use cases, and even how it is executed and reported. The idea of blind aggregation and off-the-shelf executions is antiquated and ineffective approach for most sophisticated marketing organizations.
In the case of Criteo, their proposed co-op doesn’t begin to address a major competitive issue all retailers are facing from Amazon. Amazon has transformed its assets, including its data asset, into a huge marketing and advertising platform that is siphoning channel ad dollars away from other retailers. How exactly does a blind co-op solve for that? These marketplaces should offer participants transparency and controlled participation for more customized and relevant marketing executions.
With the appropriate competitive controls, partner oversight and compensation models thriving transparent and customized data cooperatives are possible. It may be slightly harder to develop, but you can’t take shortcuts to solving this important problem.
Bottom line — Criteo is promising a new coat of paint for your grandfather’s co-op. It’s time to evolve.